Everyone who owns a pet business knows the best customers and clients come from referrals. Referrals are usually lie-down sales who buy quickly, don’t comparison shop, seldom complain, spend more money and are more likely to refer others.
Only trouble is, referrals usually happen on an incidental basis. In other words, it’s a matter of happenstance. Referrals come, but there is no way to count on them as a defined and predictable percentage of your revenues. That is, of course, unless you install an incentive-based referral reward system.
This is simply designed to encourage customers to refer their friends, relatives, neighbors and business associates on a regular basis, and reward them for doing so. It also provides your customers with a specific procedure to follow, which makes referring easy for them.
Your system includes giving your customers cards or gift certificates they give to their friends. The document includes a place for the name of the referring customer. When a card or certificate is redeemed by a referred prospect, the referring customer is sent the promised incentive.
Here are the pieces of the puzzle for establishing referral systems:
Incentives for your customer. This can be an in-store credit, for example, or it could be food, entertainment or cash. The key is to make the reward substantial enough that the customer thinks, “Wow! Good deal! I’m going to do this.”
Incentives for the referred prospect to become a customer. Again, the incentive has to be substantial. Ten percent off your first purchase or a free can of dog food isn’t going to cut it. You’re not trying to make a killing on the referral’s first transaction. You’re just trying to establish a relationship. Consider something like $25 same as cash, or $50 off on a $100 or greater purchase.
Materials: certificates, letters introducing the program to your customers and reward letters to referring customers that also provide them with more certificates to pass out.
Scripts for you and your staff to use in talking about your new referral rewards program. You will be far more effective if you and your staff know what to say in persuading your customers to refer.
Training for your staff. Sometimes employees resist being asked to do new things. It’s outside of their routine. In most cases the resistance comes from a lack of confidence in themselves. Training can help overcome that problem.
A tracking system is the last piece in the puzzle. You must accurately track referrals so you can appropriately reward clients whose referrals become customers, and so you know what revenues you are gaining from your referral programs.
A word about instant gratification ... The tendency is to default to an in-store credit as your incentive to customers for referring their friends. And because your customers are so passionate about their pets, this may work very well. But you may want to experiment with incentives that referring customers can use for themselves. Movie tickets or a dinner out, for example.
If I refer a friend and you send me a store credit, great. But I may not be able to use it right away. If you send movie tickets ... Hey! Free date this weekend! I get instant gratification and am encouraged to refer again right away.
Good pet business owners already get a substantial number of referrals. By installing a system, though, you can significantly increase the percentage of your business that comes from referrals. And remember you pay little for referral customers until after they are acquired. You can’t say that about traditional advertising.
This article originally appeared in the February 2018 edition of PETS+.