Mistruths are no way to build trust with your customers
October 25, 2010Who says people won’t pay more for a better customer experience?
October 29, 2010
Referrals are every entrepreneurs dream way of growing their business and you can get a steady stream of referrals if you have the right incentive programme in place. Right?
I was speaking at an event for entrepreneurs the other day when as part of the question and answer session one of the attendees asked me what I thought about offering incentives (money, discounts, vouchers etc) to contacts, customers or suppliers for referrals.
My answer was that unless you have set up a distributed sales force ie. you have many people selling your product or service for you on a commission basis, I don’t think this works as well as we might want it to, in my experience. The reason being is that often it can feel like mixing oil and water ie. do we talk to people about a great customer experience and refer people just to get ‘paid’.
The reason that I say this is that I believe that if you are building a business that delivers a great product or service then if it is good enough your customers will talk about your business. And, they will happily talk about you to people that they know and meet. Why?
Well there are many reasons why people refer us to other people, only some of which are financial. Seth Godin in a recent post I spread your idea because… shares with us 20 ideas for why people share things. Of his list only 2 have a financial benefit.
On this basis, all you have to do is:
- Make your customer experience so good that people want to share you with others; and
- Make it easy for your ‘advocates’ to share you with other people.
Going back to the event, the lady who asked the question then went to ask if I would suggest a different approach that would enhance her referral strategy and kick start her referrals. I suggested that a different way of going about it would be to work on delivering a great and complete customer experience. Something so great that it stood out against her competitors. Then, I suggested that she consider giving ‘gifts’ to her customers and those that referred others to her as a way of building that relationship and showing that you care and are grateful. When I say gifts I don’t mean just bunches of flowers or chocolates, although these can work as a starting point, but what I mean is gifts that have thought in them and are about your customers or those that are referring you and not about you. So, a promotional pen or a branded calendar is not enough.
These are my beliefs based on my experience.
Does your referral incentive programme work or do you too think it is like mixing oil with water?
Thanks to creativeFlutter AKA MazerDesign for the image.
15 Comments
Referral incentive programmes or gifts or both? http://bit.ly/dtAbwn
RT @adrianswinscoe: Referral incentive programmes or gifts or both? http://bit.ly/dtAbwn
RT @adrianswinscoe: Referral incentive programmes or gifts or both? http://bit.ly/dtAbwn
HI Adrian,
Really enjoyed reading this post, and you are so right – referrals are the ideal way of growing your business, but “incentives” can seem either tacky, or more like bribery!
Gifts as rewards are a lovely idea, and as a company we send out hand made made thank you cards as a way of letting our customers know how much we appreciate both their business and them telling others about us. The most important asset any business has is it’s existing client base.
Hi Lorelei,
I am glad that you liked the post and agree that our customer bases are the most important assets that we have in business. Often it is the smallest of ‘touches’ or gifts that count the most and can be the key to building a long and fruitful relationship.
Adrian
Adrian,
I don’t think you need to “buy” your referrals in business. You stated the obvious which is excellent customer service. Look at Zappos or Nordstroms. People continue to buy from them, and refer them because of their customer-centric approach to business. To add to customer service, I would say customer appreciation if you can. This is not “buying” or “gifting” to them, but showing appreciation in a way that the feel you care about them as a person and not just a transaction.
Cheers,
Mike
Mike,
I agree that showing your appreciation in a way that is more human centric rather than transaction centric is a great way to build the relationship. However, most businesses seem to not do this or get it wrong. Why is that do you think?
Adrian
They don’t see the ROI in doing it. They are only focused on the transaction. They don’t realize that an appreciated customer will not only come back again and again, but will tell all their peers, family and friends, gaining you new customers at ZERO COST.
Mike
I agree. Time for a culture change don’t you think?
This is something that I talk about in my new book: RARE Business
Take a look and let me know if you’d like to see a copy. I could send you an electronic version for review if you like.
Adrian
Customer experience, referrals, incentive programmes or gifts … http://bit.ly/93cv4Y
RT @adrianswinscoe: Referral incentive programmes or gifts or both? http://bit.ly/dfk43v
My accountant has at the bottom of each e-mail that he will give £50 for any referral which results in a new client signing up. This line at the bottom of his e-mail actually results in me NOT wanting to refer him. I work within professional services, and agree with you that the best way to generate referrals is to deliver a great client experience – not incentivise your existing clients to find you more business. After all, more clients for my accountant may lead to a drop off in service for me and my business…
Personally, when I do get several good referrals from one source, i do like to show my appreciation – and more than just a simple thank you. I will send a card or small gift. But, the card and gift are always chosen with care.
Hi Heather,
Thanks for your comment. I glad that you agree that incentives can muddy the water. I am sure that they can work but sometimes the simplistic way that they are used can cause confusion.
Picking the right thank you gifts can be a great way of building a more solid and valuable relationships. What sort of gifts have you sent in the past?
Adrian
Incentives are engineered to drive transactions, and if your business model is one that supports a transaction based relationship, then it’s all good. However, if your business model is based on organic growth and personal connection, then there is no way that incentives will deliver. If a company does give a “gift” it’s really an “incentive” in sheep’s clothing. A gift is given from the heart with no intention of satisfying anyone else but the receiver of the gift. Most companies haven’t taken that class….
Hi Bill,
I think that you are spot on that it depends on the type of relationship you have with a customer whether it is transaction or through to partnership based.
Hopefully, we can promote that ‘class’ as you rightly call it to help companies understand that giving ‘gifts’ is a great yet indirect way of building relationships and marketing our businesses.
Adrian