I’ve often thought those referral programs where a past customer gets some type of reward like a cash kick back, or steak dinner were a waste of time and effort — sort of hokey. Personally, I never sign up for them. I’ve experimented with them in my home service business, and never had any noticeable success. If anything, they just create a mess, where some customers are annoyed that you’re asking them to participate, so they just don’t participate or avoid referring, and others are taking a “throw mud at the wall” approach in an effort to collect the reward and telling everyone they know to contact you but none of them lead to sales.
Even more frustrating is keeping track of it all. Someone needs to enter details in a CRM. Rewards need to be issued. The customers that take the “mud at the wall approach” check in frequently to see if they have any rewards due. Even worse is when two customers refer the same prospects… who gets credit for it?
Referral Programs Create A Complex Mess, With Little Or No Reward
But until I head Tom Reber’s recent podcast, I wouldn’t actually say it. Explicitly coming out and saying referral programs are a bunch of BS, would certainly go against every marketing guru or consultant’s cliche advice. So thanks for coming out and telling it like it is.
Occasionally customers will ask for some kind of kick back to which I reply
“Thanks for considering referring us, we do not have any kind of referral program, but I would hope that you refer us for our quality of work and level of service relative to our competitors, not because we are paying for referrals.”
Yes, I’ve actually used that line.
Anyhow in Tom’s podcast he excellently explains why these referral programs don’t work, and how to get referrals. Check it out!
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