High Road Referrals

Most businesses, and especially small businesses, have people to thank for their growth. This week’s topic could be about employee recognition because every employer knows it takes talented, hard-working people to get the job done. But this blog post is about referrals – a subject that regularly comes up when we talk to clients about sales and marketing.

Word-of-mouth has always been the most cost-effective way to promote products and services. In theory, all you have to do is deliver what you’re selling, provide decent customer service, and all of the sudden you have another salesperson out their recruiting your next customer. In reality, it takes more than that. It takes something special.

Marketers have understood the importance of referrals for a long time, and over the decades we have seen two schools of thought emerge. I refer to them as the high road and the low road.

The low road refers to incentive offers in all its various forms – essentially paying someone a commission for their help. Not to be confused with loyalty programs (membership reward points or a sub shop punch card), low road referral programs are about flat-rate or percentage-based finder’s fees for leads generated or sales closed.

There’s even a trend in digital marketing sometimes mistakenly referred to as reputation management, which is about monitoring brands online – not making up false reviews, where marketers pay individuals to write and post comments on blogs and social networks to create artificial online buzz.

I’m not a fan of the low road. Many years ago in the software business we recognized the importance of referrals and tested different incentive-based referral programs. Sometimes they attempted to entice customer referrals, other times they encouraged employee referrals, every time they generated more problems than customers.

The first problem is tracking the referrals. No matter the incentive, someone has to keep track every referral in case they turn into a customer. Whether that’s on the back of a napkin, in an Excel spreadsheet, or in your customer relationship software, it requires another set of manual and/or automated processes to be maintained because someone is going to want to get paid.

The second problem is even worse. You also have to manage the referrers. Someone once referred to salespeople as commission lawyers – meaning no matter how carefully you write the rules, a good salesperson is going to find the loopholes and game the system to their advantage. The last thing you want is your customers, or worse your non-sales employees, spending time calculating referral incentives rather than focusing on their job.

The high road to referrals is about doing the right thing because it’s the right thing to do. In its most basic form, taking the high road is simply a matter of saying thank you. I should give credit where credit is due (thanks, Mom!), but I always recommend hand-written thank you cards, especially in this digital age of emails, text messages, and Facebook posts.

More developed ‘high road’ referral programs focus on touch points – those precious moments (in print, on the web, and especially in person) when you have your customer’s undivided attention. We have many examples of touch points and ideas for thanking your customers. Give us a call if you would like our help developing a high road referral program for your business.

The bottom line here is the customer experience. Yes, your customer needs to feel like they got a good value, and yes, your product or service needs to deliver on your promise. The ‘something special’ it takes for your customer to become your brand advocate is an unforgettably positive experience that they will share their family and friends.

Have you enjoyed a memorable customer experience recently? If so, please share your touch point story in the comments section below.

Until next week,

Matthew Anderson, President
Milestone Marketing Associates, Inc.