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Referral Marketing Strategy #1: Show Me the Money
This referral idea uses the idea of complementary businesses. A complementary business is one that serves the same target customers as your business but is not a direct competitor. For example, I serve small business owners with a marketing consulting business. Complementary businesses in my target market would include accountants, lawyers, print shops and tax services.
I recommend only approaching businesses you have some type of established relationship for reasons that will be obvious in a moment.
Work with one business at a time and ask them to mail out a letter to all their clients introducing your business and recommending your products and services. In return, you promise to pay the company a percentage of all sales that you obtain through this mailing.
Don't be stingy here - make it worth their while. While you may need to offer 25% or more of first-time sales produced, the value comes from retaining these customers for future business.
If you make the offer attractive enough, you may even be able to negotiate for the company to pay for the mailing. Another option is to see if the company is willing to include your letter in their next customer wide mailing as an additional insert. Everything is negotiable so craft a compelling offer that will benefit the company in return for exposure to their customer base.
Another option is to find a company with a similar sized mailing list and each of you do a mailing for the other. In this way, you each pay for your own mailing expense but you don't have to give away a percentage of sales. Of course, the main advantage of this referral idea is to approach a company that has a much larger mailing list than you. So, I recommend you work it from that angle and agree to give a percentage of sales booked.
One of the critical factors for this referral idea is the ability to track when clients come to you as a result of the mailing. The best way to handle this is to come up with an offer that requires either a coupon code or a visit to a unique URL that you can track. Keep a spreadsheet of responses and business booked from the mailing so that you can make your payout at the appropriate time.
When you find a company where this works well, they may be willing to repeat your mailing (with a different offer) on a yearly basis.
This referral idea really does require you have a trusting relationship with the complementary company as they will be relying on you to track the business you book from the mailing.
Referral Marketing Strategy #2: You Scratch My Back & I'll Scratch Yours
Thisreferral marketing strategy is simple but powerful. Your client sends you people that make a purchase and you give them coupons worth 20% off a specific product or service. For example, if someones buy brooklyn cyclones hat, you should give 'em coupons for the seton hall hat (for example).
Let's say you are a consultant and have an established relationship with a client for whom you are working on a project. The project is a day-long training event and you are charging $2,000. You tell your client that you will knock 20% off the price for every client they send you that makes a purchase.
What makes this system so compelling is that there is no limit to what they can save. If they send you 5 prospects that end up doing business with you, then their $2,000 training session is free (5 x 20% = 100%).
Would you trade a free service for five new clients? I would! This referral provides a strong incentive for the client to send you good referrals.
Make sure you keep careful records of who sends the referral and when the referred customer actually makes a purchase. If you are using ACT! as your customer contact software, there is already a standard field to input who referred the customer. This makes it easy to keep track of which clients have sent you referrals.
Another thing to keep in mind is that referred customers usually don't make immediate purchases so you have to take this lag time into account. Typically, this means you will need to cut "referral" checks to your client for a past service performed. In our $2,000 training example, the client would pay the $2,000 and then, as their referred clients made purchases, you would cut them 20% referral checks. This referral marketing strategy is a great way to help differentiate your business.
So there you have it! Pick the referral marketing strategy that most appeals to you and get to work integrating it into your own business. You'll be surprised at the results!
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