I’ve become very aware of good referral systems after attending seminars about the topic at SMBNation. I’ve come across what I believe is a really poorly executed one.
As I have mentioned before, I am a member of a DVD library where DVD’s are sent to you on a regular basis in the mail. I feel it has a lot of benefits and is relatively cheap. Every now and again they send me these “free tickets” with the message:
Give these tickets out to your friends so they can enjoy up to 15 DVDs of their choice from our extensive movie catalogue.
What’s the problem with this you may ask, well my answer is, what’s in it for me? I don’t receive any discount, bonus or recognition for providing this offer to my friends. So the company is asking me to their marketing for them without any tangible benefit for myself.
Am I likely to oblige? I may if someone asked me specifically but I’m not going to be ACTIVELY promoting this product since I receive no benefit. It wouldn’t take much on their behalf to maybe offer me some sort of discount or prize from bringing on board new members. I don’t know if it is just me but honestly, I think most other people would feel the same.
It illustrates that even big companies get their marketing and referral system wrong. Think of all the money they must be wasting on attempt to generate new business and by leaving a simply reward off they are failing to make all the conversions they can. If you are developing a referral system, remember people must have a REASON to refer you and then they should RECEIVE some sort of personal reward. It doesn’t make sense to reward the whole business when only one individual inside a business has provided a referral does it? Why would they continue to refer you? You need to make the reward personal and memorable so it conditions their response to refer you again.
You can drive more business via referrals but to succeed, like everything else, you need to develop a system. You need to test and refine that system constantly if you ever hope for it to provide you business. If you simply hope that people will refer you to others then you chances are very slim indeed. You need to encourage people to ACTIVELY refer you, otherwise any offer is simply wasted.