What is referral marketing?

Richard Denny explains why franchise businesses that treat their clients as fans, not customers, will be the ones to thrive.

Referral marketing is a very systematic, structured, strategic process that takes word-of-mouth to its highest level. It develops the best presentation and reasons to deal with a business and to refer it. It furthers relationships with customers and contacts; furthermore it encourages them to think and talk more about you, your company, your products and services. It also concentrates the mind on the benefits and value they provide for them and also to people they know. Referral marketing goes from the spontaneous word-of-mouth situation, to a very proactive, predictable and controlled solution where your customers will be motivated to provide you with more referrals.

Normal word of mouth: A business, can be any type or size, services a customer well with a one-off or repeat product or service. The customer has had an excellent buying experience, leaves the business premises, or website, and the business owner never contacts that customer again, except to invoice, and they ‘hope’ the customer will come back again, plus refer them to their own connections.

Referral Marketing

As above; a business services a customer well with a one-off or repeat product or service. The customer has had an excellent buying experience and if no customer details are obtained via the transaction, they are requested and permission gained from the customer for the purpose of providing that customer with further benefits, value, vouchers, privileged offers etc. The customer’s contact details now go onto a database and that information is used on a confidential, intelligence, professional proactive basis to develop and opted-in long-term relationship and this is the key factor. A continuous communication programme can now be conducted with the customer via email, social media, hospitality events which can also include follow up letters, very important and successful, newsletters, surveys, special offers and a loyalty scheme etc., all of this must be managed in a way that does not become an overkill or a nuisance.

For businesses who work on a seasonal basis, i.e. travel agents, florists, hotels, hamper suppliers, etc., can make proactive special offers to customers at celebratory periods. Businesses who are part of joint venture groups can offer even more benefits and value to customers by offering the joint venture partners offers and endorsing them to their own customers. A referral marketing run business continuously reminds customers that they appreciate them, and customers are also reminded of the good experience that they have had. In today’s world where advertising is proving to be less effective and more costly, due to the impact of the internet, all progressive businesses are now undertaking the development of the referral marketing strategy and opportunity. I personally believe that this can be outstandingly effective but equally outstandingly offensive, particularly where some companies are still attempting to obtain a referral by a bribe in the form of an incentive; referral marketing has gone beyond this initial strategy. Referral marketing need not be an expensive solution to winning new business, but is a specifically thought out strategy to be implemented by each individual business, it must not be a ‘one size that fits all’.