Marketing guru, Jay Abraham, coined the phrase “Ethical Bribe” many years ago. He was referring to when it’s totally appropriate in business to give a gift that incents and encourages a behavior wanted from a client or customer base—whether that be a sale, reference or something else. We know that people love freebies & crave recognition. Using incentives rewards the behavior that you want repeated. We’ve all been to a ball game where fans fight over free t-shirts being thrown into the crowd. By offering incentives to customers for referrals, you encourage the behavior you want repeated, you’re saying thank you and most important, you’re setting the stage for the next generation of referrals. Let me explain…
The obvious reason to provide incentives is to say thank you and to remind customers that you need continued referrals. But the not-so-obvious and much more important reason for providing incentives is that it sets and establishes a foundation for the next generation referral wave. In essence, you’re creating a culture within your customer base. Referrals buy more, they become customers faster, they stay customers longer, & perhaps most important, they refer more customers to you because that’s the way they were introduced to you. Incentives grease the wheel and make all this happen easier.
So, how much do you offer as your incentive? The answer is easy to determine if you‘re tracking your numbers correctly. One of the metrics that should be top of mind is the lifetime value of a customer (LTVC). Simply put, this is how much revenue the average customer generates over the lifetime of working with a business. When you know the total value of a customer, you can easily decide how much you can spend to get one.
Let’s use a generic example of a customer who spends $75 per month and remains a customer for 8 years on average. The LTVC of this customer is $7200 ($75 x 12 x 8). When you’re looking at your business from this angle, giving a modest incentive to generate a new customer makes way too much sense to ignore. Some businesses actually forfeit their entire 1st year of profit because they are most interested in the long-term value of the relationship. The question you have to answer is how much of that LTVC are you willing to invest?
Your incentives can be something as simple as a gift card, free service, a discount coupon or even free products. And depending on the business you’re in, don’t overlook the value of a handwritten thank you card which is so often lost in today’s digital world. And remember that you should also give a discount to the person referred to incent faster conversion rates. In other words, tell the customer that if they were referred, they will get a discount. They will ask how that works, you’ll explain, and bingo. Guess who else is referring now?!
What if you could automate your entire incentive offering? Being and remaining organized is vital in sales and in business development. So, anytime you can automate repeatable systems, you should. This makes you look super-together, organized, professional and you never have to worry about follow up. An automated incentive offering is just one of the tools in the ReferMe IQ™ Marketing System that helps you solve the biggest pain in business—getting customers. I welcome you to check it out further.
So don’t miss the importance of adding an incentive and loyalty program to your marketing machine. There are several reasons why people refer: they’ve had a great experience, it makes them look good, you’re giving them a compliment, and last, they want rewards. In short, the reason people refer is because it’s about them. The incentive and loyalty program is in perfect alignment with human nature and behavior so make sure it’s part of your marketing and referral machine. To your success and to smart marketing. Post author: Mike Rowan
Post author: Mike Rowan