Let me ask you: Would you be surprised to learn that there are many retailers, especially jewelers and gift shop owners, whose business is based in large part on referral selling? And with that, next let me ask you this: Do you have a referral program or system for your business? If the answer is no, my friend, you are potentially missing plenty of profit dollars! If you do have a program, you already know that it’s a lot like putting word-of-mouth advertising on steroids.
Attracting referrals is part of the D.I.A.M.O.N.D. Growth Strategy. We often hear that word- of-mouth is your best advertising, and I’ll agree with that – but only to a certain point. If you put that advertising strategy on steroids with a defined referral program, it will rock, and profits will soar. Let’s take a look at how you can build a program and reward those folks who refer a new buying customer to you.
Studies in retail and advertising have shown that in the U.S. it costs anywhere from $75 to $300 to bring a new customer through the door. Depending on your particular locale, you may fall at either end of that range, but that’s approximately what you’ll spend in marketing dollars. And notice I simply said, “bring a new customer through the door.” I mentioned nothing about them actually opening their wallet and buying from you when they do.
At this point, they’re a bit of a “cold” prospect because the only thing they may know about you is what you’ve told them through your own marketing. Or, they may know nothing at all and you are starting from scratch with this prospect.
Now imagine that you might be able to spend less and bring someone through the door who’s heard about you from a trusted source and walks in as a “warm” prospect who’s more likely to spend money with you. That’s exactly what a referred customer is, and the more of them you get, the more profitable you’ll be!
Rewarding for Referrals
How do you recognize the people who send you referrals? Maybe a big pat on the back? Do you call them personally to say thank you? Those might be nice, but they fall into the “oh my goodness – big whoop” category in my estimation. They deserve better – much better.
We need to be smarter and more effective in continuing to generate referrals, so let me share some ideas about how you might go about setting up a referral system or program that will do exactly what it’s supposed to do: boost your bottom line!
One of the easiest ways that I’ve discovered is using our Edge point-of-sale system to do the work for us, perhaps you use something different. With this system (and the one you have may have a similar if not identical feature), we can send the person who referred the buying client a gift certificate.
I’ll give you an example. If someone refers a new client who now spends $500 with me, I’ll send that person a gift certificate for $50 to spend in my store in any way they wish, and there is no time limit or expiration date. I believe this is the ultimate compliment and thank you – and the least I can do. If a referred new customer spends $1,000, I’ll send a $100 gift certificate.
This article is an excerpt from “Diamond” Bill Warren’s latest book, The Ultimate Jeweler’s Success Guide – 7 Strategies To Significantly Increase Revenue and Boost Profits!
