100% referral growth
Im Sergey Patrikeev, mentor, entrepreneur, business owner and today I will be talking about growing your business through referrals and word of mouth.
I personally love marketing, referral growth is one of those alluding unicorns that a lot of businesses completely neglect. I hope you're gonna be excited about this as much as I am, so let’s get started.
Do you think it’s possible for a business to spend 0 on ads?
Now think about companies, Zappos or Tesla. Each company has zero marketing budget, in fact, Tesla disbanded it’s PR department completely in 2019.
Both companies focused all of their attention and budget on making the best product or service they can. Tesla cars had such a huge contrast with anything that was available on the market in almost every aspect, that it was hard not to talk about it or share it with others.
In fact, many people said that it was hard to get back to driving a regular gasoline car after driving Tesla.
Tesla also provided with 7 days no strings attached return policy. If you don’t like their car, you can just return it and get your money back.
Zappos is known for it’s exceptional customer service, free quick delivery of shoes and free return if you didn’t like it. They were one of the fastest growing companies in US in the online shopping market, all 100% organic.
In my business experience, having word of mouth is the cheapest channel of customer acquisition, they are the most loyal, they stay longer, and spend more.
At some point on one of my projects I calculated that 25% of new customers were coming from paid advertisements and we were spending $6-7k a month on ads.
About 20% were coming from organic search channels (which we spent around $3k a month on SEO) and the rest from word of mouth (free).
Word of mouth scales!
While SEO and Paid ads have a limit of audience or reach, which you share with your competition and you can only get to so many customers from it. Brilliant thing about word of mouth is that each happy customer turns into an influencer, a portable ad so to speak, the more happy customers you create, the wider the news spread.
Your job is to:
- Nurture and grow the lines of your champion customers.
- Provide them with the tools to more efficiently spread the word about your service/product
- Give them an incentive to keep doing it longer.
- Once in a while, do something special to notify them about their special status.
- Track the progress
- Fire bad customers
1. Nurture and grow the lines of your champion customers.
First you need to make your business stand out from the countless number of other similar services. You will know when you get your first champion customers, they will write reviews, send you warm thank you emails or calls.
Find out what were they happy with, so you could multiply that special sauce and grow the lines of your champions
2. Provide them with the tools to more efficiently spread the word about your service/product.
Imagine you got a champion customer. How are they going to tell others about you?
They could verbally talk about you with friends or they could post something on their facebook or social media. For that to work, you would need to have a website at the very least.
However you can go further than that.
In my business, we created a gifts over text feature. Each customer has a limited amount of gifts they can send to their friends. All they had to do to give their friend a $50 credit, is to type their friend's phone number and click send.
Their friend would get a text message that such an such was sending them a $50 credit as a gift in our service, and they would automatically get that credit during the signup process. Simple. About 30% of all the gifts sent converted into paying customers.
3. Give them an incentive to keep doing it longer.
You don’t have to give special incentives for spreading the word about your company to those who do it. However, you want to reward loyal customers with special rewards or loyalty discounts.
As mentioned above, we have given $50 discounts to their friends as a gift, and that is huge. Next time they hang out, their friend will surely do something nice to repay that gift, or we hope they would. Social currency is also a huge aspect, even if they never got monetary compensation for their work as a referrer.
4. Once in a while, do something special to remind them about their special status.
We organized a special party for VIP customers, gave them special VIP bags and other perks.
Yelp was known for having an Elite program. It was insanely successful. Elites would get invitations to special parties, free dining experience and special discounts.
Being an Elite was so cool, people would spend hours a day, exploring new places to write about, share pictures and share through their network for the entire year, to get that special status and a badge.
5. Track your progress.
You can’t assume that your champions are hard at work, you need to have special metrics in place to know how well your word of mouth program works.
In our case, we tracked customer signups that came directly or were referred to our website. As well as how many people used their gifts over text.
6. Fire bad customers
Fire customers who use your programs for personal gain or to cheat your system. Like with our gift program, it won’t allow you to send the gift to yourself and every new customer must have a unique phone and an email.
But some found a way to cheat and we had to tell them to stop.
Let’s summarize what we have learned so far.
- Nurture and grow the lines of your champion customers.
- Provide them with the tools to more efficiently spread the word about your service/product
- Give them an incentive to keep doing it longer.
- Once in a while, do something special to remind them about their special status.
- Track the progress
- Fire bad customers
Congratulations! Now you know the basics about how to grow your business through referrals.
