Passive word of mouth is always ineffective. Happy customers tell an average of 0.7 people if they have had a positive experience with you. Unhappy customers tell 11 to 20 other people.
Word-of-mouth advertising can be made to work, but it requires discipline and a programmed effort. Ask customers for referrals. Make it easy for them – give them brochures, flyers, samples, or whatever it takes to make your case. Then follow up.
Discounts for introductions come out of your advertising budget, so you need to work out how much an introduction to a prospect is worth before you can decide on the discount.
The rules to follow are:
Be specific in the type of introductions you want. In particular, make the sales volume and product specifications clear. There is no point in giving a discount for products on which your margins are already tight.
Have a sliding scale of discount. The more introductions you get the more you give.
Make it easy for people to give you introductions. Send them fax back forms or have a place on your website for them to tap in minimum details. A name and company should be enough for you to find the other details you need.
Follow up and let people know that their introduction paid off. People are usually interested in more than just the discount when they give introductions.
Have specific programmes such as “member gets member” and run it as a campaign for a set period of time. Then change the programme and the discounts. That keeps people interested.
Give the discount promptly, but not until the new introduction has bought and paid their bill.
Give an extra discount for introductions to loyal customers. Perhaps when the new customer has placed their third or fourth order you can give the extra discount.