Word of mouth can be very effective but not always in the way you might hope. An unhappy customer is probably more likely to spread bad news than a happy one is to encourage people to come. However, word-of-mouth advertising can be made to work. With the right techniques, tools and incentives you can turn a happy customer into your number one salesperson.
You need to find a way to ask customers to refer your business to a friend. Make it easy for them – give them brochures, flyers, samples, or whatever it takes to make your case. Then follow up. Typically, business owners will give a customer a discount if they recommend their product to a friend. 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. However, it must feel worthwhile to the customer if they are going to go to the effort.
Here are some basic rules to follow or consider:
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. Have a very simple form 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.