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Customer Referrals Mean Success

The best way to get customers who are pre-conditioned and motivated to buy from you is by way of referral — getting your existing customers to refer their family, friends, neighbors and colleagues.

The bottom line is that people trust friends and family more than virtually any other information source on the planet and pay more attention to recommendations that come from friends than any other sources. Friends referring friends to your security company is so powerful that it is the only form of marketing that can actually stop people from doing research, and just purchase a product or service.

You have customers, they have friends, and their friends tend to act a lot like them. Current customers are a great resource to gain even more customers who may be interested in your security services.

5 Reasons to Have a Referral Program

1. They are predisposed to buy. According to survey conducted by Nielsen (a leading global information and measurement company), 92 percent of respondents trusted referrals from people they knew and people are four times more likely to buy when referred by a friend. In essence, people that have been told about your business by someone they know, like and trust are much more motivated to do business with you, making the sale and your life that much easier.

2. They have a higher retention rate. According to The Wharton School of Business, “the lifetime value of a new referral customer is 16 percent higher.” That means those customers that have been referred stick around longer. Realize that customers who stick around longer offer you more value, referral opportunities and profits; in fact, these referrals have a 20-percent higher average order value — meaning they buy more — each year.

3. It is Cheap. Having a referral program is a dirt-cheap way to attract customers who want to do business with you. It is much easier on the wallet to have a referral system in place than it is to get new customers through traditional marketing channels.

4. Happy customers are much more apt to refer. Texas Tech University (a public research university) found that 83 percent of consumers are willing to refer after a positive experience — yet only 29 percent actually do. That is a startling statistic. If you are making customers happy, then there is a strong opportunity (83 percent worth) to get them to refer other customers to you by having a formal referral system in place.

5. Referred customers are more likely to refer other customers. Referred customers are between 4 and 5 times more likely to refer additional new customers.

The Best Type of Referral Program

The best type of referral program is one that rewards those who refer your business. Giving incentives for referrals will encourage loyal customers to talk about your security company, what is has to offer and the wonderful service they experienced.

I like to offer all the folks that refer their family, friends, neighbors and colleagues a $50 gift card for each referral that turns into a sale. I also offer the referred person $50 off the security service they need. This has worked well for me, but if your average install is $200-$300, then offering a $50 gift card and $50 off the service would be too steep. Perhaps offer $10, $15 or $25. Offering less money should not change the outcome of your referral program. In fact, according to the American Marketing Association, “Offering a reward increases referral likelihood, but the size of the reward does not matter.”

How to Promote a Referral Program

There’s no time like the present to start your own referral program. Here are several examples of how you can let the world know about it:

  • Create a page on your website for referrals
  • Announce it on your social media sites
  • Blog it on your website
  • Send out an email to your client base
  • Announce it in your company newsletter
  • Include a referral notice in the footer of all company emails
  • Create a handout piece that your techs can give to clients featuring you referral program
  • Include a small note about your referral program on all company business cards
  • Insert a referral program flier inside your invoice envelopes

When you are out and about, look around and you will see many other businesses that have referral programs. Go online and Google “Refer a Friend” and take a quick glance at the search results. You will find that many big box companies offer Refer a Friend rewards, such as Chase Credit Card, Dish, all the big phone carriers like T-Mobile, AT&T, Sprint and Verizon; even ADT offers one. It is time you did too!

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