Build Your Retail Business by Rewarding Customers for Referrals

Getting existing clients to send new clients to you is a great (but tricky) way to grow your business. The problem isn’t credibility; after all, most people will take the word of a friend over traditional marketing methods. The issue is getting them to make a referral in the first place.

Truthfully, most referral systems don’t work. You could offer the most attractive bonus in the world, but most people are too busy with their own lives to market your business, regardless of the payback. And some feel uncomfortable receiving an incentive for referrals.

But a reward system? That’s a whole different game.

An incentive is a payback for assistance promised upfront; a reward is a simple thank-you. Are we splitting hairs? No. People generally don’t want to be compromised or feel they are joining a program—but they do love to be acknowledged for their help. If you offer a customer a complicated incentive scheme to encourage them to send business your way, you will probably get no response. But send a thank-you each time they give you a referral and you will find that what gets rewarded gets repeated.

When customers purchase from you, ask what or who prompted them to shop with you today. Some customers will be from your advertising and marketing efforts, but others will be there for the first time because a good customer has recommended your store.

Make sure the staff asks for that name. Send the referrer a thank-you letter—their details should be in your database—along with a reward to spend either with you or elsewhere. It will be a wonderful surprise! Of course they will tell other people about the reward (more referrals for you) and how wonderful you are (more referrals for you, more vouchers for them); and if you gave them a voucher, they will probably spend more than the voucher is worth (more sales for you).

It boils down to training: If you send your customers a voucher each time they send you a customer, they will tell more people how good you are and get more rewards. (Why do you think the dolphins at SeaWorld get a fish for each trick? Humans are not so different!)

Make sure your employees play their parts by gathering the information. Challenge them to a little game based on who can collect the most referrers’ names each month. Remind them of the thanks they’ll get when someone comes in to use a voucher.

Why not try it? You might get a pleasant surprise!