Recently I got an inquiry from the CEO of a rapidly growing education firm looking for help with a referral-based lead gen program. Below is an excerpt from my response that I thought might be useful to others.
By the way, publishing your answers to client/customer questions in your blog or FAQ section is fast becoming a best practice for savvy companies. Why?
- First: we tend to get the same questions from multiple people, so rather than rewriting the answer each time or searching your hard drive, just send the link to your blog/site where your answer already resides.
- Second, your answer will invariably include relevant keywords that can bolster your natural/organic page rankings on Google, et al.
Below is the content from my reply–the company’s identity has been omitted.
Basic Rule: While Referral and Loyalty Programs are Different, They Overlap in Important Ways Here is the difference: Referral programs are those that leverage existing or previous customers to generate new ones. Loyalty programs reinforce the referrer’s ties to the brand by providing additional benefits available to them as a reward for their loyalty.
Strategy 1: Utilize Rewards/Incentives that Reinforce Your Value Proposition We know that referrals are a sign of brand loyalty; your opportunity is to provide the referrer with special incentives and rewards that bring him or her closer to your brand over time.
Therefore rather than continually rewarding/incenting referrers with cash or other equivalents (i.e. the “Infinite Happy Meal Loop”), consider utilizing discounts on future courses and continuing education, additional/ongoing access to instructors and guest speakers and other similar branded assets, services or intellectual property. The benefits of this strategy are three-fold:
- The reward reinforces the value of the brand, which is what customers like about you in the first place, and what they want more of.
- Branded assets, services or intellectual property can be delivered at cost, thus creating a high perceived value at a relatively low out-of-pocket cost.
- Helps avoid the “Infinite Happy Meal loop,” in which the only differentiator is the toy, rather than the core product, and there is a constant challenge to up the ante by coming up with a new “toy.”
Strategy 2: Create a “Cumulative” Program to Stimulate Long-Term Participation Take advantage of untapped potential to generate referrals among those who have used your product or service longer than 24 months months prior.
To develop additional “hooks” that keep referrers engaged in the Referral Program beyond the 12-month period, consider evolving from a “year-to-year” model to a “cumulative” program that counts all referrals over the lifetime of the referrer.
For example, being part of a CEO’s Club, based on outstanding referral performance over the last five or ten years would carry a tremendous amount of prestige for a graduate that is so vested in your company.
This “cumulative” model creates awareness (and healthy competition) among all graduates, not just those who graduated less than 12 months prior.
Strategy 3: Leverage the Power of the Community One of your greatest assets is your customer base (tried but true cliche alert!). If you haven’t already done so, create and foster online (virtual) communities on MySpace and Facebook that provide a place for interaction and promotion.
This powerful community dynamic can be leveraged to benefit your Referral Program to:
Test program ideas.
Promote the program
Generate ideas from customers on how to stimulate referrals.
Provide customers with “viral marketing” tools to help them creatively and powerfully stimulate referrals.