Think about a lifetime of referrals

If you are putting a referral plan together, it’s important to look at the longer term rather than the initial cost to set one up. Here’s an example:

Say you decide to give a bottle of wine away to each client that refers someone on to you. To make it even sweeter, you decide to also give the new client a bottle as a reward for coming over to you from the competition. At $20 per bottle, that means you are up for $40 for each new client. Then something remarkable happens, a client refers you more and more new clients and suddenly you owe them six bottles at $120, not to mention the new clients’ reward of a bottle each, so $240 all up. You think you can’t afford that – or can you?

Just how much revenue will each of those six new customers bring in this year? And how much does it costs to find six more new customers in the first place? If a client stays with you for six years on average, that is a lot of new revenue generated.

Thinking about what a new customer costs you on the surface is dangerous. Find out how much it currently costs you to get a new client (with your current advertising etc) and work out how long a client stays with you on average. Once you have these metrics, you can make more informed decisions about what you can comfortably spend to generate more business. And don’t forget, with a referral system like that above, the referrer is also an ambassador of what you do, someone willing to spread the word on your behalf. Who could ask for more?

Serious about your success?