BID® Daily Newsletter
Feb 11, 2010

BID® Daily Newsletter

Feb 11, 2010

DEFINING CUSTOMER REFERRALS


The dictionary defines referral as 'the act of a person recommended to someone or for something or mentioning.' Bankers are always trying to capture new customers and one of the best ways to do that is through a referral program. While your bank may already have an existing referral program, here are some tips worthy of consideration in order to make it more effective and generate new leads.
The key to any rock-solid customer referral program begins with training salespeople to ask if the customer feels comfortable giving a referral. Contrary to popular belief, there is no "best" time to ask for a referral (although the worst times are when a customer is angry, you have given them a bill, at the very beginning or the end of a meeting), so quit stalling. Teaching everyone at the bank to continually ask happy customers if they will refer others is a great way to begin. Remember that referrals begin with a satisfied customer experience, so watch for that and ask whenever you see a smile.
Another important component of a well-run customer referral program ensures clients are armed with the information they need to help sell. It is easy to ask someone if they will be a referral, but 5 minutes after walking out of the branch they usually forget. Enthusiastic customers may be given marketing materials, business cards, an email they can forward to others, or given an brochure about a promotion. Remember that the easier it is for customers to refer someone the better the results.
The third major component includes an ongoing process to raise awareness. Customers should know you are creating (or already have) a referral program that explains the value to their business. Make sure existing customers know you are seeking referrals and be sure to send a letter outlining the program to every new customer within a few days of their first purchase. To really supercharge this effort, have employees call customers with recent interaction individually during downtime to be sure the experience was a good one.
Still another item to consider incorporating is to offer some sort of incentive for the referral. People like to feel special, so including discounts, a small gift, lunch, points and a slew of other potential items can deliver results. Try testing different ideas to find the right mix and then occasionally rotate things to keep everything fresh. Customers love to collect points, incentives and coupons, so figure out what works for yours.
Any good program will also have a tracking mechanism and a feedback loop. It is hard to reward customers for results if there is no way to track them. Incorporating something as simple as a form, checklist or even more robust systems are all available. Just be sure whatever you use, at a minimum, identifies the source of the referral (customer, mailing, alliance, staff, etc.). Then, follow up with the referral source letting them know that their referral resulted in action (and maybe new business).
These are just some of the ways to help begin turning your customers into an extension of your own sales force. Some studies find as much as 90% of business at many companies ultimately comes from a referral source. We will cover more on that tomorrow as we delve deeper into word of mouth marketing and show that the results can be very powerful indeed.
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