A recent research report on customer loyalty brings out some interesting points:
Eighty-two percent of Americans participating in customer loyalty programs have actively referred friends and family to their favorite loyalty programs, according to Parago’s 2004/2005 Customer Loyalty Research Report. The findings indicate that customers actively refer others to their favorite programs, especially high-income earners who tend to be more involved in loyalty and rewards programs.
So what does this mean to you? You want your customers to refer others to your business. The report highlights the reason for this:
With the cost of acquiring customers via traditional marking efforts continuing to increase, one can begin to imagine the dramatic effect referrals can have on a company’s bottom line.
Referrals are golden because people come to you with an established positive impression of your goods or services. Encourage your existing customers to refer others. The article continues with this advice:
The key to successful referrals is identifying the customers most likely to be advocates, then creating a focused referral program to track and reward their participation and subsequent impact.
You know your customers (well, at least you should) and can identify those that are already giving you comments and positive feedback. Invite these individuals to spread the good word about your company. Some may do it for free. Others may require a little compensation to motivate them. In either case, encouraging a system of referrals from your existing customer base can lead to magnificent growth and opportunities.