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From JA NY: Using Referrals to Get Clients through the Doors
Rather than paying up front for marketing that might not show results, jewelers should use referral systems that get clients into the store at a low cost.
New York--Finding the right marketing plan can be difficult for jewelers, many of which will put a substantial budget toward trying to find the right mix of things without really even knowing if it’s working.
At an education session held Sunday afternoon at the JA New York Spring show, Ascend Marketing Inc. President Jim Ackerman suggested an option for retailers that, while not necessarily new or revolutionary, brings people in the door for less than what most advertising costs: referrals.
Self-generated leads can provide a strong marketing method for retailers to drive new and existing customers through the door at little cost up, Ackerman said. And since people tend to associate with similarly situated individuals, referrals can bring in “clones,” so to speak, of top existing customers.
According to Ackerman, referral selling offers a number of key advantages: no real up-front cost of acquisition, an easier and faster close, a higher unit of sale in general, less price sensitivity and greater long-term loyalty. Referred customers also are more likely to tell others about the store.
Asking for referrals, however, must be done correctly and depends a lot on attitude, Ackerman said.
Rather than directly asking the customer to make a referral to help the business, it’s important to word it in such a way that makes it “a matter of you serving the customer” and doing what’s in their interest rather than the other way around.
There are two kinds of referral systems, pro-active and passive, Ackerman said.
Passive referrals provide an incentive for when a customer sends a referral but can take time because then the store has to wait for them.
According to Ackerman, an example of a successful passive referral program would start with sending a letter to a store’s existing customer base introducing the system and how it works. Included with that would be a certificate that has a space for them to write their names. That way, when a new customer comes in the store will know who referred them.
Once a referral comes in, the store should send the referring customer a letter giving them their reward as well as additional certificates to encourage more referrals.
Rewards can be either in-store or external, such as a gift certificate to a local restaurant.
A pro-active referral, meanwhile, rewards customers offering referral contact information on the spot. This provides retailers with names
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and information right away but means they have to do some relationship building.
Ackerman said he recommends jewelers use a combination of the two within their stores, and said there are seven key characteristics to making referral programs successful.
They are:
--Offering incentives for the referring customer;
--Offering incentives for the referred customers;
--Creating the necessary support and promotional materials;
--Creating scripts for salespeople and staff;
--Offering training for salespeople and staff;
--Having tracking systems to reward customers for referrals; and
--Having a tracking system to make sure the process is working.
Ackerman said he recommends jewelers use a combination of the two within their stores, and said there are seven key characteristics to making referral programs successful.
They are:
--Offering incentives for the referring customer;
--Offering incentives for the referred customers;
--Creating the necessary support and promotional materials;
--Creating scripts for salespeople and staff;
--Offering training for salespeople and staff;
--Having tracking systems to reward customers for referrals; and
--Having a tracking system to make sure the process is working.
Another idea to create self-generating leads for the store is a guest/host joint venture program, which aligns the store with non-competitive but complementary businesses in the area. One good example are those also in the bridal/wedding planning industry.
In this partnership, the retailer would endorse the joint venture to its list of customers. The joint venture partner would agree to give the jeweler’s customers a better-than-normal deal as well as cut the jeweler in for a piece of the profits.
That joint venture also can reciprocate by endorsing the jewelry store to its base of customers.
It’s important that the jeweler go to a business with a clear idea of what the partnership terms will include, Ackerman said, and negotiate the terms thoroughly, including who will pay for the promotional material costs as well as when and how commissions are paid. It’s also extremely important for the jeweler to be true to all terms of the partnership.
Finding businesses that might agree to a guest/host joint venture and setting up the partnership will take some time, Ackerman said, but that shouldn’t stop retailers from trying it.
“Why should you? Because your competitors won’t.”
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