Customer referrals are the way most shops grow their business. I love customer referrals. Shops love customer referrals. Customers love customer referrals. There are many reasons for this of course. Referrals come with a built in level of trust. Marketing money wasn’t spent to get a referral. It’s easy – no thought involved. Yet, most shops who tell me their customers love them, and that most business comes from referrals are not leveraging this awesomeness nearly enough! Just because you have referrals, doesn’t mean you should take it for granted, or not try to get more referrals. If you have a ton of referrals now, how many more could you get if you tried? Shops often have some sort of referral program, but in my opinion, many times the programs fall short of being truly effective. Recently I witnessed a program that rewarded customers with $10 for every referral they sent to the shop. Great. Will $10 get your attention these days? Is it enough money to get you to ask more questions about how it works? Enough money for you to perceive value as a customer? I would have to refer 10 customers to pay for an oil change and tire rotate.
When shops look at $10 they think “we’re giving away $10 to a customer”. When a customer looks at $10 they think “$10 for what? There’s probably a catch and I’ll never get it.” Both thoughts are misguided. If you want the program to be effective put a dollar value out there that knocks as customer over the head and gets enough of their attention for them to ask questions. $50 works. This gets their attention – even if they are skeptical. They’ll ask you how they can get $50 toward their next repair. Or “What do you mean I may never have to pay for automotive repair again?” (At $50 each referral, someone who works in a large company and is excited and outgoing about their great repair experience with you can easily give out enough referrals that they may not have to pay for many repairs out-of-pocket).
“But, Greg, you’re asking me to give away $50! No way! You’re crazy!”. Here’s the error you are making. That $50 is marketing money that is 100% effective. You could spend $500 on direct mail advertising to 1,000 customers and maybe get one customer to return. If you give me $50 for every customer I refer….I’m bringing you one customer for every $50. That means that for each $50 of marketing money spent you get an average RO back in return (usually $200 to $450 depending on the shop). Customer referral money is well spent – if customers are willing to find out how the program works and can easily see the WIIFM – What’s In It For Me. Consider how you can improve your referral program today!