Generate 189 Referred Customers in 90 Days or Less

I was sitting in my office, meeting with a friend of mine, and we were chatting about referrals. He had just killed it with a promo where he got 189 referrals over a three-month period. The promo was very simple: Give us a referral and get entered for a chance to win a trip. The trip was a three-day, two-night stay in beautiful McCall, Idaho. The total value of the trip was about $700.

Now, the trip itself was very nice and would have been fun to win, but it was also a trip that many living in the area would likely have taken before. That said, I was a bit surprised by the response — 189 referrals is huge.

As we were hanging out in my office chatting, I challenged this offer. I said, “What if you gave away a trip to Disney World next time and extended the contest to six months instead of three? Think about it: If people are willing to send 189 referrals for a trip nearly any of them could take on their own fairly easily, how many referrals would you get for a five-night, six-day trip for a family of four to Disney World?” I then asked him what would happen if he gave away two trips. One trip could be won instantly for referring 10 households, and the other would be a raffle.

I know a family that doesn’t live too far from his practice that has saved for over three years to take their dream Disney World trip. Is it possible that this family would have moved mountains to get 10 referrals? Unfortunately, I find that most business owners and marketers are far too cheap when it comes to what they’re willing to give up to get more referrals. We all feel that referrals should simply happen, but just like other marketing, you must make an investment if you really want to be successful.

Related: No B.S. Guide to Maximum Referrals & Customer Retention

Building a referral campaign

Coming up with a referral strategy can be challenging. How much do you spend? What do you offer? Is it a gift for all referrals or is it a raffle? Much of that is determined by the economics of your business, but start with how much you are willing to spend to get a new customer from cold traffic.

If you’re willing to cheerfully give a marketing company $200 for a new customer, why wouldn’t you be willing to spend at least that amount on a referral? I could even make the argument that you should spend more on a referral, as its lifetime value, on average, is 14 percent greater than a customer from cold traffic. Referrals typically are better customers overall, and they also tend to refer other new business to you, increasing their own lifetime value. With all of these factors in your favor, it is easy to justify spending more on a referral than on a new customer who comes from cold traffic.

Here at The Newsletter Pro, we are in the beginning stages of our new referral program. However, below is the inside baseball on our previous program, the marketing that went behind it and our cost estimates. For this program, we gave away a three-day, two-night trip to Vegas, including airfare, lodgings and a VIP racing experience in a Lamborghini or Ferrari. Plus, I even hosted an after-party with drinks and networking. Now, unlike my friend from earlier, our promo was not a contest; anyone who sent us a referral who became a customer got the trip.

Related: You’re Guaranteed Tons of New Customers With This Killer Referral Program

Costs, details and promotion

It was an awesome trip. It cost in the neighborhood of $1,000 to $1,250 per referral, plus marketing expenses.

We ran the promo for about nine months since our product tends to have a longer sales cycle. We had everyone meet during the same three-day, two-night period so everyone could show up and hang out. We also added escalators to the trip. For example, if clients referred two people who became customers, they got to bring a friend and we had a limo take them to and from the airport. If people referred a third client, we gave them $1,000 in cash to test their luck at the tables.

Once we added in the marketing and special surprises, we easily spent more per new customer than we typically do, but as I stated earlier, a referred customer is a better customer. They’re worth more, and in turn, I’m willing to spend more to get them.

Related: The 5 Factors That Make Customer Referral Programs Fail

As for promoting this program, this was a featured insert in our newsletter each month. Customers got various emails and direct mail. We changed the signature lines on all of our emails company-wide. Our “Weekend Reading” emails had a banner or other mentions of the program, and of course, social media was used to promote and drive traffic. It was a full marketing campaign.

I will end this article with some additional inside baseball. A while back, I had a meeting with a mentor of mine who is the CEO of a $120-million-a-year company, and one of the items we talked about was marketing. Over the years, he and his team have found that referrals are the single best source of new business for them, outperforming all other customers generated from all other media.

Referrals are so good that my mentor’s team has modified its marketing strategy to focus on increasing referrals by five times the number of referrals the team gets each month. This company has spent millions and millions of dollars over the years on every type of media you can imagine, and with all of that, it has found that the best bang for the buck is referrals. To me, that speaks volumes.