Turning Your Customers (and Non-
Sales Employees) Into a Sales Force
Turning Your Customers (and Non-Sales Employees) into a Sales Force
In a day and age when acquiring a customer is getting more and more difficult
due to increased competition and slashed sales budgets, customer referral
programs can be utilized to generate significant sales growth in a very practical
and effective manner.
Word-of-mouth referrals have been looked at over the years as a key means by
which to acquire new customers. The activity of promoting a given product or
service to a friend or family member has a significant impact on that person’s
likelihood of purchasing said product or service. Inversely, and logically,
detraction has the opposite impact, leading to a loss of potential new customers.
A recent study examined the effect of customers who advocate or speak out
against companies in the wireless GSM sector in the United States. The findings –
customers who promote their wireless company attract a half new customer
each on average, and, generate $1700 for the company. Those who speak
against their provider cause the company to lose 1.3 potential new customers on
average, and generate a net loss of $300.
Clearly, referrals are an excellent means for generating new business . That said,
companies need to proactively push their customers to generate these referrals,
but rarely do. Few have successfully tapped into this ever-important lead
A new and ever-burgeoning means of doing this is through the use of customer
referral programs. These programs can be simple or rather complex, rewarding
customers with prizes, products, cash, etc., for each referral / lead that turns into
a sale. Some examples from different sectors include:
Bank of America – Rewards both the referrer and referred with up to $50 in
cash for the referred opening a new checking account .
DIRECTV – Rewards both the referrer and referred with a $50 discount on
their next bills for the referred subscribing to satellite television services.
Vonage – Rewards both the referred and referred with two months free
Vonage services if the referred subscribes to their fixed line service.
A variation of this program involves opening up the referral program to the
company’s own employees, turning all non-sales employees into lead generators.
One company that excels at this is PNC Bank. Through their “Chairman’s
Challenge” program, the company has brought in over $440 million in new
demand deposits and generated $1 billion in deposit and loans balances. The
program rewards employees with points for every account that is opened
through a referral they submit, then, the points accumulate and can be turned
into numerous different prizes .
Companies, particularly those in the service industry, stand to reap significant
benefits from setting up a referral program of their own. Some critical principles
that need to be adhered to when doing so:
Simplicity – The program should be easy to understand, easy to use, and easy
to process, from both the customer and employee perspective. Over time the
program can evolve but should start with a focus on the referral of one product
or service, with one prize associated with said referral.
Financial Feasibility – The rewards provided to the referrer and referred
should be financially in line with the profits to be generated from the acquisition.
This may be secured through a requirement of some minimal commitment from
the new customer (i.e. minimum 6 month contract). Otherwise, in the lack of a
contract, the reward can be given out once a certain time requirement has been
met by the customer.
Strategically Sound – The business activity being promoted should be among
the company’s strategies, and, should not reward an activity which is likely going
to happen anyway. For example, a bank could consider rewarding customers
who refer others and set up online banking with their new account. By doing so,
the bank would ensure a lower rate of churn (as online banking has a significant
positive effect on retention), and would promote an activity they may have a
hard time convincing customers of doing.
Cyclical – Such programs are more effective when they have time periods
attached to them, a specific start and end date – thus driving customers and/or
employees to take action and make referrals. Setting the program up to be
cyclical additionally allows the company to make alterations to the program over
time aimed at enhancing its attractiveness.
Certainly, these programs make sense, and will likely evolve and multiply over
time across many sectors and countries. Through rewarding its employees,
customers, and new customers, it’s the company itself that benefits the most in
About Forte Consultancy Group
Forte Consultancy Group delivers fact-based solutions, balancing short and long term
impact as well as benefits for stakeholders. Forte Consultancy Group provides a variety
of service offerings for numerous sectors, approached in three general phases -
intelligence, design, and implementation.
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