Customer Referral Program

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why is a well defined referral program so important - we can help design one that works for you!

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Customer Referral Program

  1. 1. Customer Referral Program
  2. 2. Proforma Copyright The customer referral program you will receive is for your use only or you can pass it on to clients. The customer referral program power point is not to be given directly or indirectly to other salespeople/owners or anyone else in the promotions industry unless they have purchased it through Proforma. The order form you signed states your agreement to this copyright protection. Running Title Area
  3. 3. Customer Referral Sales Opportunity Target 20 Companies/Buyers Meet with 10 Buyers in the next 6 months or sooner 7 Buyers say show me ideas Win 4 Buyers Average buyer has 10,000 customers 10% refer one customer or 1000 referrals, 30% of referrals close or 300 sales. Average sales is worth $20,000. Pay out per sale 1% or $200. Total new sales to you $60,000 $240,000 in new sales (4 Buyers x $60,000)
  4. 4. Why Referral Programs Work Where new business comes from: 43% Referrals 13% Direct Mail 13% Internet 12% Signage 12% Radio 10%Telephone 10% TV 10% Print 4% Ads Source: Marketing Best Practices Online Survey of Business Owners Running Title Area
  5. 5. Supporting Research According to Business Network International (BNI), the business and professional networking organization, BNI members reap approximately $1 billion a year in referral sales. That means a seat in a BNI group is worth, on average, $45,000 in sales annually. Not bad! Mark Grinblatt, UCLA Anderson School of Management, says that when people become serious about buying a car, they switch from paying attention to ads on television, magazines, newspapers and the Internet—and begin looking for referrals instead, asking for opinions from their colleagues and friends. John Jantsch, author of the book “ Referral Flood,” calls referrals “the most important business marketing secret in the world.” David Frey, author of the book “ The Small Business Marketing Bible ,” says the key to making referral systems run by themselves is to “institutionalize them into your business.” Joe Giard is listed in the “ Guinness Book of World Records” as a record-holder for selling the most automobiles for 12 consecutive years. How did he do it? According to Joe, it was through referrals.
  6. 6. As a general rule, promotional products of greater value generate more sales leads than products of lower value 176% Increase
  7. 7. Promotional Products’ Impact Brand/Company
  8. 8. Tennant Case Study Promo Piece Reward Card
  9. 11. Tennant Program Details Sales Force Promotes to Customers Customers go to website to submit referral (s) Lead passed on to sales rep through lead management system Lead turns to sale customer notified with letter and reward card Reward Budget 1% of sales 1099 issued for over $600
  10. 12. Tennant Program Results 400 Leads sold a year Average Sale $30,000 Sales Generated $12 million Investment: $120,000 ROI: 100: 1
  11. 13. Applications/Contacts Any Business that has 500 or more Customers Any Industry Sales Manager and or Marketing Manager
  12. 14. How to Prospect Go to website find out how many customers they have or guess Create a Benefit opening sentence: Would you be interested in seeing an idea that could generate $12 million in new sales( 160,000 customer, 1 % refer, 50% of these turn into sales at $15,000 each) that will cost you less than 1% of sales and give you an ROI of 100 : 1 or better? Refer to my prospect letter in section 5 of the sales playbook
  13. 15. Interview Questions How do your salespeople get new accounts How many come from referrals Do you believe in asking for referrals Do you think your customers would refer to you What is the value of an average customer to you per year
  14. 16. Interview Questions How many salespeople do you have How many referrals would you like them to get Total sales( # of Reps x # referrals x $ of average customer value per year =) Could you afford to spend 1% of sales to get a referral that sold? If I could show you a plan that would generate X$ in new sales at 1% investment. Would there be any reason why would could not get going on something like this?
  15. 17. Interview Questions Who else need to be involved in the decision making process When can we set up our next meeting to discuss my recommendations
  16. 18. Budget Elements Collateral Website Awards Administration 1099 Customer Data Base
  17. 19. Why Motivation Organizations need motivation more than ever. They need to motivate customers to opt-in to receive ongoing targeted marketing and other information, to buy, and to remain loyal. They need to inspire salespeople to sell, channel and vendor partners to work harder, and employees at all levels to deliver the promises made in marketing and sales communications. Managing these motivation processes across multiple audiences has become known as People Performance Management—an emerging business field that focuses on achieving financial success through a strategic approach to people throughout the organization.
  18. 20. Why Motivation People Performance Management provides the strategies and tools to help organizations maximize the commitment and engagement of customers, channel partners, vendors, and employees—even shareholders—in order to optimize sales, productivity, quality, and financial results.
  19. 21. People Performance Management includes Strategic planning to determine how to best engage and mobilize the targeted audience in line with organizational objectives, opportunities, or challenges. Incentive programs to engage and equip a target audience during a specified period. Recognition programs to reward loyalty and performance and to reinforce organizational values. Motivational events to inspire and engage and to align individual efforts with organizational goals. Multi-touch communication to convey the right messages to the right people, whether in face-to-face motivational meetings or events or through printed materials, online communications, or promotional products. Targeted training and education to equip people for success. Technology to deploy and manage all of these processes on an integrated basis and to measure the results.
  20. 22. Return on Investment Many Businesses Ignore There is a direct link between employee satisfaction and customer satisfaction, and between customer satisfaction and financial success, according to “Linking Organizational Characteristics to Employee Attitudes and Behavior,” a study by the Forum for People Performance Management and Measurement, Department of Integrated Marketing Communications at Medill School of Journalism, Northwestern University. The shareholder performance of organizations on Fortune magazine’s list of 100 best companies to work for outperformed the general S&P index by as much as 300 percent over a seven-year span according to the Great Place to Work Institute and the Russell Investment Group. Knowledgeable and attentive employees account for 80 percent of the reasons that consumers feel satisfied, according to a PNC Bank Corp. survey. Incentive programs can increase performance by up to 44 percent in teams and 25 percent in individuals, according to “Incentive, Motivation, & Workplace Performance,” a study by the International Society of Performance Improvement.
  21. 23. Return on Investment Many Businesses Ignore Fewer than one in four American workers is working at full potential; half of all workers do no more than directly asked; and 75 percent of employees say they could be more effective in their jobs, according to research by the Public Agenda Forum. 70 percent of unhappy customers abandon vendors because of poor service, according to the Forum Corp. A 5 percent increase in customer retention can increase lifetime profits from a customer by 75 percent, according to The Loyalty Effect (Harvard Business School Press), by Frederick Reichheld. Some 65 percent of executives believe that incentive programs using travel and merchandise are more memorable than those using cash; 60 percent of executives believe that sources of merchandise and travel are more helpful in creating an incentive program than are sources of cash, and 57 percent of executives believe that bonus payments are often regarded by employees as something they are due, according to the most recent “Survey of Motivation and Incentive Applications” by the Incentive Federation
  22. 24. Most frequently used types of motivation programs <ul><li>Most frequently used types of motivation programs: </li></ul><ul><li>Increase sales in units or volume </li></ul><ul><ul><ul><li>Customer service/telemarketers </li></ul></ul></ul><ul><ul><ul><li>Sales representatives </li></ul></ul></ul><ul><ul><ul><li>Distributors (dealer loader) </li></ul></ul></ul><ul><ul><ul><li>End users </li></ul></ul></ul><ul><li>Roll out new products or stimulate sales in a particular line </li></ul><ul><ul><ul><li>Entire channel (above) </li></ul></ul></ul><ul><li>Improve attendance </li></ul><ul><ul><ul><li>All employees </li></ul></ul></ul><ul><li>Reduce turnover/improve length of service </li></ul><ul><ul><ul><li>All employees </li></ul></ul></ul><ul><li>Improve safety </li></ul><ul><ul><ul><li>Office </li></ul></ul></ul><ul><ul><ul><li>Plant/warehouse </li></ul></ul></ul><ul><ul><ul><li>Drive </li></ul></ul></ul><ul><li>Induce referrals/leads </li></ul><ul><ul><ul><li>Customer </li></ul></ul></ul><ul><ul><ul><li>Employee </li></ul></ul></ul><ul><li>Encourage suggestions </li></ul><ul><ul><ul><li>All employees, all departments </li></ul></ul></ul><ul><li>Sales support </li></ul><ul><ul><ul><li>Increase display usage </li></ul></ul></ul><ul><ul><ul><li>Increase traffic </li></ul></ul></ul><ul><ul><ul><li>Improve product knowledge </li></ul></ul></ul>
  23. 25. Compensation vs. Recognition Ask most consumers, employees, or companies what type of award they prefer, and the majority will usually answer cash. But because awards play a far more subtle role than simple motivation, the answer to this question does little to help the planner. Recipients say they prefer cash because of the trust issue: They know the value of cash and like the option of using it for whatever they desire. Organizations often prefer cash, because it’s so easy; it’s often little more than an extra entry on the pay check or a deduction from an invoice in the case of customer incentives. Organizations that use non-cash awards such as branded merchandise, gift cards, group travel, etc., do so because they want to make a special point of adding value or providing recognition in a way that clearly distinguishes the program from compensation or pricing issues.
  24. 26. Compensation vs. Recognition Cash is the currency of compensation and pricing. Use cash and it becomes part of an individual’s compensation package or a customer’s pricing program. Invariably, if you offer a cash incentive to any audience, internal or external, it becomes a benchmark against which future compensation and pricing issues get measured, leading to a condition known as “program addiction.” Because cash quickly gets mingled with other compensation or expenses (in the case of customer cash expenses), it has very little residual or marketing value. Nothing tangible remains to remind participants of the program once the cash is consumed. Non-cash awards, on the other hand – especially those targeting internal audiences – have a far greater chance of breaking through the promotional clutter than a straight cash award or discount. Employees, in particular, often feel uncomfortable talking about their receipt of a cash award, thereby reducing the potential “buzz” factor desired to promote organizational values. The goal of any incentive, reward, and recognition program usually involves creating buzz, promoting values, creating excitement, and fun, etc., whether in an external or internal promotional program that may or may not be repeated the following year or promotional period. Offering non-cash awards supports this goal by increasing the communication and promotional components while reducing the chances that people will grow to expect the award in subsequent years
  25. 27. Incentive Award Options Travel (Group or Individual) Miles (All A Carte) Debit Card( Visa/Master/Amex) Premium Awards Merchandise Catalogs Imprinted Awards Recognition Awards International Run the Warehouse Prize Insurance Cash( Rebate, Free Goods, Discounts, Check, Stock, Vacation Pay)
  26. 28. Cash With time at a premium, many managers prefer cash for the pure simplicity of it. Simply set a goal and tell people: Achieve it and you win! Then, cut the check, include it in the next payroll, or deduct it from the customer’s invoice. Sounds simple, but does this approach have anything to do with rewards and recognition strategies? Do-this, get-that programs essentially add up to legal and ethical bribes, and offering cash in this manner, while perfectly ethical, gets the award lost in cash flow without any marketing, communication, or residual value except the expectation, in the future, that more cash will come. A good question to ask when you are thinking about using cash: Is this part of a program your company wants to offer on an ongoing basis, as part of its compensation or pricing program? Pros: Simplicity Recipients understand it. Cons: No trophy value Often viewed as compensation or pricing Can foster program addiction.
  27. 29. Cash vs. Non-Cash Awards
  28. 30. Goodyear Cash Study <ul><li>Time period: 6 months </li></ul><ul><li>Audience: 900 stores </li></ul><ul><li>2 groups </li></ul><ul><ul><li>Cash (Group A) </li></ul></ul><ul><ul><li>Non-cash (Group B) </li></ul></ul><ul><li>Efforts to ensure fairness </li></ul><ul><ul><li>Stores ranked numerically by sales from best to worst </li></ul></ul><ul><ul><li>Divided equally (1 st in group A, 2 nd in group B, etc.) </li></ul></ul><ul><ul><ul><li>Method eliminated regionality issues and other factors </li></ul></ul></ul><ul><li>Rules </li></ul><ul><ul><li>For every 12 Cooper Aquatred ® tires sold: </li></ul></ul><ul><ul><ul><li>Group A received $X. </li></ul></ul></ul><ul><ul><ul><li>Group B received merchandise or travel awards </li></ul></ul></ul><ul><ul><ul><ul><li>Non-cash awards were comparable in price to cash awards </li></ul></ul></ul></ul>
  29. 31. Goodyear Cash Study (cont) <ul><li>Results </li></ul><ul><ul><li>Non-cash outperformed cash by 46% </li></ul></ul><ul><ul><li>Non-cash: 37% increase in product mix </li></ul></ul><ul><ul><li>ROI </li></ul></ul><ul><ul><ul><li>Cash: -20% </li></ul></ul></ul><ul><ul><ul><ul><li>Every $1 invested = an $0.80 return </li></ul></ul></ul></ul><ul><ul><ul><li>Non-cash: +31% </li></ul></ul></ul><ul><ul><ul><ul><li>Every $1 invested = a $1.31 return </li></ul></ul></ul></ul>
  30. 32. Why Travel Awards According to a survey commissioned by CMI: 58% say travel is more effective in delivering results than cash. 85% of American workers said they were motivated by vacation travel incentives A 2003 Incentive Survey of Buying Practices revealed that travel and merchandise awards are remembered longer than cash payments. Specifically, 69% strongly agree with this statement A USA Today survey stated that “93% preferred travel over other incentives.” A 2003 Wirthlin Worldwide Research survey asked “Suppose your employer wanted to reward your work performance. What would you find most rewarding?” 88% - indicated a trip they plan and take with a companion to the destination of their choice
  31. 33. Vacation Packages Vacation America is the incentive industry’s premier individual travel program, offering over 1,600 destinations, guaranteed reservations and personal travel planners. With vacations ranging from $200 to $2,000, Vacation America has a travel award for everyone.  HMI developed Vacation America to provide the utmost in flexibility and convenience to your award winners. Your guests can stay at the Marriott®, Hyatt®, Fairmont®, Ritz-Carlton® or travel onboard Royal Caribbean® Cruise Lines, and fly American Airlines® or other leading airline. Vacations include: A Minimum of 3 Day/2 Nights accommodations Breakfast daily Activity discounts, A gift, compliments of your company, A $100 hotel voucher for add on or future travel
  32. 34. Next Steps

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