Can your customer bring one more customer?

Word of mouth is the most potent form of marketing. Its conversion rate can be up to 10 times higher than any other channel.

There are varying levels of word of mouth, each with its own potential for leverage:

These are the main traits that can be combined for a customer involved in word of mouth:

1. Champion: Always mentions your company in any context.
2. Advocate: Mentions your company in specific conversations or for specific needs.
3. Fan: Likes your company and engages, but doesn’t push.
4. Benefactor: Directly benefits from involving others with your company.
5. Friend: Feels a social obligation towards your company.

Considering topics on a spectrum with different strengths is a useful approach. Although not strictly two-dimensional, adopting this perspective can deepen your understanding of common phrases like "word of mouth."

This article primarily focuses on the Benefactor trait and how to create mutually beneficial deals with customers.

Most companies lack a referral program.

Referral programs have gained the reputation of being associated with cheap products.

When people know they’re being promoted something through a referral, they become naturally skeptical.

Those being referred will ask themselves:

"Does this truly benefit me, or just them?"

Hence, we recognize the challenge of developing and branding the right referral program.

It’s a challenge.

Let’s dispense with any pretense.

There’s nothing inherently wrong with a referral program. There’s nothing inherently wrong with any channel.

In fact, capitalizing on untapped channels your competitors haven’t exploited is an advantage! Marketing through an undersaturated channel is much more likely to grab people’s attention.

Our equation has three components.

It has three parties that need to win (benefit):

Referral program success = [1] Target lead success + [2] Our benefactor customer success + [3] Our company success

For this equation to hold true, there’s one condition:

[1], [2], and [3] must each individually be > 0 (i.e., there must be a level of success for each of the parties).

Success doesn’t solely hinge on direct financial or numerical gains.

Consider these examples:

• Our benefactor recommended a fantastic product that our target lead liked. Their bond grew stronger.
• Our company collaborated with our benefactor. We fostered a working relationship and gained a deeper mutual understanding of how to assist each other.
• Our benefactor initiated a conversation between our company and the target lead. We weren’t the right fit, but we still offered advice to their company. They’ve become a friend.

Take some time to outline the different facets of success your referral program could encompass.

Referral programs aren’t just about acquiring more customers. They offer our company another avenue to explore both known and unknown growth opportunities.

Not every benefactor will manage to bring in one customer.

However, if the contract value is significant, you could consider offering them a financial incentive. Just ensure your offer to them is well-done: financial measures like rebates or discounts won’t always work or may not be appropriate.

Some benefactors will be financially motivated, while others might be driven by status, or by simply wanting to support you.

Each of these scenarios demands a distinct approach.

Consider crafting something personalized.

What additional service can we offer our benefactors as a token of gratitude?

Reflect on what they desire and require.

To motivate them to put in genuine effort, you need to make them care almost as much as you do.

Transparency is key. Keep them engaged and informed.

What's one more customer worth to you?