From JA NY: Using Referrals to Get Clients through the Doors

New York--Finding the right marketing plan can be difficult for jewelers, many of which will put a substantial budget toward trying to find the right mix of things without really even knowing if it’s working.

At an education session held Sunday afternoon at the JA New York Spring show, Ascend Marketing Inc. President Jim Ackerman suggested an option for retailers that, while not necessarily new or revolutionary, brings people in the door for less than what most advertising costs: referrals.

Self-generated leads can provide a strong marketing method for retailers to drive new and existing customers through the door at little cost up, Ackerman said. And since people tend to associate with similarly situated individuals, referrals can bring in “clones,” so to speak, of top existing customers.

According to Ackerman, referral selling offers a number of key advantages: no real up-front cost of acquisition, an easier and faster close, a higher unit of sale in general, less price sensitivity and greater long-term loyalty. Referred customers also are more likely to tell others about the store.

Asking for referrals, however, must be done correctly and depends a lot on attitude, Ackerman said.

Rather than directly asking the customer to make a referral to help the business, it’s important to word it in such a way that makes ­it “a matter of you serving the customer” and doing what’s in their interest rather than the other way around.

There are two kinds of referral systems, pro-active and passive, Ackerman said.

Passive referrals provide an incentive for when a customer sends a referral but can take time because then the store has to wait for them.

According to Ackerman, an example of a successful passive referral program would start with sending a letter to a store’s existing customer base introducing the system and how it works. Included with that would be a certificate that has a space for them to write their names. That way, when a new customer comes in the store will know who referred them.

Once a referral comes in, the store should send the referring customer a letter giving them their reward as well as additional certificates to encourage more referrals.

Rewards can be either in-store or external, such as a gift certificate to a local restaurant.

A pro-active referral, meanwhile, rewards customers offering referral contact information on the spot. This provides retailers with names