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Thread: Incentivizing customers to refer family and friends as new customers

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    Question Incentivizing customers to refer family and friends as new customers

    Hello. I recently began working for a retailer for a large wireless provider. My position is 100% commission. I would like to provide an incentive for customers that have purchased from me to refer family and friends back to me. I was thinking of a few ideas, but I wanted to bounce these off of this community since your probably a lot more experienced in this area than I am.

    The referral will be earned if my customer refers someone to me and the person they refer activates new service or upgrades their existing phone.

    • My initial thought was a gift card to my business. I was thinking $5 or $10. The gift card could be used to make purchases in the store, such as accessories, etc. Also, if they rack up enough referrals, they would have a collection of gift cards to use. I did bounce this idea off an associate and he thought it was a good idea because "...people like something tangible..." The downside to a gift card is that this doesn't require them to do business with me. They can use the gift card with anyone at the store. Also, a gift card to allow purchases of accessories, etc. from my store may not really be a big thing because most people would buy their accessories (phone case, chargers, etc.) when they purchase the phone.
    • Pay a portion of their phone bill. Maybe $5 or $10 per referral.
    • Instead of a gift card to my business, I could give a gift card to a local business. I'm in a small town and we do have a few chain businesses, but we also have a few "Mom & Pop" businesses. I was thinking of a local coffee shop. I know the owners and have a good relationship with them, but me giving gift cards to their business will be benefiting their business and not mine.


    With all of the above I was also thinking of limiting it to a certain period, such as ".... maximum of x gift cards per y days (30, 60, 90, 180, or something like that).

    I am open to your feedback.

    Thank you.

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    Welcome to the forum NJinVA. You can try any of your ideas and see if they work, but I generally don't think giving incentives to customers to sell your services to their family and friends is going to work well. Most people do not want to sell to their friends and family as it usually results in less friends and fewer time spent with family. Think about it. If one of your friends tried to sell you something whenever you saw him, how often would you still hang out with him?

    That doesn't mean you can't try, but I don't think financial incentives typically prove to be valuable enough to people to potentially risk their relationships with family and friends. If you do try, I'd suggest offering a lot more than $5 to $10. I don't see too many people selling for you at that price.

    The kind of incentive you're asking about could work for the carrier itself if they advertised the offer nationally. I'm thinking about DirectTV and how they used to offer $100 off your bill if you signed up a friend. They did that long enough that I assume it worked. I just don't see it working as a $10 offer from an individual salesperson.

    I would think the best way to earn money in your position is simply to get good at sales. The skills will also be useful to you throughout your business lifetime too.
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    Thank you Vangogh for the welcome.

    I am not asking my customers to become active sales people, selling on my behalf. I am just looking for referrals, such as they hear of someone looking for cell phones. "... I just moved to the area. Does anyone know where the best place is to purchase a cell phone?", "....My cell phone just died! I need a new phone!" Then they can jump in and say, "Well, I went to xyz and NJinVA was extremely helpful, here's his contact info..."

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    It might not seem like it, but you are asking people to sell for you once you add the incentives. You don't need to offer anyone money to get a recommendation. If you offer a good service, people will recommend you regardless of any added financial benefit to them. You're adding the incentive because you want more than just that recommendation.

    If you don't like a service or product enough to recommend it, $5 or $10 is not going to get you to recommend it to someone. You're looking for things you can do to get the person who wouldn't ordinarily recommend you to a friend to recommend you. That's asking people to sell your services for you.

    You have to put yourself in the position of a consumer. People generally aren't asking each other where to get a cell phone. Most people go into a nearby carrier and see what's there and probably get whatever phone is being given away with a contract that week. People who know exactly the kind of phone they want usually know where to get it.

    In my circle of family and friends, I'm one of the people others ask for help with tech questions. I've never once been asked where someone could buy a cell phone. It's not a question people really have, at least not enough to where additional incentives will make sense. I'm not trying to tell you can't try something, but lots of people before you have tried similar things and they rarely, if ever, work.
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    Okay. Thank you for your feedback.

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    I apologize if what I've said comes across rude in any way. I genuinely don't think incentives for referrals is a great idea. That said I'm sure we can come up with other ideas to help you.

    If I understood right, you're working for someone else in a commissions based sales job. Naturally you want to come up with ways to sell more because you'll make more money that way. I think there are two basic ways to do that. You can either reach more people or you can improve how many sales you make from the people you reach now. Ideally you'd find a way to do both, but I think being able to close more sales is the better avenue to pursue.

    There's a ton of information available about how to sell. From what color clothing you wear to specific words and phrases to use. Anyone can learn how to convince more people to buy from them. There's also an art to it. What sales technique will work best on this particular customer? When is the best time to try X? A lot of that comes down to experience. Pay close attention to what people respond to and develop a sense for how you'd answer questions like the ones I just asked.

    If you work in a physical retail store, you probably don't have much control over how many people walk in the door. You could always work more hours or try to work the busier shifts, but your reach is mostly out of your control.

    I think you'll end up making more just through learning and practicing sales techniques than the referral idea. Many of us, including myself, have tried that and while it seems like something that should work, it usually doesn't. People don't like to approach friends and famiy with this stuff other than recommendations they would give anyway.

    I hope that helps.
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    You didn't come across as rude. I'm sure that pretty much everyone here has more experience than me.

    Yes, I am working for a business in commission sales. It is a physical retail store. I just started working there in May and I just finished the training program after Independence Day, so I'm still new and still learning.
    Last edited by NJinVA; 07-28-2017 at 07:41 PM.

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    Oh good. Sometimes I think I may have said something in less than the best way and I figured I would check just in case.

    We all start with the exact same amount of experience…nothing. We were all new once and we're all always learning. There are a lot of popular books about sales techniques. Unfortunately, I've never ready any so I don't have a good recommendation for you. I'm sure other people here will have recommendations. We probably have a thread or two with them here somewhere already.

    If you start digging in to how to sell better, you'll probably come across the AIDA sales model.

    • Attention
    • Interest
    • Desire
    • Action


    If you search google for AIDA and sales, you'll find plenty, probably even some examples about how someone leads a customer through the process from the moment they start talking.
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    Thank you. I'll look into AIDA. I've been reading The Little Red Book of Selling

    BTW: I found this: 11 Simple Ways to Incentivize Customers to Refer Friends and Family

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    I wouldn't trust that article too much. As a general rule I wouldn't trust articles that are offered as a list of anything. List posts are thin on content and generally offer little besides the most generic device. They exist because they're quick and easy to write and because people click page titles with numbers in them.

    You're welcome to try giving customers incentives, but I don't think you'll see any significant results beyond what would happen from treating the customer well and providing a good service. That said, a lot of business is trying and seeing what works.
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