If we were to poll 100 security dealers about whether their business accepts referrals, all 100 would raise their hand with a big yes. Then, if we were to ask those same 100 companies how many have a formal referral program, or how many are maximizing referrals, just about all of those hands would go down.
Referrals represent the best prospects, because they come from a trusted source and are easier to close — and usually spend significantly more money. By formalizing your referral program you will start seeing an immediate impact on your qualified inbound leads.
According to Nielsen, 92 percent of consumers trust referrals from people they know and three out of four consumers are more likely to buy a new product when learning about it from friends or family. With numbers so staggering, why doesn’t every single security company deploy a referral program of their own?
Think a referral program is just for your customers? Think again. To maximize its effectiveness it is important to leverage your employees plus customers to yield even higher rewards. When you look at your referral network, the external network is comprised of new and existing customers. Your internal employee network isn’t just comprised of salespeople; it also can include your technicians and even office staff. Whereas you may have considered incentivizing external sources for a referral, what about also incentivizing internal sources? For example, why not give $20 for each referral provided and $100 each time a deal is closed?
Think those numbers are too rich? We know that the cost to acquire a customer at any scale is considerably more than what you would spend on incentivizing your employees. According to the Wharton School of Business, a referral has a 16 percent higher lifetime value, so these incentives make perfect sense.
Your external referral program network, too, must be formal. Many companies offer two months of free monitoring for a referral, but that typically doesn’t entice customers to flood your company with referrals. Make your program juicy. When you go to a restaurant and look at the menu, you never see a picture of a skimpy burger — right? They show you a fat, juicy, dripping-with-deliciousness burger. That’s what you have to do for your referral program; not literally hand out burgers — make it enticing like one! What we see happy customers get excited about is $100, $150 or even $200 for a referral that closes. Often a customer not only will refer one customer, but sometimes up to three.
Don’t know where to start? We’ll walk you through a formal referral program by an SDM 100 security company that caught our eye. The program is called “Free Monitoring for Life!” If this particular security company receives a referral from one of its customers, they will give them $50 when the new customer signs up. If the customer refers a total of seven active monitoring clients, then the security company will give the original customer free monitoring for life. As long as there are seven or more referral customers who are actively paying for monitoring.
Now that you have an idea for a referral program, how does it get marketed? It should be marketed in every way possible. First, it has to be formal, so that means it can’t just be word-of-mouth. Take time to thoroughly think it out, write it down, and run it through a couple of staff members to make sure it makes perfect sense; that way when it’s presented to a new customer, it appears to be professional and official. Put it on your website and make it super easy to understand and get started. Create a print piece that can be used during the installation. What about cards or flyers that you can give to every one of your customers? To take it a step further, create some swag including hats and t-shirts that your customers will actually want to wear. Also, make sure you have meetings with your sales staff and technicians to talk about your referral program, best practices, and even role play.
The biggest takeaway is to do something about this — today. We challenge you to be different and try something new that is proven and won’t cost you an arm and a leg.