If you’re like most auto repair shops, you probably already have a new customer referral program in place.
Most business owners who have a referral program or are thinking about implementing a referral program worry about the profitability of the program and the idea of giving away dollars to “buy” customers. Some believe it may result in attracting customers who are just looking for a discount and will become the dreaded one-and-done customer.
Yes. Those are all valid points and have happened to businesses who have not been able to successfully use a customer referral program.
There are questions you must ask yourself to evaluate the profitability of your referral program. And there are unique ways to offer more than just a monetary discount (read on to learn how to create community goodwill with your referral program).
In the Harvard Business Review article, Why Customer Referrals Can Drive Stunning Profits, the authors encourage businesses to evaluate and compare the profitability between referred and non-referred customers. Some questions you must ask yourself as outlined in the article include:
“What kinds of customers are most likely to bring in highly lucrative referrals?”
“Once the high-ROI referrers have been identified, how can companies market selectively to them?”
“What referral reward strikes the optimal balance between the acquisition cost and the subsequent value of a customer?”
As with any marketing strategy, it’s always a good idea to conduct A/B testing to help answer these questions and evaluate the results.
But I Don’ t Want to Give Away Too Many Discounts to “Buy” Customer Referrals
And you don’t have to! Instead, create goodwill within your community by donating to charity.
You can then set up a Referral Program where you donate dollars to charity on behalf of the referring customer’s name (and you can even set up matching donations). The new customer can also choose to donate their dollar discount or use it at their first visit.
Thank you messages are also automatically triggered and sent to the referring customer as a thanks for the referral and the donation.
But I Want to Avoid Attracting the One-and-Done Customer
We can help you with that. With our eWardMe Auto Shop Rewards Program, we have been able to help our clients reduce their customer attrition rate. eWardMe clients who properly deploy the Rewards Program on average see their one-and-done customers drop to 15% to 20%.