MySuccessCompany.com E-NEWSLETTER
September 2024
This Month’s Selling Principle:
Long Term Marketing, part 4 – Referral Programs
Is your referral program working? Should you even have one? And if so, what should it look like?
In part four of our series on developing a repeat and referral business, we’ll examine these questions, and discuss what other successful salespeople across the country, those who derive the majority of their income from repeat or referral clients, are currently doing. In every market we’re currently in, there are a few sales professionals who fit this bill. And some don’t even take new customers (fresh ups) anymore.
To find out if our referral program is working, all we have to do is figure out how many referrals we sold in the last 90 days and what percentage of those required us to invest in referral incentives. If the answer is two or three sold referrals a month and zero referral fees paid out, then the answer is fairly obvious. The validity of this test depends on how long we’ve been in the business, of course. But if we’ve been selling for five years or more, and these were our results, then it ain’t working (or we aren’t)!
So should we even have a referral program? Not if it’s the mindless $50 bird-dog fee administered in a haphazard fashion. I’d bet my next paycheck, if that’s our idea of a referral program, it’s not working very well for us right now. About half (and it IS roughly half) of the successful sales pros we’ve interviewed do NOT use any kind of formal or published referral program. They rely simply on their reputations for delivering excellent service to drive business their way. Some will pay for the occasional dinner for two, or concert tickets, etc. to those clients who either purchase several cars from them or have sent several referrals in the past. But for the most part, this half of the marketing world we visited with believe being skilled, concerned, and committed to delivering outstanding customer service is enough.
The other half employ various incentives to drive referral business to them. None, none that we’ve interviewed anyway, have had any success using the traditional (read “tired”) $50 bird-dog fee mentioned earlier.
Some will spring for a nice dinner for two for every referral sent to them. They usually set up an account with one or two of the nicest restaurants in town. Then they’ll simply ask the referring client to mention their name when making reservations, so the restaurant will know to bill the salesperson’s account. (One salesperson told us they had a customer use their name for more than one dinner, so now he calls the restaurant beforehand to “approve” each referral dinner.) Some have fancy certificates printed up that the restaurant approves ahead of time and agrees to honor. Some sales people include alcohol, some don’t. Some sales people include the gratuity, and some don’t. Some use a set dollar amount, like on the certificates, but most don’t.
A few sales people like to send referring clients tickets to a concert, or a play, or a sporting event. Quite a few of these maintain season tickets for this purpose (reminding us that they are tax deductions after all). Some will send them car accessories, or wine baskets, or other gifts like that.
Others still have success using cash but it has to be a cash amount of significance. A good rule of thumb as far as how much to allocate, whether for a dinner, concert tickets, cash incentives etc. is to take our average commission, divide it in half, and then add to it whatever the dealership has already set up for referral fees. So, as an example, if our average commission is $500, and the store will allocate $100 for referral fees, the amount we can offer as a referral incentive is $350. Now we can advertise our referral program like this;
“For every customer you refer to me that, 1) sets an appointment with me, 2) tells me you sent them, and 3) eventually buys from me…I’ll make your next monthly car payment! (up to $350, I’m industrious not wealthy!)” or like this;
“Would you like to hear of a way that you can drive this Sentra for free? Well, let me tell you about Michael Money! For every customer you refer to me that, 1) sets an appointment with me, 2) tells me you sent…”
One sales person came up with this idea. He calls it “Larry’s Lottery” and here’s how it works.
For every car he sells he puts $25 dollars in an escrow account. He even has an accountant client of his “audit” it. At the end of November, the accountant pulls three names from the “hat” to divide up the lottery pot. First place gets 60% of the lottery pot, second place gets 30%, and third place gets 10%. For every referral someone sends to him, they get one ticket in the lottery. For every referral that buys, they get two more tickets in the lottery. So even if they don’t end up buying from him, the referring customer gets a chance at winning some money. If they DO buy from him, the referring customer gets three chances at winning! Then to advertise it, he takes what he sold last year from December to November and projects out the total pot. Something like this;
“Remember “Larry’s Lottery” referral program! For every car I sell, I’ll put $25 dollars in an escrow account. For every referral you send me, you’ll get one ticket in the lottery. For every referral you send me that buys, you’ll get two more, or three total tickets in the lottery. The accounting firm of Jones & Jones will pull the names on December 1st. Last year’s lottery totaled $4,500 (180 vehicles sold @ $25 each). First place, which went to Mr. Client, was $2,700! Second place, which went to Ms. Customer, was $1,350! Third place, which went to Rick Refersalot, was $450. So don’t miss out! I love referrals and you will too!”
You think that might catch someone’s attention? I’m sure that all of us can come up with other ideas just as clever and just as effective. If not, we can use these ideas that have already been proven to be effective. One sales person told us that he alternates between incentives each quarter and uses his newsletter to publicize what he’s doing next.
But we must make a decision! Are we going to use an incentive for referrals or not. (Remember, roughly half of those we talked with choose not to use incentives). If we choose to employ a referral incentive, then we need to publicize it, and use it whenever or where ever we can to drive business our way.
Please let me know how it’s working for you, okay?
Until next time, be well, and do good work!
Michael D. Hargrove
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Objection of the Month: “The payments/price is too high.”
These are just a few of the most common strategies shared at the workshops we’ve conducted all across North America and attended by thousands of the top sales people in our field. Please keep in mind that nothing works all the time, and no one thing will work for everybody. Each of these strategies, of course, need to be tailored to the individual user, to the specific customer, and the particular situation. Also, this is by no means the definitive work on overcoming this particular objection and it’s not intended to be.
a. “How much too much?”
b. “Liz, the price properly reflects the safety, performance, and quality that you’ll be enjoying for the next four years of ownership. Let’s wrap this thing up so you and your family can start enjoying your new car. While they’re finishing up the rest of the agreement, let me get you all something cold to drink. Who wants to come and help me carry the drinks back?”
c. “Mitch, didn’t you say this car is for your wife? Sue, you understand why Mitch wants you to have the airbags and the anti-lock brakes, don’t you? Now Mitch, wouldn’t you agree that Sue’s safety is worth a few extra dollars a month? Let’s put this thing to rest so you both can put this shopping stuff behind you and start enjoying your new car. Should we register this in just Sue’s name or both names?”
d. “Bart, you originally said that your major concerns were reliability and economy, right? Isn’t it true that the money you’ll save in gas and upkeep over the next three years is more than worth the additional $300 in original investment now? Just OK your purchase right here and we’ll get them started on the rest of the agreement. Did you want to use my pen or yours?”
e. “Of course it is Rachel! Tell me though, other than price, is there any other reason why we can’t send you home in your new car today? No? Good! Now you said that you usually keep your cars for five years, did I hear you right? You also said that you’ll use it mostly for business and that you’ll carry clients in it a lot, right? Well, isn’t the prestige and extra influence this car will bring to your career worth a few extra cents a day it’ll cost over the next five years? Let’s wrap this thing up. Exactly how do you want it registered?”
f. “What’s easier for you, an extra $4000 up front or an extra $100 per month?”
g. “If you had $5000 deposited in a CD, what would you expect your rate of return to be? Heck, the state charges you ____% tax and what services do they really provide?”
h. “Let me ask you this, Ms. Customer, currently how many of your payments are too low? All payments are too high, right? You see, that’s simply the nature of payments. The fact is, three years from now when you’re ready to replace this vehicle, you’ll be trying real hard to keep your payments right around the one that today …seems a bit too high. Just like now, you’re trying to keep your payments right around the ones that three years ago, seemed a bit too high. That’s just the nature of payments. You love this car, and we both know you can afford it. Why don’t you just go ahead and get it?”
i. “If paying $XX more per month for the vehicle you love is too much, how do you justify continuing to pay $XXX per month for a vehicle you don’t even want anymore?”
Next month’s objection will be: “I’m just looking, not buying today.” We need YOUR input!!! Please forward your ideas on this one, or your suggestions on which objection to cover next, to [email protected].
“People of mediocre ability sometimes achieve outstanding success because they don’t know when to quit. Most men succeed because they are determined to.”
George Allen
On Success:
Picked Up In The Rain
One night, at 11:30 pm, an older African-American woman was standing on the side of a Alabama highway trying to endure a lashing rain storm. Her car had broken down and she desperately needed a ride.
Soaking wet, she decided to flag down the next car. A young white man stopped to help her – generally unheard of in those conflict-filled 1960s. The man took her to safety, helped her get assistance and put her into a taxi cab. She seemed to be in a big hurry! She wrote down his address, thanked him and drove away.
Seven days went by and a knock came on the man’s door. To his surprise, a giant combination console color TV and stereo record player were delivered to his home.
A special note was attached. The note read:
Dear Mr. James:
Thank you so much for assisting me on the highway the other night. The rain drenched not only my clothes but my spirits. Then you came along. Because of you, I was able to make it to my dying husband’s bedside just before he passed away. God bless you for helping me and
unselfishly serving others.
Sincerely,
Mrs. Nat King Cole.
“We are intended to be someone’s miracle. Live up to it!”
Michael Hargrove
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