Incentives for referrals?

This is a good thread and some good ideas in here as well. I am starting to get alot of referrals from coworkers and past customers as well and was pondering how, if at all, I should reward those giving the referrals.
 
I have been toying with the idea of approaching various businesses, such as hair salons in an attempt to team up with them by offering the following reward pass. Below is the basic idea. The passes would be printed on post card stock and a stack given to each involved business to display at their place of business. Let me know what you think of the idea.



CUSTOMER REWARDS PASS

This pass entitles you to $20 off your first car detailing when presented along with your paid receipts totaling at least $20 from Selective Salon. As a bonus, you will also receive a Twenty Dollar Gift Certificate good towards your next Selective Salon purchase. That’s a total savings of $40. Plus, you will receive a free pen, map and air freshener when you have your car professionally cleaned, polished and waxed. This offer is for first time customers and is valid anytime during calendar year 2007.
 
Hey Frank,



I really respect your expertise here on this site but im having trouble with this one....



What exactly does the salon gain from this coupon?



Does the customer have to get a detail from you in order to get 20 bucks off their next salon visit?



I dont think a Pen and a map are very good incentives for me to go to a certain company... I dont know, when i read it, i really wasnt jumping out of my chair to call you.



I think the idea is good it just needs some work and maybe some clarification.



Again, Frank, i really respect your expertise around here and in no way mean to disrespect your ideas. Just some constructive criticism.



Jim
 
dpsorg said:
My standard disclaimer: I'm not a pro detailer. I would guess that you have at least 3 different kinds of customer, and there might not be a single type of acknowledgment that would appeal to all three (or however many).



One type is the high-end car owner, the executive. He's driving a high 5 figure or more car and will be insulted by almost any amount of cash. He's giving you referrals because you're professional in your demeanor and results. He's doing his golf buddies a favor by referring you. In my opinion, that kind of guy gets no advanced "offers", he's likely not induced by such, maybe even offended. Instead, he gets the unasked for extra services at no charge as you deem him worthy, with an "I appreciate your referrals" when he picks the car up.



Another type is the female; usually a busy exec. or housewife with the SUV. IMO you can ask gently for referrals and use a gift cert. for a nice "luncheon" type of restaurant or a Starbucks card or the local bookstore. Sorry to stereotype, but they wouldn't likely even notice any free extra detailing services.



Third type is the younger guy, maybe a little stretched on his car payment, pretends he knows what's hip with detailing, but does truly appreciate it. Generally more flash than cash kinda guys. He's the guy you can be blunt with, humorous, "hey, bring me some business, buddy!" They're the ones that would go for future discounts on their cars, gas cards, MF towels and QD, etc.



There may be some other "types", you guys would know better, but each of them probably would respond best to different tactics. Sorry if it makes it more complicated, but I do think there are important differences. I used to sell cars (and other stuff) and to treat everyone as equal in what motivates them is a mistake.
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Very well put! I totally agree.



The point you made about it being offensive to give cash or just about any kind of reward to a wealthy executive was the first thing I thought about. I have a few wealthy customer's, and I can't imagine handing them some type of monetary reward for referring my service. Now, a nice thank you letter along with a nice thank you card would do perfect for this type of customer. As far as the other type of customer's, those ideas make perfect sense, and I can see them working out very well.
 
kleraudio said:
Hey Frank, I really respect your expertise here on this site but im having trouble with this one.... What exactly does the salon gain from this coupon? Does the customer have to get a detail from you in order to get 20 bucks off their next salon visit? I think the idea is good it just needs some work and maybe some clarification.

Again, Frank, i really respect your expertise around here and in no way mean to disrespect your ideas. Just some constructive criticism. Jim
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Jim,



Thanks for taking the time to share your thoughts. I guess I have been asking myself the same questions and that is why I have not gone forward with the idea.



The way I figure it, the business owner, in this case the salon owner gets a reassurance that their current customer has a $20 (paid for) incentive to return to their salon. And yes, the customer needs to have their car detailed in order to get the $20 off certificate to be used at their next visit to the salon.



Here's the way it works. A client of the salon calls me and tells me they got one of my customer rewards passes at the salon and would like to make an appointment to have their car detailed. I detail the car and then stop by the salon and purchase a $20 gift certificate, which I in turn mail out to my new customer.



The salon benefits by selling me a $20 gift certificate every time someone with one of the rewards passes gets their car detailed. From the viewpoint of the salon, all they have to do is make sure they distribute the rewards passes and then they will have me coming back in buying $20 gift certificates every time someone gets their car detailed.



The whole idea centers around teaming up with local businesses. What I have found over the years is that most small business owners have an appreciation for other small businesses. Most of the owners understand how difficult it can be at times in running their business, so most are usually very receptive when it comes to helping out other people in the same situation.



Any suggestions on how to improve upon this idea?
 
This actually sounds like a deal I have with a few restaurants in my area.

My location is in downtown Minneapolis and on the weekends/at night I get some clients that are going out for the night and want their vehicle done while they are enjoying themselves.



A few of the classy restaurants and valets have my brochures and information. If I get a client referred from one of them they get a gift certificate in return from that restaurant.



In this context it works very well for me.
 
Sorry Frank for the delay, I let this thread slip through the cracks somehow! Im slipping up!



Anyways, thanks for elaborating on that idea. After you clarified it, it actually seems like a VERY good idea. I will have to think it over tomorrow as I am very tired right now, but I think that is a great idea, now I see how the salon benefits.



See, before I didnt know you were actually going into the salon and buying $20 gift cards. I just thought that the salon gives them $20 off if they get a detail through you. Which as you can understand made no sense.



As it stands, it seems like a VERY good idea and a well thought out one. Let me mull it over tomorrow and I will post some of my thoughts, I believe this idea has ALOT of potential.



Have you gone out and spoken to anyone about it yet? How were their responses?



Jim
 
mirrorfinishman said:
Jim,



Thanks for taking the time to share your thoughts. I guess I have been asking myself the same questions and that is why I have not gone forward with the idea.



The way I figure it, the business owner, in this case the salon owner gets a reassurance that their current customer has a $20 (paid for) incentive to return to their salon. And yes, the customer needs to have their car detailed in order to get the $20 off certificate to be used at their next visit to the salon.



Here's the way it works. A client of the salon calls me and tells me they got one of my customer rewards passes at the salon and would like to make an appointment to have their car detailed. I detail the car and then stop by the salon and purchase a $20 gift certificate, which I in turn mail out to my new customer.



The salon benefits by selling me a $20 gift certificate every time someone with one of the rewards passes gets their car detailed. From the viewpoint of the salon, all they have to do is make sure they distribute the rewards passes and then they will have me coming back in buying $20 gift certificates every time someone gets their car detailed.



The whole idea centers around teaming up with local businesses. What I have found over the years is that most small business owners have an appreciation for other small businesses. Most of the owners understand how difficult it can be at times in running their business, so most are usually very receptive when it comes to helping out other people in the same situation.



Any suggestions on how to improve upon this idea?
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Okay so I see how this would be beneficial for the salon but how do you make up for the forty bucks that you "discount" them? I understand this might drum up some extra business but you shouldn't have to sacrifice profit to get extra business. It would be kinda risky(also a little shady) to raise prices for these customer(to make up the "discounted" money) because if one were to find out it could blow up in a very bad way...causing you and the salon to look bad. I am just trying to figure out how all this helps you...right now I don't see it.
 
I would think the addition to your customer base has it's own value, not to mention the opportunity to up sell the customer (headlight restoration, paint and chip repair, scotch guarding, window chip repair...etc.) If your looking into this type of referral isn't the intention to increase business?, I personally would take the reduced ticket opposed to no ticket.
 
BucketsandBubbl said:
I would think the addition to your customer base has it's own value, not to mention the opportunity to up sell the customer (headlight restoration, paint and chip repair, scotch guarding, window chip repair...etc.) If your looking into this type of referral isn't the intention to increase business?, I personally would take the reduced ticket opposed to no ticket.
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Well if that is what you want to do then by all means have fun...me personally I like to do less cars for more money than more cars for the same money. There is no guarantee that any of these people will continue to get their cars done...most of them (I believe) would see the deal and do it because if is a good deal for them but once the deal is gone so is their business. Don't get me wrong I like the idea of linking up with other local businesses but not if it will cost me forty dollars every time I detail one of their clients car. I also don't want to sound like I know it all because I know nothing...I am always looking for good marketing strategies.
 
I know this is slightly off topic but Anthony brings up a relevant point. I understand when people say that something is better than nothing but be careful of the precedent you set by arbitrarily lowering your price. Reducing your price is a double edge sword. First it helps to understand the buyer’s mentality; you can do this by putting yourself in their position. When you walk into the automobile dealership to purchase a new car, do you want to pay list price, probably not. This is the same thing that happens when a prospect walks into your shop. If you do not or have not built a value to your service the prospect will always go to price. I'll go back to my example of the car dealer. People are less likely to haggle over the price of a CL500, why because Mercedes has built a perceived value for their vehicles. As a last resort if you have to lower your price to close a deal you want to make sure you do not appear to be pulling prices out of thin air. You must be certain that any reduction in price is tied to a reduction in the amount of service provided. It makes sense if you think about it for a moment, a wash and wax is less than a wash, polish and wax. Why because the ww takes less time and less time = less cost to the customer. Never give a wash, polish and wax for the same price as a wash and wax.



Good luck.



Tony Stubblefield

Founder

New England Detail Authority

617.464.4481 ext.2

HOME and MOBILE

Member

National Association for

Professional Detailing and Reconditioning
 
Because I don't do detailing full time (just on weekends and holidays), I'm able to be a little more generous with my incentives to customers. I offer a 4 for 1 incentive deal, meaning, that if one customer refers 4 other people to my services (they have to get work done with a basic package), the customer gets the next detail for free!



I charge $150.00 Cdn. for a basic detail on a car, $175.00 for an SUV/Truck/Mini Van, so I figure that getting $600.00 minimum in new sales is worth giving a free voucher away. It's the domino effect too... these four new people perhaps tell 4 other people and, viola!, you have dozens of new customers without even trying to get them. Sounds pricy but, in the end, it has seemed to work out fine too.
 
From a business perspective, I could not see anything better than handing out a percentage discount card. It's guaranteeing that your customer will be rewarded for bringing in a referral and ensures that you may still maintain a profit margin for your work. Percentage discounts work nice because the more money that the customer is going to spend with you (say in enrolling in your maintenance plan, for instance) then the more money they will save at the time. If you feel like you should be handing out something extra after the 10% referral, then you could always add an extra 5 percent for things like extended referrals or listed, recurring visits. Like everyone else has said, when one person brings in 3 referrals, if your work is good enough, you'll lose 10-15percent off of one detail from a customer that you know is going to come back.. and you'll gain 3 more jobs that should continue also.



Kyle
 
dalethompson said:
Because I don't do detailing full time (just on weekends and holidays), I'm able to be a little more generous with my incentives to customers. I offer a 4 for 1 incentive deal, meaning, that if one customer refers 4 other people to my services (they have to get work done with a basic package), the customer gets the next detail for free!
Click to expand...
Same exact thing I do.
 
So as far as I have read, 10-20% off coupons, and the 4 for 1 idea seems like the best. I am starting detailing full time this year, and want to make sure to bring in buisness, and referals are half my buisness.
 
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