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Table of Contents

Lead Story

Growing mobile adoption puts security center stage

News

Industry Update

Apple Pay may set mobile payment security standard

Alibaba IPO takes investors on magic carpet ride

eBay to unleash PayPal in 2015

Features

Retailers mobile-ize

Views

Check out Visa

Ken Musante
Eureka Payments LLC

Prepaid debit wins over newly affluent

Patti Murphy
ProScribes Inc.

How Apple Pay will affect ISOs and the card brands

Brandes Elitch
CrossCheck Inc.

Education

Street SmartsSM:
Bitcoin: Passing fad or dangerously disruptive?

Tom Waters and Ben Abel
Bank Associates Merchant Services

How to grow your business with referrals

Michael Gavin
Merchant Warehouse

Processor contract terms impacting portfolio values

Scott Calliham
First Annapolis Consulting

Pay attention, limit attrition

Jeff Fortney
Clearent LLC

Company Profile

Instant Credit Manager

New Products

Merchant applications made simple

BankCardApp
Electronic Payments Inc.

Power boost for recurring payments

Update XP
Meritus Payment Solutions

Inspiration

Ancient wisdom for today's payment pros

Departments

Readers Speak

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

October 13, 2014  •  Issue 14:10:01

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How to grow your business with referrals

By Michael Gavin

Referral programs have become increasingly popular in recent years, and many businesses are taking advantage of this effective strategy. If you are an ISO or merchant level salesperson and your customers are not offering referral programs yet, they are missing out on a great opportunity to grow their businesses, and you are missing a chance to be viewed as an expert. After reading this article, you will be ready to explain the benefits of referral programs to your customers and make suggestions on how they can build their own referral programs.

Word of mouth has always been a valuable and powerful marketing tool, but in today's modern world, word of mouth has become larger than ever. The always on, connected world we live in allows consumers to communicate via various channels, including social networking, text messaging and emailing. From sharing offers to writing reviews to just "checking in," consumers are sharing experiences faster and easier than ever before.

Businesses recognize the tremendous impact word of mouth can have on their bottom lines and, in response, they are implementing referral programs to encourage customers to spread the word even more.

Leverage word of mouth

Referral programs help businesses acquire new customers while rewarding their existing customers. When existing customers refer a new customer, both parties are rewarded. A satisfied customer can be a business's best advertisement; consumers trust recommendations from friends seven times more than traditional advertising, according to Extol Inc.'s paper Referral Marketing Best Practices for 2014.

That is why businesses have turned to this low-cost, effective marketing strategy to bring in more customers. Not only do referral programs generate new business, but they also help boost customer loyalty and retention.

In his March 20, 2014, Business 2 Community post Why Personal Touch Trumps Technology, Grant Cardone emphasized that before starting a referral program, you must have strong customer relationships and satisfied customers, which are critical to the success of a referral program. Cassandra Jowett, author of 5 Key Ingredients for a Successful Customer Referral Program, agreed. The ingredients she listed at nfluitive.com/blog/5-ingredients-customer-referral-program/are: strong relationships; simple, easy and fun advocate experience; clear communication that sets expectations; recognition and rewards; and raving fans, evangelists and advocates.

Customers need to have trust in your business and believe in your products and services to feel confident enough to refer a friend. Make an effort to show your appreciation for your customers and give them a personal touch. Even though technology is fast and convenient, customers appreciate handwritten notes and personal interaction. In fact, consumers desire and find more value in personal touches today.

Starting a referral program may seem overwhelming to business owners, but it can be a fairly simple and inexpensive process. The first step in launching a referral program is to determine your offer, which must be compelling for both parties. It must encourage your current customer to refer a friend and motivate the friend to try your product or service. Think about your existing customers' needs to make the offer relevant.

A few common offers are discounts, points, gift cards, and free items. For example, Uber, a ridesharing and taxi alternative company, occasionally runs a refer-a-friend campaign where new customers receive $10 off their first Uber ride when they sign up using their friend's code. The friend gets $10 credit added onto their Uber account after their friend takes their first ride (see http://blog.uber.com/give-and-get-free-uber-credit).

This appeals to both the customer and friend, allowing each to benefit from the offer. If you are unsure of what to offer, test a few different offers to determine which ones are most effective. Also, reward your customers every time they make a referral. Some businesses make customers reach a specific amount of referees before they receive a reward, which isn't as effective.

Make it easy

Building a referral program should be an easy process for you, and referring a friend should be just as easy for your customers. Make it easy on the customer by providing a simple card or a short online form to make a referral. It is also smart to give your customers the option to share your referral program online via email, Facebook, Google+ and Twitter.

Another essential aspect of a referral program is tracking. Various software platforms run and track referral programs, but you can also use a spreadsheet to manage referrals. A spreadsheet may sound labor intensive, but it can be simple, especially for small businesses with limited customer bases. By using a spreadsheet, you can track your customers by their last names or assign unique numbers to each customer if you have a large customer base. Whether you choose to invest in a software platform or manually track it yourself, determine your method of tracking before launching the program.

You may have a compelling offer and solid referral program in place, but if it is not promoted properly, it most likely will not provide you with successful results. Display your referral program details on your website, blog, social media, email blasts and even in your email signature. Program details as well as terms and conditions should be included so customers have a clear understanding of how it works and how long it will continue.

An easy way to get started for in-person promotions is to create referral program cards with your company name, logo, and lines for both the referee and friend's name. During in-person interactions with your customers, politely inform them that you are looking for referrals, and give them a few cards to pass out to their friends. Various businesses, such as salons and dentist offices, distribute multiple referral cards in order to expand their client bases.

As competition becomes fiercer and customer acquisition becomes more challenging, businesses embrace referral programs to acquire new customers and keep customers coming back. Don't lag behind your competition. Start growing your business by tapping into your current customer base.

As Merchant Warehouse Senior Vice President, Sales, Michael Gavin is responsible for day-to-day management of the company's direct sales, as well as leadership of all sales activities within the company's agent channel. He has served as a key leader within the organization since joining the company in late 2000. Merchant Warehouse's Genius Customer Engagement Platform is a single, intuitive platform that integrates every transaction technology, loyalty program and more. Contact Michael at mgavin@merchantwarehouse.com. For more information on the company, visit http://merchantwarehouse.com.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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