Promises and bird dog fees: Ways to nurture referral business

Publish Date: 
Jun 16, 2014
By Rod Stuckey


Of course, like most business best practices, implementation is the hardest part, so the question becomes how? First, it’s important to understand that just because you have satisfied customers doesn’t mean you’re creating a referral culture. Many dealers have an underlying belief that satisfaction equals referrals. In other words, if I do a good job, my customers will send me business.

However, high CSI scores typically aren’t enough, as it’s natural for people to have a reluctance to refer friends. They fear that the person they refer could have a bad experience, making the referrer look bad.

You dealers are skeptical as well, because many of you have never been exposed to hard data that could validate the need for such a system. And of course, many dealers just have never been taught how to create and execute a referral system that works and gets measurable results.

One of the most time-tested and proven referral strategies is to incorporate incentives such as bird dog fees. Your customers need to get over the natural reluctance to refer, and you can help them do that with a little extra enticement, like $50 cash or an in-store gift card when they refer a friend or family member who buys a vehicle. Money is the most powerful behavioral modification tool on
the planet.

Other critical elements of your referral system have to do with the timing in which you ask for a referral. There’s a natural desire to do things for people who do things for you, so the best time to ask for a referral is right after a customer does business with you. This can be done face to face, with email, telephone or even snail mail.

Zappos has taken a slightly different approach to referrals, with a brilliant under-promise and over-deliver process. Here’s how it works: The company automatically upgrades all repeat customers to next-day shipping. The customer receives an email confirmation saying their your order will arrive in three to five days, and then they immediately get another email that says, “Woo-hoo! Because you’re a valued customer, we’ve upgraded your shipping
to overnight.”

The leadership team at Zappos decided long ago to book the extra shipping cost to advertising, and their efforts have in turn created a brilliant word-of-mouth referral strategy.

Whether you’re Joe Girard, Zappos or just an ordinary powersports retailer, an effective referral system is a proven winner -- and it fits in everyone’s budget.