Case Study: Referral program our way

November 13, 2015 -  By

How one landscape company added $100,000 in sales by redefining its referral program.

For the past few years, Mark Borst, owner and president of Borst Landscape & Design in Allendale, N.J., has been offering a customer referral program where clients could earn a $250 invoice credit for referring a new customer.

Borst says it helped a little but “wasn’t a grand slam.” So this year he upped the offers. In addition to a customer referral incentive, the company added a customer service upgrade bonus and a signing bonus for new clients. These are also doled out as invoice credits at $250 and $150, respectively.

“Even in other industries—such as your phone or cable companies—the focus is always on getting new business,” Borst says. “You see a lot of incentives for new customers. But if you turn some of that focus inward and think of ways to reward existing business, you can grow your company that way, too. We have to remember that without existing business, we wouldn’t be where we are today.”

Borst says the program has issued about $8,000 in credits, and it has generated around $100,000 of business between referrals and upgrades. He can directly link 40 new clients to the referral program.

But the investment in existing clientele has been the key to success, Borst says.

“I realized that by only rewarding for new business, we weren’t doing as much as we could for our existing clients,” Borst says. “That’s why we added the customer service upgrade bonus. The rewards always seem to be focused on new customers, but I want my existing clientele to know we value them—even if they’re not bringing us new customers. These upgrade bonuses have been a great way to reward existing clientele.”

Borst says the program has had the added benefit of helping close the deal on some jobs.

“We had clients who were on the fence about whether they wanted to upgrade their services, but this bonus was the deciding factor,” says Borst, who adds that the bonuses were advertised through e-mail blasts and on monthly invoices.

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photo: Borst Landscape & Design

One potential challenge is stacked bonuses. For example, if an existing customer refers a new one, the existing customer earns $250 and the new customer earns the $150 signing bonus.

“Now you have $400 going out,” Borst says. “You just have to be mindful of that.”

Borst advises others considering bonuses to be careful of the language you use. If you have too many bonuses that can be stacked, it might be worth saying something like “not combinable with other offers.”

For now, Borst has allowed the bonuses to stack, as it’s been worth all the new business. Some clients embrace the referral bonuses—a few of his lawn care clients paid for their whole season by referring so many new clients.

Since it’s a credit to the account—not cash in hand—the money is kept in house, but Borst says the company did get “dinged” on a few jobs where customers chose to apply the credits to small projects. For example, one customer earned a $250 referal credit and applied it to a $200 job. That meant he still had $50 as a credit in his account after a completed job.

“But on the flipside, the bonuses helped us sell a $60,000 job,” Borst says. “That shows that in the long run, it’s worth it. The majority of our customers applied credits to maintenance renewals. In those cases, they save some money, and we helped secure their renewal with us—so it’s a win-win.”

And even when the incentives are applied to smaller jobs, Borst says the credits help create a sense of “goodwill” among clients, who may book bigger jobs in the future. Borst reiterates that finding ways to reward existing customers is vital, and he believes it’s why this program has been so successful.

 

Photo: ©istock.com/cacaroot

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