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Secret Number 3: Access The Power Of Word Of Mouth Marketing

Home » Secret Number 3: Access The Power Of Word Of Mouth Marketing

Are you searching for the ultimate solution, which will cost you next to nothing, bring in a flood of new customers, generate heaps of sales and leave your competition wondering what happened? If you are, and you already have a stream of loyal customers in your business … I have some great news for you.

As a marketing consultant, I constantly hear business people tell me that they generate a lot of business through word of mouth. The fact is people talk to each other. Then I ask them: What would happen if we set up a system to encourage more referrals? What would that do to your business? And what if that system took all of about 2-3 hours to set up, cost you barely nothing (other than the paper you printed it on) and could potentially generate thousands of dollars in sales? Let me explain how this system works. When you’re planning to buy something, you always feel more confident purchasing from someone that has been recommended by a friend you trust, don’t you? We all like to know that someone has tried the product and can vouch for it doing what it says it can do.

So How Do I Set Up A Referral Program?

It’s relatively easy. The first thing you need to identify is “What’s the average dollar value of a
client.” Let’s take the example of a women’s hairdressing salon where the average sale would be $50. Now how much is that customer worth to you? How many times do they come back within a year? If they come back once a month that customer is worth $600 to you. The most important part of this exercise is knowing what the average value of a client is. To work this out is simple. Calculate the number of clients on your database, and divide this by the turnover since you started. For the purpose of this exercise, let’s assume the average value of a client is $400.

How much extra business can our clients send to us?

Based on the above details we know that with an average dollar value for each client of $400 if a customer sends us:
• 4 clients = $1600 turnover.
• 8 clients = $3200 turnover.
• 12 clients = $4800 turnover.
• 15 clients = $6,000 turnover.
Let’s estimate the profit margin to be 50% (you’ll have to work this out based on your own product or service) This means if someone sends your business 15 clients you are making 3,000 in profit from that client.

How do I reward my clients?

Simple. Offer them your products for FREE based on how many people they send you. For instance if in the above example you are making $3,000 in profits with a 50% margin, why not offer your clients FREE Hair Treatments for the year valued at up to $1,000 if they send you 15 new customers. Total cost to you @ 50% profit margin = $500. Total Profit = $3,000. Total Risk = $0. If your clients send you 4, 8, or 12 new customers you structure benefits for each level.

How do my clients promote my business?

When every client completes a service with you hand him or her a letter explaining the referral program, and the benefits, togethor with some gift vouchers for your client to give to their friends. This makes it easy for them. Your clients give a valuable gift voucher to their friends and they get rewarded for it. You have your best sales force out on the road – and you don’t have to pay a single cent.

How do I track results?

Simply stamp each gift voucher, which goes out with a number, and then write your customers name down next to those numbers of the gift vouchers they have. When gift vouchers come in from their friends, call your clients up and thank them, and let them know of their bonuses. This will keep them active and increase their motivation.

What’s the Potential of a Referral Program?

Let’s use the above example. The company has 1,000 customers coming in every month. If just 20% of people were to refer one new customer to their business with an average lifetime value of $400 this company would have 200 new customers with a value of $400 each = $80,000 in turnover = $40,000 in profit. Not a bad effort for handing out a few pieces of paper and printing some gift vouchers. Not only that, because every customer has been referred, they are more likely to be better customers than those coming from advertising.


Setting up and systemizing a referral system for your business is not difficult … and implementing this program could be the most leveraged time you spend this year. So what are you waiting for? There’s thousands of dollars going untapped sitting in your customer database. Get out of your comfort zone, take stock of your assets, do the figures, and make it happen.

Scott Bywater –

Scott Bywater is a professional direct response copywriter and the author of Cash-Flow Advertising. To get access to his highly prized complimentary copy of his special report ‘7 Ways To Boost Your Turnover… No Matter What The Economy’ (valued at $29.95) and a free subscription to his “Copywriting Selling Secrets” newsletter where you’ll discover how to write ads and sales letters to get people lining up and almost begging you to take their money, jump onto his web site at


  1. AnthonyOctober 30, 2012Denny’s in Killeen, TX I don’t know if its bad management or just lazy wroreks, but my wife and I and a friend decided to try them again before we leave Fort Hood. The same disappointment as before. It shouldn’t take more than 5 minutes to be asked what you want to drink. We over heard the waitress tell an elder customer that she has to wait, that she has to get another order and all the lady wanted was here coffee. The nerve! I don’t see how this place keeps business. The restaurant has 1 waitress and the diner is busy, shouldn’t they call someone in to help. This is stupid and stressful. 20 minutes have past and still no food. I’m wondering why i wasted this much time here.