How to Use Promotional Products to Earn Repeat Customers and Referrals

When it comes to a successful education, old timers tell us about the 3 R’s of education. The idea is that a focus on “Readin, wRitin, and aRithmatic” would help create a good student.

And though that is hopefully not the entire focus of our education system today, we know that those are the basics for success.

The Three R’s of Business Growth: Retention, Repeat Customers, Referrals

When it comes to business, there are also the THREE “R’s” that are important in any successful, long term business.

We have already spent an entire blog post on one the role that promotional products can have in fostering the first “R,” customer retention. Today I’m going to introduce the next two R’s of Business—repeat customers and referrals.

Why are repeat customers so valuable?

All successful business owners want to have a steady stream of repeat customers. Repeat customers are the backbone of any vibrant business. They are the “holy grail” of business growth.

These customers come back again and again and (hopefully) their loyalty leads them to spend more time and money with us.

(Repeat customers are, incidentally, our best source for the third “R”—referrals—but I will get to that in a minute.)

Repeat customers are great because we have already won them. It takes a great deal of time, energy and money to earn a customer’s trust and business. It’s much harder to convert a non-customer into a customer than it is to sell to one of your current customers. Depending on the study, it’s been shown that it costs up to 6 to 7 times more to capture a new customer than to sell to a current customer.

Insufficiently focusing on their current clients is one of the main mistakes many businesses make. Why do so many spend so much time and money on the clients that are hardest to reach?

So, we have a base of repeat customers. Great! Now, what next? It’s safe to say the goal is to grow that base. But how?

The first way is to get these repeat customers to come and do business with us more often! If we can increase the number of times these customers do business with us, we increase sales. Duh…right?

Well in two separate studies (in 1993 and 1994 respectively) promotional products were shown to improve repeat business.

Research into How Promotional Products Encourage Repeat Business

Repeat Business for a Food Delivery Service

In the first study, conducted by Southern Methodist University, 900 people were divided into 9 groups of 100. These nine groups were broken down by customer type (existing residential food delivery, new residential food delivery, and business/commercial food delivery customers) and what they received (a promotional product, a coupon, or nothing.)

The promotional product and the coupon were both valued at $2. But which one turned out to be more valuable?

  • Customers who received promotional products ordered up to 18% sooner than those who received coupons.
  • Customers who received promotional products also averaged up to 18% more orders than those receiving coupons.

In other words, the customers that received the promotional products ordered more quickly and more often than those that received coupons…or nothing. Sales more often and sales more quickly = more sales.

Repeat Customers for a Dry Cleaning Business

This study, also conducted by Southern Methodist University, tracked the activity of 300 new customers at two locations of a dry cleaning business.

Customers were randomly assigned one of three groups. Everyone received a welcome letter from the company. One of the groups, in addition to the letter, received a promotional product valued at $5. The second group received a $5 coupon. The control group just received the welcome letter.

After 8 months, the results of the study were:

  • New customers who received the promotional product spent 27% more than those who received coupons, and 139% more than those who received only a welcome letter.
  • Promotional product recipients were 49% more likely than coupon recipients (and 75% more likely than letter recipients) to patronize the dry cleaner in each of the eight months studied.

Just as in the first study, this second study showed that customers who receive promotional products spent more and were more regular customers than those who do not.

If repeat customers are the “holy grail” to business success, then you need to consider how cementing that relationship with a promotional product can help you grow.

How to Get More Referrals

Another huge part of any successful business is the third R…referrals. As a business friend once told me, “The best way to get referrals is to deserve them!” Obviously, this is foundational. But I am going to assume that you’re already running a business that is worthy of referrals.

So here I’m going to talk about how to get more referrals.

As I mentioned earlier, your current customer base is often the best place to look for growth in your business. It’s also a source of referrals that many business owners and marketers ignore. Your current client base already “gets” you. They understand what you offer, and they love you for it. Repeat customers can be a fantastic source of new customers.

The problem with referrals is that no really likes to ask for them! Admit it. You, like everyone else, don’t like asking for referrals. (Most people don’t.) Nearly every time I speak to a group, everyone agrees that getting referrals is a great way to grow your business. It’s just common sense. And yet, most people admit to failing to “consistently ask” for referrals.

What I’ve found, time and again, is that giving a promotional gift before asking for a referral is a simple way to make asking for referrals easier.

And another study proves it.

In 1993, researchers at Baylor University showed that customers who received a promotional product are more willing to provide referrals than those that don’t.

The study was conducted with 20 Mary Kay beauty consultants, half of whom distributed a promotional gift to their customers; the other half of whom gave no promotional gift.

The results were impressive.

  • Customers who received a promotional product were 14% more likely to provide leads than those that did not.
  • Salespeople who gave promotional products to their customers received 22% more referrals than the salespeople who did not use promotional gifts.

Providing even a small promotional gift to your customers increases the likelihood that they will provide you with referrals. Combine that with the fact that you have a business worth referring…and you have business gold!

Here’s an Idea: Create a Gift-Based Referral Program

Are you still struggling to ask for that referral? Here’s another approach—create a referral program which does the asking for you.

First, create a flyer to email, mail, fax (or send via smoke signal, your choice!) to your current customers.

The flyer should advertise a nice “referral gift.” Use your imagination. The gift can be anything from a nice watch to a piece of luggage. The incentive gift does not have to break the bank, but it does need to be nice enough to garner attention.

Send your flyer, letting customers know that if they provide a referral that results in business for your company, they will receive this fabulous gift.

Boom. Watch the referrals flow in.

A few tips:

  • The gift needs to be nice enough to get your customer to act: Make the new customer’s qualifying purchase large enough that the profits from that sale will cover the cost of the item. This way you might break even on this transaction, but now you have a new customer for life!
  • Make it feel “exclusive”: Considering only sending your referral offer to your top 20% of clients. They are the most likely to give you the best referrals anyway!

Setting up a simple program like this—one where you “give first”—takes “the ask” out of the referral. Instead of asking for a referral, you’re giving them an opportunity to receive a great gift. It’s a win-win proposition.

Focusing on the three R’s—retention, repeat business, and referrals—lays the foundation for building a successful business. And the research shows that promotional products can help your business achieve all three goals.

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Written by: Kirby Hasseman

Kirby Hasseman is the CEO of Hasseman Marketing & Communications. Kirby hosts a weekly Web show called Delivering Marketing Joy where he interviews business leaders from around the country. Kirby has published four books. His most recent is “Fan of Happy.” His book, called "Delivering Marketing Joy" is about doing “promo right” and is perfect for people in the industry and customers. He also wrote “Think Big For Small Business” and “Give Your Way to Success. All are available on Amazon.