How To Avoid These 7 Common Mistakes When Setting Up Your Online Referral Programme
One of the major strengths of our internet age is that it is possible to set up the technical aspects of an online referral programme without speaking to a single human being. However, this is also a huge weakness and packed with simple errors which I see all too often.
That is, unless you’ve somehow stumbled on a genie hidden in a lamp!
It is not the technology that creates the success; it is the strategy, the tactical implementation of the plan and the people that will determine your level of success.
Strip it all down to its raw parts and you have something remarkably simple, but you have to remember that it’s the customers, the real people, that make or break a business. When planning your online referral programme you have to remember you have TWO customers to keep happy in every transaction – the end customer AND the online referral partner.
Let’s now take a look at the level of resource you will need to make available to ensure everything gets off to a great start and you can build on your success.
But just before we do let’s go back in time a little. Remember how you felt about your first-ever online sale?
How long did it take to arrive?
How long did it take until you had a steady stream of sales on a weekly basis and then on a daily basis?
It didn’t happen overnight did it…! And, I’ll hazard a guess that you had to work hard with persistence to actually turn your goals into reality.
Well… finding the right online referral partners is a similar process. However, the benefit here is that these particular “customers” are entrepreneurs who are looking to make a profit from a portfolio of merchants. So you have to compete favourably against other potential merchants on all aspects of your programme and present yourself as the best partner you can be.
As an illustration, I recently spoke to a merchant who told me that his online referral programme was generating such low returns that “it didn’t really work”. When I investigated further, I found some simple mistakes. BUT ones that can crop up time and time again when we’re conducting Referral Programme Audits.
Let’s get started…
Interested? Great, You’re Approved!
Perhaps the single biggest mistake is when online referral programmes allow referrals to sign up and be automatically approved with no human intervention at all.
After all, the more referrals you have, the more sales you make, right?
This is a very common misconception. Think of each and every online referrals partner as a member of your sales team. Would you hire a new salesperson without a job interview? Without checking references, testing out their sales skills, seeing how they are going to represent your company in the marketplace?
NO WAY your screaming… right?
When explained this way it seems obvious I know. But for some reason I see way too many businesses fall into this trap. It’s almost like because it’s an “online”, “remote” type of relationship that it’s somehow OK to not really know your online referral partners at all.
Let me firmly dispel this belief right now.
Online Referral Partnerships are a relationship game. Get to know your referrals and only recruit the best. The best will perform for you…they will go to bat for you…they will generate you quality leads and sales.
Ask yourself. Where’s the relationship? The mutually beneficial partnership? Where’s the monthly phone call to see how it’s going for them and how you can improve what you do in order to help maximise their profits (which, of course, comes from more sales of your products)?
The second most common mistake which is pretty much guaranteed to kill your online referral programme is relaxing or stopping the communications and incentives.
As the merchant, it’s your responsibility to maintain the activity, energy, communications, and excitement around your programme.
To help, here are some simple ideas that are quick and easy to set up and maintain:-
- Send a quick monthly video update/video newsletter.
- Regularly launch new coupons, new deals, and special promotions.
- If you selling physical products ensure your data feed is always up to date so price changes and stock levels are accurate on your online referral partner sites.
- Help education and train them – this is often a great way to revitalise dormant partners’ as sometimes they just need a little help understanding how best to promote you.
In short, ensure there is always a clear direction and focus for your online referral partners.
Invest in Management
The third most common mistake, particularly in larger companies, is not to set up a dedicated Online Referral Partner Manager. Whose role is to find partners, interview them, nurture them, manage the regular communications with them (newsletters and promotions, etc.) and help them sell your products!
This is a vital position if you are looking at building a series 6 and 7 figure Online Referral Partner marketing channel.
Ensure this position is occupied by an ‘A’ Team player.
Ensure they have realistic and measurable targets – number of referrals interviewed, selected, expected sales, sales against the target, training is given, etc.
It’s important to set your expectations accordingly here though. A brand new programme will take longer to gather traction. Remember this is a relationship game. Therefore managing your programme ‘in-house’ to start with is a great way to be profitable from day 1.
Once you’ve gathered some traction and you can see the growth curve starting to take shape I highly recommend recruiting a first-class Online Referral Partner Manager… it’ll pay you handsomely and can be geared to constant growth in the sales too.
Pay on time EVERYTIME
ALWAYS pay commissions on-time
This is a very obvious one I know, but you’d be amazed how many business owners fail at this step.
The minute you do this it might as well be curtains – harsh but true. You’ll lose your Online Referral Partner’s trust and they’ll rapidly jump ship and join a competitor’s programme instead.
Let’s just think about the last line for a minute.
“They’ll jump ship and join a competitor’s programme instead.” So… someone who was supporting your business now is a rival and directing customers to a competitor. It’s this very fact that means your programme can, quite literally, collapse very quickly if you don’t keep your side of the bargain.
Understanding the Online Referral’s Customers
In my experience here’s the fifth most common mistake. Once a business has a new customer from an referral they try and sell to them directly and cut the referral out of the loop.
If you want to scale your Online Referral Channel in a sustainable way this is a BIG NO NO!
In the vast majority of cases, business success is more often determined by the number of REPEAT customers a business can gather – selling more products to the same customer as well as reaching out and constantly growing a new customer base.
But don’t try and own the end customer yourself.
Of course, if they want to buy from your direct then your not going to say no…right?
BUT here’s my golden rule. Try to structure your programme so that a commission is still earned by the referrals who introduced them to you originally. It might only be a smaller percentage, perhaps only 10%, but can you guess what impact this will have on the online referral partner themselves?
You got it…they’re going to love you for it and in return, they will promote your more and more and more!
Of course, there comes a time when the customer will have bought from your frequently enough that they, themselves, opt to become your customer directly.
But in the early days of this business/customer relationship remember that the ‘influential party’ is really YOUR referral and not YOU.
Structuring programmes in this way fuels their long-term growth and ensures they are very sustainable with motivated and well-rewarded online referral partners who are very willing to promote you.
Over time the ‘transfer of trust’ will move over from your referral directly to you as you continually serve them well. However, be prepared for this to be a gradual process, and please don’t try to force it at the start.
Now… common sense isn’t always common practice.
To grow a sustainable Online Referral Channel you MUST use a system that allows you to accurately track the leads and sales forwarded to you from your online referral partners.
Choosing the right software package for your business does depend on two key aspects of your business.
The deciding factors are:-
- Which eCommerce Platform do you use to process your online orders?
- Which Customer Relationship Management (CRM) software do you use?
There are several software options I recommend from my own experience. For now, the two that work well in 80% of situations are:-
- InfusionSoft – eCommerce, CRM, and Online Referral Management all in one!
- SamCart – eCommerce and Online Referral Management with cool integrations with lots of CRM platforms
With that nailed we move onto perhaps my biggest bugbear with poorly designed programmes.
Attractive AND Logical Cookie Periods
Cookie length is the time in which your tracking code remains live and assigns transactions within this period to the referring online referral partner.
You may have come across the saying “you can’t kid and kidder”. Well, the same applies here too, “you can’t kid an referral with a stupid cookie length.”
What do I mean… well, if it takes you an average of 20 days to nurture a cold lead into a buying customer don’t think you can kid an referral by setting your cookie period to 15 days.
It’s obvious when I share it like that right?
All this will achieve is a flurry of leads from referral partners at the start and then, as they realise you’ve tricked them when commissions are low, they will jump ship to a competitor programme and take their audience with them. Remember what I said above about when this happens!!
Make sure you understand how long it ACTUALLY takes your business, your sales funnel, to convert and lead into and paying customers and base your cookie period on this timescale as an absolute minimum. When I’m consulting and setting up programmes myself I actually increase this cookie length by 50 to 100%… this is what fuels a long-term successful online referral programme.
Believe it or not, you actually have to be prepared to pay out some commissions! But remember, only AFTER the sales been made and the money is in your bank account.
Work your way through the points and assess your programme against each point giving yourself a mark out of 10 for each step.
How do you score?
56 and above – you’re doing nicely – WELL DONE.
BELOW…?? There’s always room for improvement so focus on the low-scoring areas first and get creative around ways you can move up one point at a time.
The best merchant-online referral relationships are close relationships. It’s a mutually beneficial partnership of trust, respect, and a realisation that it’s a win-win opportunity for ALL parties.
Above all, it takes time to establish and the continued execution of a coherent sales and marketing plan that nurtures and builds on the relationship to ensure the long-term success of both the merchant and online referral partner.
As always, please feel free to leave your comments and suggestions in the box below.
To your success, all the best
For more business growth strategies and marketing advice check out my other #PGsTips Blog Posts