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Auto Dealer Referral Marketing


According to a recent New York Times article, 65% of new business comes from referrals. That means that two-thirds of consumers make purchases because someone they know recommended a particular product or service. Social media has made a profound impact on the concept of word-of-mouth advertising. Consumers simply post a referral request on their Facebook page and within minutes can have dozens of recommendations from their friends and family.  I do it all the time, you probably have too.

What is referral marketing?

At its core, referral marketing is communicating about your business through your established customer base and offering incentives for spreading the word to others.  I recently worked for a company that offered $100 to current customers who referred someone that became a customer. Here are a couple reasons why this concept doesn’t work:
1. Most of us like helping our friends and family whenever possible. It is natural for us to share information of value with people we know because we enjoy sharing value with each other. When someone you know asks you for a referral, you don’t charge them for that information. Monetary referral marketing incentives are giving away money for something that was going to happen anyway!

2.  Even if paying your customer an incentive for their referrals converting to a paying customer did work, you are incentivizing the wrong thing. I have no control over whether my referral is going to spend money with your business. When you only reward for paying customers, you are not motivating your customers to refer.

Your referral marketing program should create opportunities for both your established customer and their referral in a one-two-punch scenario.   When you empower  your customer to share with others, you create motivation.  I love to tell my friends “Call Mike and tell him William sent you. You’ll get your first oil change at their dealership for free when you use my name.” In return, the dealership rewards me with the same incentive: a free oil change! In this scenario, the dealership is increasing loyalty and the likelihood I’ll refer again.

Your repeat customers obviously appreciate the relationship they have with you. They see the value of your products and services. Giving your customers the power to share that value with others is the most effective way to enhance referrals.

About the Author:  William Hall is an experienced business coach specializing in branding, social media and promotional events. With his years of experience teaching businesses of all sizes how to stand out in the crowd, his clients are continuously thankful for his out-of-the box ideas that lead to increased revenue, more clicks and a bigger online presence.

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