How One Business Generated $50K in Sales Without Spending a Dime on Advertising
Veronica Wheat has always believed that the best way to make truly lasting improvements to your health is by finding small, simple changes you can make every day. Not the stuff that requires you to reinvent your life, but things that fit into your life and still have an impact. She started out in business as a personal chef preparing and delivering fresh, nutritious, and delicious meals to her clients, including a bright green drink she called a vegetable smoothie. It turned out that the green drink was far more popular than the meals, so in 2012, she dropped the meals and kept the delivery service and Chef V’s Green Drink was born.
To make her Green Drink, she locally sourced fresh, organically grown kale, dandelion, and other greens, prepared them in a 1,900 square foot kitchen in San Marcos, CA, and delivered them weekly to clients all over the San Diego Area. The business grew rapidly until soon she was helping customers all up and down the west coast feel better and lose weight.
When Chef V Called on my company, Cognesis Marketing in 2015, it was to sort out some Infusionsoft permissions issues so their growing team of sales, customer service, and operations people had access to the information they needed to do their jobs, while protecting unauthorized access to other data.
The opportunity: tap into enthusiastic customers
As we got to know the company, we explored growth opportunities using Infusionsoft’s Small Business Success Method to find “fast paths to cash.” We discovered an overlooked opportunity for significant growth—turning customers into a powerful sales force through a formal referral program.
Chef V grew largely through Facebook advertising. We knew from testimonials and Facebook fan posts that Chef V had some very enthusiastic customers and that word of mouth about Chef V’s Green Drink was spreading fast. But the word of mouth was accidental, not strategic. What if we could intentionally build a referral program that supported loyal customers in introducing friends and colleagues to Chef V’s Green drink?
If Chef V’s customers were as loyal and enthusiastic as they appeared to be, the opportunity was there to attract a significant number of new customers while spending no additional money on advertising.
The first step was to measure customer loyalty. For that, we used a tool called Net Promoter Score (NPS). NPS accurately predicts customer loyalty with a single question, “How likely are you recommend us to a friend?” Answers are on a scale from one (not at all likely) to 10 (extremely likely). Those who answer with a nine or 10 are consider “promoters,” seven or eight are “neutral,” and one to six are “Detractors”. The NPS subtracts the detractors from the promoters to get a single number score that indicates customer loyalty. A Bain and Company analysis shows that sustained value creators—companies that achieve long-term profitable growth—have Net Promoter Scores two times higher than the average company.
Promoting word of mouth
Word of mouth recommendations strongly influence purchase decisions. Studies show that people seek truth and share opinions online and offline.
84 percent of consumers say they either completely or somewhat trust recommendations from family, colleagues, and friends about products and services—making these recommendations the highest ranked source for trustworthiness [Nielsen]
74 percent of consumers identify word-of-mouth as a key influencer in their purchasing decision [Ogilvy/Google/TNS]
Enter the affiliate program
Affiliate Programs are tools marketers use to generate referrals by rewarding affiliate partners for promoting their business to people the affiliate knows. Rewards can be cash, discounts, merchandise, gift cards, or countless other things limited only by the imagination of the marketer.
Customer referral programs are a special type of affiliate program where the affiliate is also a customer of the business. They work well because consumers rely heavily on the recommendations of people they know. They are most effective for B2C businesses who offer products with broad appeal—something almost anyone could buy or use—that are bought frequently. Food and restaurants, hair salons, and fitness clubs, for example. The more likely that many friends of a customer could also buy or use the same products, the higher the potential there is for a successful customer referral program.
Such referral programs are particularly powerful for business with enthusiastic loyal customers but with only a small number of them actively referring new business. This was the case with Chef V.
Our customer referral program had three essential ingredients:
Asking for referrals
Making it easy to refer
Infusionsoft made it easy
First, we set up a campaign that asked for referrals. We sent an email to customers with a link to a web form with our survey.
In addition to an NPS question, we asked, “Why did you choose this rating?” and, “Is there anything that would improve your experience with Chef V?.” Those who did not respond were sent one or two more similar emails within a week.
Those who gave a 7 to 10 rating were sent an email inviting them to “become a Chef V Health Champion” by signing up for the customer referral program, including customers in an inner circle rewards them psychologically in addition to the tangible reward of free product. Those who did not respond were sent up to three more invitations with different headlines and appeals over the next couple of weeks.
A notification was automatically sent to customer service to contact anyone who gave a rating of six or less so they could attempt to improve their experience.
We used an Infusionsoft web form to sign people up to the program.
Once they signed up they received an email that made it cut-and-paste easy to make referrals using social media or emailing friends.
The affiliate code links in these emails automatically tracked all the referrals. The Chef V Staff then used Infusionsoft’s built in referral reports to fulfill the free week of green drink reward.
The Survey confirmed that Chev V enjoyed a very loyal customer base. In fact, a whopping 63.68 percent of respondents gave a rating of nine or 10! This meant that the referral program had a high success potential.
Detractors (1 to 6)
Passives (6 to 8)
As a bonus, we learned the reasons customers liked the product, including taste, health effects, convenience, and economical price. These findings were great for developing marketing messages. Moreover, the survey revealed several opportunities for even more closely meeting customer needs such as suggestions for packaging and variety.
A total of 197 customers signed up to become affiliates over the next several months. They referred 208 new customers to Chef V. This was an exciting result! With an average customer value of $200 to $300, the program is estimated to have increased sales by about $50,000. All without spending a dime on advertising!
Dave Blanchard, Owner and Founder of Cognesis Marketing, has been passionate about producing marketing results for over 30 years. He has helped about 100 small businesses attract and keep customers with automated marketing. Always happy to serve in any way he can, Dave welcomes your questions. You can e-mail him at [email protected]
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