Referral Program

Business By IsaSW Updated 1 Sep 2009 , 8:16pm by cakesweetiecake

IsaSW Posted 6 Aug 2009 , 2:32pm
post #1 of 14

I wonder if offering money to customers for referring friends and family is a good idea. Has any body done this?
I was thinking... if Kate (the Bride-my customer) sends me her friend Melissa, and Melissa orders a $400 cake, I will send Kate a $40 check(10% of Melissas purchase).

Any comments?

13 replies
-K8memphis Posted 6 Aug 2009 , 2:41pm
post #2 of 14

Why? People refer anyhow--no need for all that mumbo jumbo and lost wages.

Incentivize other vendors by referring each other.

Invest in a bridal show & see how you do--some are very successful with the shows & some are not--see where you fit in the equation.

Giving former clients cash money?? Just say no!

sweet-thing Posted 6 Aug 2009 , 2:41pm
post #3 of 14

I think that is extremely generous. Maybe too generous! That is a huge amount of your profit to just give away. Remember you got that big order because of your amazing cakes not as a favor to a friend. I know some people give discounts on the original clients next order.

indydebi Posted 6 Aug 2009 , 4:13pm
post #4 of 14

I've been giving a referral credit for 25+ years. But never never never give cash .... always give it as a store credit.

Kate would have a $40 credit at my store. She might use that to buy cookies for the office, so she buys 8 dozen cookies @ $6 each/doz = $48. She hands me $8.

What did it cost me in materials to make 8 dozen cookies? About $8. So I broke even and she thinks she got a great deal. Plus I got $400 in new business that she referred. Win-win.

BTW, my referral credit is 5%.

I had one bride who got her $600 wedding cake free. She had sent me 3 of her friends who booked their catering with me. $12,000 worth of biz. Am I willing to lay out-of-pocket expenses of about $250 to make her wedding cake in exchange for $12K of biz? Heck, yeah! But I didn't fork over $600 ..... out of pocket was about $250 +/-.

alvarezmom Posted 6 Aug 2009 , 5:23pm
post #5 of 14

I was thinking of doing the same. I thought 10% was a good deal, but after hearing what you said Debi 5% sounds just as nice.

LaBellaFlor Posted 6 Aug 2009 , 5:33pm
post #6 of 14

Giving cash is kind of extreme. No discount for referrals. I'm thinking I may do this for my prefered vendors list, but I'm still not sure.

Kiddiekakes Posted 6 Aug 2009 , 5:36pm
post #7 of 14

IndyDebi,


I am always amazed at how astout your are of a business woman.....Love your comments and advice!!

IsaSW Posted 7 Aug 2009 , 2:35pm
post #8 of 14

Thank you so much to all of you who answered. You guys are the best!
I am so happy to be in this Cake Central family.

And yes I agree, Debi's wisdom always helps so much! icon_smile.gif
Thanks Debi, for sharing your experience.

BeeBoos-8599_ Posted 7 Aug 2009 , 5:07pm
post #9 of 14

I deliver a thank you card with every order. That card also acts as a coupon they can use as a discount on thier next order (usually 20%). I inclose a few business cards that have my refferal program on the back which is the same 20% if the reffered person buys from me. I have people that will save them up to pay for thier cakes.

ZAKIA6 Posted 7 Aug 2009 , 5:24pm
post #10 of 14
Quote:
Originally Posted by indydebi

I've been giving a referral credit for 25+ years. But never never never give cash .... always give it as a store credit.

Kate would have a $40 credit at my store. She might use that to buy cookies for the office, so she buys 8 dozen cookies @ $6 each/doz = $48. She hands me $8.

What did it cost me in materials to make 8 dozen cookies? About $8. So I broke even and she thinks she got a great deal. Plus I got $400 in new business that she referred. Win-win.

BTW, my referral credit is 5%.

I had one bride who got her $600 wedding cake free. She had sent me 3 of her friends who booked their catering with me. $12,000 worth of biz. Am I willing to lay out-of-pocket expenses of about $250 to make her wedding cake in exchange for $12K of biz? Heck, yeah! But I didn't fork over $600 ..... out of pocket was about $250 +/-.




this sounds interesting. i get alot of referrals from people at work. im just trying to figure out how to keep track of it? also do they have a timeframe to use the referral credit?

cylstrial Posted 7 Aug 2009 , 11:47pm
post #11 of 14

Indy's way is the way to go. 5% back and only in the form of a gift certificate/store credit to your store .

indydebi Posted 8 Aug 2009 , 1:40am
post #12 of 14
Quote:
Originally Posted by ZAKIA6

this sounds interesting. i get alot of referrals from people at work. im just trying to figure out how to keep track of it? also do they have a timeframe to use the referral credit?




My system (and I use the term loosely!) is real informal.

On my wedding order form, I have a place for "referred by". When the bride books, I send the "referred by" person an email that tells them how much credit they have.

I don't have a timeframe. It's not been an issue to this point. I wouldn't have a problem with some kind of expiration, though. Call it a "booking incentive" where they Use It or Lose It! icon_biggrin.gif

Bee-Boos, I've seen your idea mentioned before on here and everytime you mention it, I keep leaning a bit more toward it. Still in the thinking about it stage, but it sounds very interesting!

IsaSW Posted 1 Sep 2009 , 7:43pm
post #13 of 14

Thanks to CC advice,
I am sending my first thank you note today. icon_biggrin.gif
Together with 2 of my business cards, and a note explaining what Debi taught me about the referral program.
My DH helped me with the letter, thought I should share it here, for anybody who wants to use this template.
Thanks again everybody!

I am a newbie and trying to absorb every tip and trick I can from CC.

cakesweetiecake Posted 1 Sep 2009 , 8:16pm
post #14 of 14

Great thread!

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