As a small-business owner, you may not think you have much in common with Elon Musk, the ultra-billionaire behind Tesla Motors. But we all should learn something from the way he runs Tesla's customer referral program.
Tesla customers can get $1,000 for referring a friend who buys a car. They also get entered into a lottery for tickets to exclusive Tesla events, including the 2017 unveiling of the Model 3.
This program checks all the boxes: it helps Tesla find new customers, rewards loyalty, and earns the company media attention. When that happens, you know the marketing team is firing on all cylinders.
So what can your business learn from this? Four things.
Lesson 1: Set a Goal
Referral programs reward customers who get friends, family, and associates to spend money at your business. But they don't all work the same way.
Each business should set specific goals for referrals. Tesla clearly wants new customers. All businesses want that. But your referral program might have other goals, including...
- Earning (social) media attention.
- Capturing leads and contact information.
- Tracking customers' purchases.
- Expanding into new markets.
- Building customer loyalty.
That last one is key. Studies have shown that repeat customers spend 67 percent more than new customers. That's huge. You might think a referral program is about getting new customers, but it's just as much about strengthening your relationship with current customers and earning their loyalty.
Lesson 2: Create a Meaningful Reward
Imagine you're behind the wheel of a Tesla roadster. As an electric car aficionado, chances are you enjoy nerding out about cars and tech. That's why you got a Tesla in the first place. And that's why it makes so much sense that Tesla's referral program rewards customers with exclusive access to company events.
For a guy or gal who likes all the attention that comes with owning a Tesla, what's better than being invited to an unveiling at the gigafactory? The answer: not much.
Tesla's referral program doesn't just help the company get new customers. It gives current customers more of what they want. And by doing so, it takes these customers and turns them into brand ambassadors.
Lesson 3: Decide What You'll Measure
When an employee pitches me a new idea, I always ask what we'll be measuring. What results would qualify as a success for us? A 10% increase in sales? Capturing a certain number of new leads? Improving our NPS score?
You should be asking yourself the same questions. Figure out what you hope to get out of your referral program and set a measurable target. Without a goal, there's no way of knowing whether your program is a success.
Lesson 4: Remember: You're Building Relationships
In my experience, revenue always follows relationships. And a referral program is all about relationship building.
Add a few small touches to your referral program to personalize it. After a customer sends you a referral, send him or her a thank you note. If you have birthday information for customers, send them well wishes or coupons on their birthday. A customer referral program is just the beginning of a relationship. It's up to you to strengthen it.
As small-business owners, we can learn from the best. Take the lead from Tesla. Make an investment in your customers and begin building a loyal customer base.