1. Converting your customers into promoters
If you happen to have browsed fairtrade clothing range People Tree's website recently, as I have, you may have noticed the call to "Become a People Tree Promoter!" The blurb goes like this: "People Tree Promoters sell our clothing to their family and friends in a wide range of fun ways, and as a thank you we give them a discount as well as other benefits." Customers place one big order for them and their friends, and get 15% off if that order is more than £250, 10% off for £100. The customer who spearheaded the group buying - the 'Promoter' - then gets a neat little range of other benefits going forward.
This is a really easy model to copy - just make sure you do your costing carefully, so the bulk buy discount doesn't eat away at your profit margin too much.
Having a brand your customers are inclined to want to share helps too. People Tree's incentives are two-fold, really, because you're also making the world a better place when you sign your friends up to buy more fairtrade clothing from them. But that doesn't mean the idea doesn't carry to other industries...
Group discount buying is being pioneered by lots of hot new online start-ups too. In the cases of sites like MyCityDeal and LivingSocial, customers sign up a certain number of friends to a deal to enable the whole group to get a discount. In the case of LivingSocial, you get a free deal if you get three friends to sign up. Small local businesses offer the discounts through the site, arranging how it will work with sales reps from the site. This article in The Telegraph explains more about the pros and cons of signing up to the websites as a small business, and tips on making it work for you.
This is a trend that looks set to mushroom, too, so it's well worth investigating: new companies in the sector have attracted funding from heavyweight investors Brent Hoberman (who co-founded Lastminute.com) and Michael Birch (who founded Bebo and is also, we're proud to say, a Smarta investor). Get your offers on one or two of these sites, and watch new faces fly through the door. As Indian restaurateur Ali Aktar says in the Telegraph article: "I felt it was a positive exercise because it generated some new, fresh faces. I was quite astounded."
We covered this idea in our web chat with Smarta's founder Shaa Wasmund and 4Networking founder Brad Burton, but in a nutshell, it means giving your customer a service so exceptional that they can't wait to tell their mates about it. Yes, it's basically the most traditional way of incentivising word of mouth that we're talking about here, but that doesn't mean it's any less valuable or effective. As Shaa explained in the web chat: "For me a fan is a customer who doesn't just buy your product, it's someone who engages with your brand, tells other people about what you do and returns to buy from you again because they value the special service you provide them. But it's by no means simple - you can't buy fans, you have to earn their love and respect with extraordinary levels of service and by going further to please than anyone else.
"It's about getting the small things right as well. People expect you to do get the basic, big things right - that's what they're paying for. Give them something extra they didn't expect and they'll remember you."
Brad added: 'Everything from approach, packaging, culture, ethos, all go some way to making fans out of customers. Look at the ipod boxes: you are already seduced by the Apple store service, the 'no security', then the box, the smile, the smug feeling listening to the player... smart smart smart. You don't get the same experience when you go buy a Samung YP2 MP3 player from Curry's."
Add extra value that goes over and above what the customer expects, and you're that bit closer to converting them into a fan.
This is a super-simple one that's been tried and tested the world over - offer customers a discount for referring a friend. It's a simpler structure to set up than the group buying ones mentioned above, so can be a great first foray into the world of discounting. Think of every time you've been to get your hair cut - how many of those times have you walked out with business card saying: "Refer a friend and get 25% off your next blow dry?" I've got about seven of them in my handbag right now.
Offer incentives for customers to refer a friend, and you've effectively simulated the word of mouth effect.