All clubs referral-driven sales percentages vary. What percentage of your sales are driven by referrals? Most of the data that I read from IHRSA states that most clubs get approximately 50% of their sales from existing members. If that is the case, then it presents some very intriguing questions.
1. If I give my sponsoring members valuable gifts for sponsoring members, will they get me more members than they are currently bringing me?
2. If I don’t give them anything, will my referral-based sales drop, or stay the same?
3. Should I increase the value of gifts, if members bring me more than one new member?
4. What incentives make the best referral gifts?
If you ask 100 managers these questions, you will get 100 different answers. I believe the number one reason that clubs have lower than expected referral sales is they don’t ask for them. I’ll deal with that in a moment. I have been running referral-based promotions for 20 years and here are my top 10 Referral Rules:
1. Yes! Members will bring you more members if you give them valuable gifts. However, you can’t just announce what the referral gifts are. You’ll need a system in place (i.e. sending members trial memberships) that periodically gets members to give you referrals so they can earn the gifts when their friends join.
2. Yes! If you don’t give them anything your referral-based sales will stay about the same, or go down.
3. Yes! You should increase the value of the gifts that you give members as they get you more members. Why? Because the cost of the referral gift usually never comes close to the amount of cash most clubs currently are spending on marketing. The average club spends between $150 and $300 dollars to get a new member. Take the cost of your last marketing campaign and divide it by the numbers of sales you closed from it. Don’t forget to include commissions
4. What makes the best referral gifts? I have found that members like high quality, logoed club gear and club wear the best. The secret to this is they cannot buy it. It’s easier for them to buy it than it is to get you a new member. So, the gifts have to be something very special that you don’t offer members in your pro-shop.
5. If you want a large volume of referrals, you should offer the referral a trial membership. Give them a chance to try the club before they decide to join. Members will be much more receptive to giving you the names of their friends if they know they are going to be contacted and offered a trial membership as opposed to being contacted to join.
6. Reward members for giving you the names of their friends, even if they don’t join. “Wow, this guy has got to be nuts!” I know that’s what your thinking, but stay with me on this one. If you have someone sit in a high traffic area of the club and offer members a gift for giving at least two names of friends, how many names would you get and how many sales would you get from those names? Let’s say you are giving a set of headphones or a club t-shirt for every two names you receive. Your cost for these gifts is about $3.50 each. You should be able to get two hundred names in a short period off time (don’t forget to offer those referrals a trial membership). Out of two hundred names 100 won’t be interested. Out of the remaining 100 names your sales staff should be able to set at least 40 appointments. If you get 20 new memberships from this effort, was it worth your investment?
7. Make sure the referrals are contacted. I have actually found salespeople getting referrals and not calling them. Make sure you have a system of accountability to ensure there is follow up.
8. Make sure you have a system that gives the sponsoring member a thank you letter and their gift immediately. You should also send them a couple of trial certificates so they can work on getting the next valuable gift on your referral rewards tier.
9. Set a referral standard at your club. Most sales reps don’t know what the clubs referral standards are because the club has never set this expectation. My referral standard has always been a minimum of two point-of-sales referrals. I also set a standard that sales reps had to get 20 referrals from existing members each week. That’s only five a day. I can get five referrals in fifteen minutes working the floor or calling my members.
10. Make sure your salespeople know how to ask for referrals, especially at the point-of-sale. If a professional referral presentation is not given, the numbers are going to be low.
If you’d like me to email you my point-of-sale referral presentation, just send me an email and I’ll get it to you right away!
Jim Martin is the President of Powerful Promotions. He can be contacted at 877.822.5577, or by email at jmartin@powerfulpromotions.com , or visit www.powerfulpromotions.com .
