Thursday, 26 September 2013 21:19

Setting Up a Referral Program with Clients

Written by Terri Wojak

The quickest way to build a successful business is through retention and referral. “It costs six to seven times more to acquire a new customer than to retain an existing one.” – Bain & Company. Marketing efforts can be accomplished through post-cards, social media, public events, e-mail blasts, et cetera. However, there is a cost associated with all of these methods that ultimately affects a business’ bottom-line. The most profitable business models follow “The Customer is Always Right” rule. Nordstrom, a high end department store, is a great example of this; they are known for their exceptional customer service. Their customers feel confident that the accommodating staff at Nordstrom will be happy to exchange or return any product that does not meet their expectations. This philosophy sets them apart from other retailers, thereby increasing their consumer retention.

Think back to the last service you were looking for, whether it was a massage, cleaning service, gym or restaurant. How did you get a referral? Did you simply go through advertisements, ask friends, or look for reviews online? It is much more common today for consumers to look to others for opinions before purchasing products or services. According to Myles Anderson, founder and CEO of BrightLocal.com, 85 percent of consumers say that they read online reviews for local businesses. Yelp, a website based on referrals, is one of the fastest growing websites and many more are popping up on a daily basis. These websites offer consumers a place to post feedback on their experiences and in turn allow others to gain unbiased reviews. Unfortunately in this society, people tend to focus on the negative instead of the positive. There is a general saying in customer service that one happy client commonly tells one person about a good experience; an unhappy client will tell 10 people about a bad experience. This shows that even a few negative reviews can damage a reputation. Myles Anderson concludes that, “Consulting reviews is now a logical step in the purchasing cycle for all types of products and services. The increased quantity and availability of reviews makes the selection process easy for consumers. Whether they’re choosing a nice restaurant for dinner or looking for a new yoga teacher, they can benefit from reading other’s experiences and insights.” Most companies, regardless of how successful, will experience negative reviews. So how do you bounce back from a negative review? It is not simple, but it can be done. The most important way to overcome negative reviews is to outweigh them with positive ones.
threeIt is important to note that when working in a medical setting, no incentive can be given for a referral. The medical community sees this as fee-splitting. The AMA code of Medical Ethics Opinion 6.021 states, “Physicians should not offer financial incentives or other valuable considerations to patients in exchange for recruitment of other patients. Such incentives can distort the information that patients provide to potential patients and compromising the trust that is the foundation of the patient-physician relationship.” This may make it more challenging to build a strong client base, but with some innovative marketing efforts it can be achieved.
A simple way to introduce a referral program in a medical setting is to use what a popular medical marketing company, IF Marketing, calls VIP cards. These are $50 gift cards that current patients can give to their friends and family as a gift. As opposed to giving the current patient incentives, as stated by the AMA, this simply allows current patients to provide a discount to potential new patients. One Chicago-based practice that utilized this tool brought in over $30,000 in revenue over a three month period. This clearly shows the effect that peer-to-peer referrals can have on a client base without direct incentives to current patients. Additionally, medical offices can put out signs that simply state, “Share Your Experience with a Friend.” This brings the attention to the client that it would be appreciated. Make it easy for someone to refer; brochures, cards and educational materials should be easily accessible to patients at check out. If working as an aesthetician outside of a medical practice, there are many more options for referral programs. Those working in a salon, spa, resort or independently can offer incentives to their clients. Value-adds, events, industry discounts and community outreach are of the most lucrative methods.

"Do what you do so well that they will want to see it again and bring their friends."
- Walt Disney -

A general rule of thumb is to avoid free services and discounting with current clients. The goal for a thriving business is to maintain steady revenue while continuing to grow the client base. This is to ensure that you are not reducing your established income. For example, you have a great client that comes in on a monthly basis and is constantly recommending your services to others. Most providers would automatically think to provide her with a free treatment. It is important to show the client that they are appreciated without losing revenue. The best option is to give the client a value-add. In addition to still maintaining the full cost of the service, you can introduce the clients to new services. Some examples would be to add a back, hand or décolleté treatment, which could be valued anywhere from $50 to $150. Another example is to add on a microdermabrasion treatment or a mild chemical peel that can be easily incorporated with minimal time from the provider and low overhead. Once clients are introduced to new services, they will likely see the benefit and continue to upgrade to these treatments. By implementing this type of referral program, you are not only maintaining your revenue but opening up doors to build even more revenue.
Providing a home care product is another option as a value-add that can be beneficial in the long run. As with the add-on service, introducing something new will likely get the client excited about it. This can be a good opportunity for retail sales through repurchasing when the client sees improved results on their skin. When promoting a product with a referral system, ensure that the cost is reasonable. It can be something simple like a sunscreen, a trial-size customized regimen, or a specialty product. A popular option is an antioxidant serum that shows immediate benefit for all skin types and conditions. This type of value-add can entice clients to try additional products that they may not originally
have considered.

"The question of incentivizing clients on the “spa” side of a “medical spa” may come into question. Most medical practices offering skin care services offer them directly under the medical practice. If, and only if, the aesthetics department is separately registered as a spa can referral incentives be offered for that department only."

It is well known that client referrals are a great way to build business, but it is equally important to actively market your services as well. Connect with other professionals involved in the beauty, health and wellness industry. Networking with hairstylists, makeup artists and nail technicians that do not offer aesthetic services is an enormous opportunity to build clientele. While receiving cosmetic services, customers are often thinking of other steps they can take to improve their overall appearance. It could be a back-and-forth referral system where you and another provider offer value-adds to each other’s clients. Another option is to provide discounts for industry professionals. This is different than discounting your current clients; the industry professional should be thought of as a model that shows off your work several times a day.
Events are a fun way to promote to current clients, as well as bring in new clients. Partner with businesses that will likely result in referrals: boutiques, bridal shops and lingerie stores are good places to start. The event should be used as an educational tool as opposed to a sales tool. It can be an evening cocktail hour with an hour long talk about skin rejuvenation techniques. Charging for tickets will help ensure that attendees show up, even if it is $10 that will be given to a local charity. Invite those in professional associations and women’s groups, always providing tickets for you and a friend. This has a dual benefit; people are more likely to attend an event if they have a friend to spend the evening with. This also provides opportunity for double the attendees. Product companies will often sponsor these events with samples, gift bags or financially. This is equally beneficial to them as a way to introduce their products. Events often result in excitement resulting in immediate sales.

Regardless of the method used for referrals, the most important aspect of building a successful skin care business is customer service. The skin care industry is constantly evolving with more
licensed aesthetic professionals each year. Set yourself apart from the competition by going above and beyond with every single client. Happy clients will result in retention, referrals, and ultimately a fulfilling and prosperous career.

Terri-WojakTerri Wojak has been an aesthetician for over 16 years. As the Esthetics Director, Business Manager and Lead Educator of True U Esthetics, Wojak lectures at multiple aesthetic conferences each year and is frequently published in industry magazines. She has trained over 1,000 aestheticians and medical professionals in the art of advanced skin care with a specialization in techniques used in a cosmetic medical setting. Beyond the techniques and treatments, Wojak makes sure students are trained to succeed in whatever setting they choose, with extensive experience and knowledge in business development and marketing.

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