An Overlooked, Timeless and Profitable DM Strategy

An often overlooked strategy to create significant profitability is a well-planned and executed friend-get-a-friend campaign. When I was the marketing manager for the Sesame Street Book Club in the 1980s, it was the most profitable initiative we did. The dilemma is that you have to have a good base of customers before …

An often overlooked strategy to create significant profitability is a well-planned and executed friend-get-a-friend campaign. When I was the marketing manager for the Sesame Street Book Club in the 1980s, it was the most profitable initiative we did. The dilemma is that you have to have a good base of customers before you can create a friend-get-a-friend program.

The direct marketing division at Western Publishing was a small piece of a $300 million corporate company driven by retail book sales of Little Golden Books. I’ll always remember sitting in a meeting with the CEO, who admitted he didn’t know a lot about direct marketing, studying the profit numbers and exclaiming “let’s do more friend-get-a-friend!”

It’s just that you have to have customers before you can get their friends to become customers.

Back in the 80s, we mailed millions of Baby Boomer households with children an offer of the Book Club. We also used magazine ads, inserts, and other media to acquire new customers. Those efforts were often at an initial loss, but profit was made up by persistency (or retention) of buyers over time.

But it was the lowly ride-a-long insert inside the monthly product shipment that brought in the most profitable new book club members.

Today, with the cost of direct mail, many marketers are looking at less expensive (but not always more effective) channels. Any of us in this business for any period of time knows that it’s ultimately the cost of the newly acquired customer, and the customer’s long-term value, that determine where you should invest money to acquire new customers.

So if you’re an established marketer, there are some specific ways to grow your business with your customers as your sellers. By the way, if you’re a start-up, I’ll offer a different set of suggestions in a future column.

  1. Your offer is very important. Sure, you can put a flyer in your outgoing product shipment suggesting that your customer pass it along to a friend. But you might have to do more. Back when I managed the Sesame Street Book Club, we assumed a significant reason a parent would give our flyer to a friend was because they wanted a friend to buy their own subscription instead of lending their child’s book. Might you be in a situation where your customers don’t want to physically share your product?
  1. “Pay” your customer with your product, or credits toward purchase when they refer friends to you. But don’t make this complicated.
  1. In today’s digital environment, since you surely have email addresses of your customers, you can cost-efficiently reach them with email to ask for a referral, but make sure you’re clear about what’s in it for your customer to refer their friends.
  1. Social media is another massive opportunity for friend-get-a-friend. Assuming you have a Facebook page, pay to sponsor posts to “friends of friends who have liked your page.” This is where you need to create a great intro in the social media post, and a strong landing page on your website to close sales.
  1. Encourage reviews, and importantly, allow your customers to share their reviews on social media. Yes, this feels like a mine field. If you get a bad review, your customer easily spreads the word. Monitor all comments and let this your opportunity to make good on the problem, and turnaround a poor review from someone who could become a rabid fan.

Before you launch into a friend-get-a-friend strategy, you need to understand what your customers already like about you. Ask them what it would take for them to refer their friends to you. Then build your program (or modify an existing one) around what will excite your customers enough to send highly profitable business your way.

(My new book, “Crack the Customer Mind Code” is available at the DirectMarketingIQ bookstore. Or download my free seven-step guide to help you align your messaging with how the primitive mind thinks. It’s titled “When You Need More Customers, This Is What You Do.” )