My wife has found a dentist she loves.  She doesn’t appreciate him because he makes her teeth whiter or takes away her pain when she has neglected her teeth.  She loves her dentist because he has given her $150 in gift certificates.

When she first walked into Dr. Painter’s dental office, she was told about a dental referral program offered by the practice.  For every person she referred to the dental office, she would receive a $25 gift card to the merchant of her choice.  Having a family of 5, she quickly got her first $100 in gift certificates.  Add in her parents, and she was up to $150 with very little work.

This dental referral program seems to be working extremely well for Dr. Painter as he recently hacked and upgraded his program by creating a sales process.  According to his website, Dr. Painter’s dental referral program still provides a $25 gift card for the first referral, but each referral also provides an entry into a quarterly drawing - the current prize being a Weber Grill.  Furthermore, the second referral has been increased to $35 while the third dental referral results in a $50 gift card.  

Once a patient has given three or more dental referrals who begin treatment, they achieve VIP status. As a VIP, they continue to get $50 gift cards for each additional referral, a birthday dinner on Dr. Painter, 5% off all of their dentistry, and a chance to win prizes from a monthly drawing.

Dr. Painter seems to understand the power of a referral.  A power that every business should consider.  The following are four reasons why every business should consider implementing a referral program.

INSIDE SALES

As business owners, we understand that sales generally come from two places: existing customers (inside sales) and new customers (outside sales).  Statistics show that making a sale with an existing customer is much easier than getting a new customer.  

But new customers are essential for growth. For that reason, referral programs are a fantastic solution to outside sales as the business owner is only selling directly to their existing customer - outside sales are actually made by making inside sales.

LEVERAGING TRUST

A second reason why referral programs are so powerful is that they leverage trust.  Once convinced, an existing customer will be able to bring in a new customer to your business because of the trust already established between the existing customer and the referral.  

Trust takes time to build, but since we have already built trust with our customer and they have built trust with their referral, we are simply able to leverage this trust without actually creating new trust, which often takes time, money, and a good amount of hard work.

REDUCED ACQUISITION COSTS

The third benefit of a referral program is that the program can actually reduce the acquisition costs for new clients.  For example, Dr. Painter is willing to pay $50 for referral.  This may seem like a lot, but when you look at the alternatives, this expense is most likely very effective.  

If he were to take the $50 he pays his existing patients for their dental referral, he could possibly send 30 mailings to neighboring houses.  But how many mailings would it take to get a referral?  Even if Dr. Painter was able to achieve the average $51.40 cost per lead the Direct Mail Association states is the national average, $50 is still cheaper than the alternative.  

Plus, referrals take less work to come by and actually help to increase customer satisfaction, something that direct mail cannot do. 

THE PROGRAM SELLS ITSELF

The final reason a referral program is so powerful is that it really sells itself.  Dentists are specialists.  They spend years learning and mastering their profession.  But for those dentists have their own practice, they are also responsible for sales.  

The power of Dr. Painter’s referral program is that existing customers become excited about referring their friends and family as a $50 incentive is often worth ones time and effort.  This means that a well designed program will work for the dentist - existing customers will start soliciting prospects in their networks with very little effort from the dental practice.

The end result is that a dental referral program is one way that dentists can focus on their technical skills while the program literally sells itself.