Written by Megan Denny
Advertising trends come and go, but word-of-mouth marketing remains the most effective way for a business to gain new customers. A study by McKinsey and Company, a renowned worldwide consulting firm, found that “word of mouth is the primary factor behind 20-50 percent of all purchasing decisions. Its influence is greatest when consumers are buying a product for the first time or when products are relatively expensive – factors that tend to make people conduct more research, seek more opinions, and deliberate longer than they otherwise would.”
It makes sense when you think about it. Most people value the opinion of a friend or family over an ad on television or an irrelevant ad in their social media feed. Some new PADI® marketing tools make it easy to boost customer referrals and word-of-mouth marketing.
Word-of-Mouth versus Paid Advertising
The McKinsey and Company study also found, “Word of mouth can prompt a consumer to consider a brand or product in a way that incremental advertising spending simply cannot.”
Zappos founder Tony Hsieh told Forbes, “We take most of the money that we could have spent on paid advertising and instead put it back into the customer experience. Then we let the customers be our marketing. Historically, our number one growth driver has been from repeat customers and word of mouth.”
Another reason to invest in word-of-mouth marketing? Friends who dive together, keep diving. You don’t have to be a PADI Pro for long to see lifetime friendships, and even long-term romantic relationships, form between divers.
Start a New Diver Referral Program
If you don’t have a new diver referral program currently, here are the basic steps to get started:
1 – Decide on incentives
The most effective referral campaign has a two-way offer: a spiff for the current customer and something for the new diver. Dropbox, Lyft, AirBnB and others have successfully grown their business on two-way referral programs.
Lyft offers a $10 US ride credit (approximately one free trip) for both the referrer and the new customer.
AirBnB has a more costly product (an average night’s stay can range from $90 – $200 US), so their referral deal offers $20 US to the referrer and $40 US to the new customer.
When deciding on your referral incentives, here are a few things to consider:
- What incentive will truly motivate people? Think of an activity you’re interested in trying: snowboarding, golf, mountain climbing, DSLR photography, etc. What would convince you to invest money on this new activity?
- Similarly, think of an activity with a significant start-up cost. What would motivate you to actively promote this activity to friends, family and co-workers? What level of incentive would inspire you to not only forward an email, but follow-up with that person and really try to sell them on trying a new experience. Use this gut feeling as part of the decision making process.
- What is the value of a new customer? Consider the net value from course fees, eLearning payments, charter bookings, gear sales, etc.
- What can you offer that’s high-value but low cost? Incentives don’t have to be discounts or store credit. You might offer two weekends of free gear rental, a free afternoon boat dive, or a guided shore dive with photos. The important thing is to include the value of your incentive in your marketing materials so people gain an appreciation of what they’re getting for free.
- Know someone who might like to explore the underwater world? Share our Friends and Family discount.
- The person you refer gets free rental gear for the course ($150 US value)
- You’ll get $50 US store credit towards a gear purchase or a free weekend gear rental ($50 US value).
2 – Make the referral process easy
The key to a successful referral program is a simple referral process. Ideally, the customer should only have to do one thing, such as:
- Forward this email or link
- Tag someone in this post who should try scuba
- Give this postcard to a friend, family member or co-worker
- Mention this offer when calling the store
- Bring a friend to the last night of confined water training
If your offer is good enough, the customer will go above and beyond the first step.
3 – Determine how you will track referrals
You’ll need a method to track new customer referrals, who referred them, what follow-up efforts have been made, and which marketing efforts are bringing in the best results (Crew Pak inserts, social media, emails, etc.). You can set up a spreadsheet, but to make sure you don’t miss anyone, put a sticky note with your new student paperwork and/or modify your student learning agreement to ask, “How did you hear about us?”
4 – Teach staff how to promote and use the program
Make sure employees are not only aware of the referral program, but also help them understand how and where it can be used. For example, when store credit is given to a customer for referring friends, make sure staff know to mention this credit while can selling equipment. If a customer is indecisive about buying a computer because of the cost, staff could encourage the customer to refer friends to earn money toward the computer purchase.
- Get the word out by sending an email or a role-play video to staff.
- Create a one-page quick reference guide about your referral program benefits and how to log referral activity.
- Remind staff that referrals are earned and delivering superior customer service is key.
5 – Try a friends and family weekend
If managing an ongoing referral program sounds like too much work, try a friends and family weekend instead. Invite current customers to bring a friend for a free Discover Scuba® Diving (DSD®) experience. If staff resources and pool space allow, offer current customers the chance to try out some new equipment at the same time. Then, give the friends time to play around in the pool together.
Some stores ask Open Water Diver students to bring a friend to the last confined water training session. While the instructor finishes up skills with the student divers, another PADI Pro leads a DSD.
Whether you host a DSD weekend, or have students bring a friend to the last confined water session, it’s important to close the sale that same day. A proven way to motivate people is to offer a one-day-only incentive.
6 – Get the word out
Use online and in-person collateral to share your offers with customers. Visit the Marketing Toolbox section of the PADI Pros’ Site to download flyers, postcards, posters and web banners in various sizes.