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Join Our Research Team at DMA 2014
Oct 27, 2004
Case Study

How to Grow Your Business 40% by Cutting Search Ads in Favor of a Customer Referral Program

SUMMARY: Is click fraud (competitors clicking on your links) trashing your paid search ad budget? After four years of search campaigns, one marketer decided he'd had enough.

For 2004, he decided to try something radical -- no outbound ads or marketing at all. Instead, he launched a customer referral program, asking current clients to help his company find new ones.

Accounts soared by 40% and his sales team is very, very happy with leads generated. Find out exactly how he did it:
CHALLENGE

"We used to do a tremendous amount of PPC search ads," says Conference Calls Unlimited CEO Zane Safrit. "It was a viable model. It worked. I could turn it off for 30 minutes and predict within five sales leads how it would change our numbers that month."

Safrit's marketing team continued search marketing for several years, even as click costs began to rise. "It became very expensive, but we had a 55-58% lead close rate so we could justify it."

But by late last year, the numbers no longer worked. "Competitors were pounding us with fraudulent clicks at $10, $20, $30 a click. After about four months of this, I said no thank you to PPC."

Undaunted, the marketing team tested the top five tactics they'd heard were working for other b-to-b companies:
- A viral campaign
- Ads in third party email newsletters
- Direct response ads in trade magazines
- A print direct mail campaign with telemarketing follow-up
- Web site chat

To maximize results, they invested in top-notch landing pages and an inbound teleservice team -- but to no avail. "None of them generated measurable results."

At the same time as marketing results were sagging, Safrit's industry was evolving from a specialized service into a readily available commodity. Partly this was due to the fact that search engines themselves made it possible for prospects to now surf and compare dozens of competitors offering nearly identical services.

When you are in a commodity marketplace, price wars become a problem. But, although Afrit's team offered pretty good prices, they didn't yearn to be the rock-bottom provider. They wanted to be the best.

How can you position yourself and market effectively against cheaper look-alike competitors? "We had to move into the next phase of the company."

CAMPAIGN

Safrit and his team knew the cut-rate competitors worked in a frenzied environment where all-too-often "customers were jerked around." Telecommunications is not a peaceful river.

Conference Calls Unlimited decided to position themselves as the exact opposite. The new company mission statement was simply: "Our Customers." (Safrit says, "Anything else is just wordy pabulum.") To that end, everyone on the team from techs to sales reps agreed to "lavish attention on the customers."

The marketing team ceased all outside advertising. 100% of communications, budget, and energy were now focused on generating goodwill, referrals, and testimonials from current customers.

Step #1. Generating goodwill

Each new account received a series of communications, including a welcome letter from customer service (link to sample below); a follow-up phone call from their sales rep after the first time they used the service; and a follow-up call from the CEO, Zane Safrit, himself a month or two after that to check on how things were going.

"I'll say thank you for being our customer, hope everything is ok. Here's all my contact info including a direct cell phone. If you have any ideas for improvements or you're not happy, please call me."

Safrit also scheduled regular time in his daily calendar to call at least two current customers, and asked sales reps to do the same. He starts a typical conversation, "I'm sorry to interrupt. I know you're very busy, but just wanted to know how our service is working for you."

He followed up all calls with a quick thank-you email for their time.

In addition, the marketing department began to publish a monthly email newsletter for customers. Again, it focused on the customer rather than the company. In fact, each issue included hotlinks and descriptions of several current customers. Safrit figured why not help customers build their own businesses by working with each other?

Plus, the company ran monthly drawings, randomly giving away gifts such as an Amazon gift certificate or an iPod. No one needed to enter to win -- as long as they were a customer. Winners' names and hotlinked URLs were posted to the main company Web site.

Other thoughtful customer-appreciation gestures included giving away free conference call services for Father's Day so customers could use the service for personal purposes.

Lastly, as Safrit notes, "All this is moot if we don't deliver great service at a great price and if we don't jump through major hoops to make any and every customer happy." (You can be sure that any complaining customer received an immediate, "how can we make you happy?" CEO phone call.)

Step #2. Generating (and rewarding) referrals

If you want more customer referrals, you have to ask for them. The sales team was instructed to politely ask customers for referrals on an ongoing basis. Plus, other company communications, including the email newsletter and customer service notes, often (but not always) mentioned the referral program.

Why not always? Because if you ask too much, it gets obnoxious.

Safrit set up corporate accounts with several gifting services, including Amazon and a chain of florists, so anyone on the team could send a customer a "thank you" gift easily and quickly for referrals. These gifts were sent with personal notes often regardless of whether the referral panned out into new business or not. "It's a tangible way of saying thanks for the courtesy."

However, the team did not promote the referral rewards program very much. "We had some fear and trepidation that someone might start barraging us with hundreds of referrals just to get a hundred Amazon gift certificates..."

Sales reps were also rewarded by getting the commission when one of their clients submitted a referral who purchased, even if they were not the rep who closed that deal. The team set up a database to ultra-carefully track these referrals and assign rewards appropriately.

Safrit hoped this would encourage reps to lavish more attention on current accounts rather than focusing only on prospects.

Step #3. Generating written and video testimonials

Although advertising campaigns ceased, new traffic to the site did not mainly due to the referral program.

Safrit never wanted a prospect to contact the company and not receive the attention they deserved. But the fact is, sales reps have limited time and can only focus on the top easiest-to-close leads. So, he took an unusual step -- he asked the company Webmaster to pull down all lead generation forms from the site.

Instead, if a visitor wanted service, they were forced to call the phone number prominently displayed at the top of every single page. On one hand, this cut lead flow dramatically. On the other hand, it ensured that leads received were so far into the sales cycle that they were likely to convert within a matter of days.

Plus, the sales team never had so many leads that potential customers had a bad experience while waiting to be contacted.
Safrit laid down the rule that every single in-bound call had to be answered within three rings. He hire on more reps as needed to cover calls, and had all 4th rings automatically routed to his own personal line for coverage.

But to get these calls coming in, the site had to be extremely compelling. Safrit figured what could be more compelling than loads of customer testimonials from named (and pictured) customers?

Again, to get testimonials you have to ask for them. The marketing and sales team used all the same tactics they had to request referrals.

Plus, they also tested asking for video testimonials. In this case, they contacted happy customers via phone asking if they'd like to be involved. Ten folks who said yes were sent a free Logitech PC videocamera (cost about $60 each.) Then the team handheld these ten clients, via email and phone, to help them make their videos.



RESULTS

"Based on paid accounts and paid minutes of use, we've grown by over 40% this year!" Safrit says proudly. But is it sustainable growth? Well, after nine months the site now has three times more monthly visitors than it did when the team relied on outside advertising.

More data:

- 60-65% of visitors who call the phone number as prospects are converted to customers. (The old conversion rate was 55-58% from mainly search marketing leads.)

- Seven of the ten customers who said they'd do a video testimonial wound up sending one in. 6% of home page visitors click on the video testimonial that's posted there.

- The site is loaded with written testimonials and happy client photos. In fact Safrit told us so many have come in that the Web department is backlogged in terms of getting all the new ones up. (Don't you wish you had that problem?)


Useful links related to this story:

Creative samples from Conference Calls Unlimited:
http://www.marketingsherpa.com/ccu/ad.html


'Testify! How Remarkable Organizations are Creating Customer Evangelists' - a new free eBook in which we first heard about Conference Calls Unlimited's marketing programs:
http://www.creatingcustomerevangelists.com/


Conference Calls Unlimited
http://www.uconference.com

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