Ideas for a Referral Program

Cutting into your own margins is a bad idea. I wouldn't do it.

I'd find a complimentary offer valued by customers that is easy for the other business to provide--preferably at no or low cost (a membership site/video training series is an example), and ideally leads to an upsell for them. Make the referral bonus that first complimentary offer.

This way, the other business gets to build a relevant buyers list (since the customers already bought from you), and the chance to build their own customer list.

Is this training business in person locally or online? It makes a huge difference.

If I were "consulting" your family member... I would be suggesting #1 Facebook Shorts, #2 TikTok, #3 Instagram.

Obviously in all 3 places we are talking video... and short ones at that as in How to properly do a lung... or how to do a plank and n and on and on - each and every segment of what may be included in a workout. Quick pre workout hydration, post workout hydration What to eat.. the topis go on and on and on

Specifically to draw business - I would be paying attention to Instagram... I would ask them to search by location ( town they live in ) and start commenting - Nice pic - wow thats cool yada yada - it WILL draw traffic to his Instagram feed. Gary Vaynerchuk's $1.80 strategy

A referral system I used for many years in retail worked like this;

The buyer had to make a purchase of $350 or more for me to offer the program.

I would offer them four gift certificates worth $20 each. I wrote one out in their name and asked them who they would like to give the other three to. Then I wrote their names on the certificates. One per referral. Each gift certificate was for someone specific, and they couldn't be combined when redeemed.

They told me the names of the other three people who would get the gift certificates. I wrote their names on the certificates and told the buyer to give them to their designated friends.

This is from memory, but it's pretty accurate.

About 40% of the gift certificates were eventually redeemed.

About 80% of those redeemed would buy something for about $20 (maybe a little more) and that was it.

About 20% of those redeemed bought a high end vacuum cleaner from me. The average price in this program was $550.

Here is why this made money. (This includes the certificates to the buyers themselves)

The people that didn't redeem their gift certificates only cost me about a dollar for each certificate (printed on hard card stock).

The ones that got their $20 worth from the certificate only cost me an average of $6 each in actual merchandise. And most of these people bought enough that the cost in goods and the certificate was covered. So there was no real cost involved.

The average certificate used to buy a vacuum cleaner gave me an average $300 in net profit.

It only worked because I only gave the program to my higher end buyers. They helped sell the idea of buying a vacuum cleaner from me. They raised the average sales price, because of what they had paid.

Had I given this program to non-buyers as well, it would have filled my store with other non-buyers. I know, because I did that for a couple of weeks and lost money.

Buyers know buyers. And your buyers will help you sell to their friends, especially if their friend gets something out of it.

The person that had already bought, who got the $20 certificate, couldn't get $20 back off what they already paid, but could redeem it right then for whatever they wanted.

Anyway, it can be used for any type of direct sale.

One thing I did NOT do, that I should have done...is call each of the customers that had all three friends buy a new vacuum cleaner...and offer more gift certificates. My guess is that it would have doubled my results from this program. But even as it was, it was a thousand dollars or more per week in extra profit, with almost no marketing expense.

It's been long enough ago, that I can't remember where I got the idea or if I created the program myself. But it sure was profitable.

Added later; I should mention that there was selling involved. I created a script that I used every time, and quickly learned all the ways customers would try to take advantage of it. It took a few months to work all the bugs out.

Bouncing off of Claudes response. Referral programs and "Product" its easy to internalize the cost of a discount... Offering $20 when there is $300 on the top end.

Once this steps into "Service" and I might say particularly this type of service ( personal trainer ) you are billing based on time... and you can only sell yourself short. There are only so many hours in a day.. you can only service so many clients etc etc. $20 isnt such a big deal... but a free anything is $45 $75 $100 $200 an hour? and there isnt the space to absorb the cost.

The one gap that can be looked at in this scenario would be Life of Customer. You then chalk up the "Discount" as cost of on boarding, because you are creating a 6 month or 16 month or 2 year relationship thats obviously long term worth far more than the initial offer.

The hard part in this scenario is the fact they are just starting. Do they even know the estimated life of customer? We can look at some demographic data and understand that in relation to Gyms... 80% of the market is under the age of 30 and 16 to 24 yr olds keep memberships for 16 months. Going older... 50+ yr olds will stay with the gym for 24 months - but we are talking 8% of the market.

It - sounds - as though they are currently offering a Month at a time... I am assuming 4 appointments per month - we can guess $40 an hour $160 a month. Your family member should be charging in full a month in advance as in for services to be carried out in July.. the payment for July should be collected the 1st session of the month. If the client misses a day... they have paid for the time slot. They ( the family member ) could also have a group make up session once a week for those that missed their regularly scheduled slot.

Doing this you then have financial leverage to offer a discount say $40 off the first month - and on the other side $40 off for the client that is referring. Seems like a big pill to swallow... and this is where life of customer falls into play. Even at 12 months with on boarding costing $80 you are looking at a value of $1920.

Take this even a step further and you can quickly see that we can now understand how many clients the family member will need to afford the current life style. 2 clients a day 5 days a week $1600 a month... 4 clients a day 5 days a week $3200 a month and so on.

I think most look at oh 20 clients isnt that much - That will be a squeeze - a tough road to haul - a huge time suck.

Something we have suggested would be to book "Group Sessions" might add here that it has mostly been women that do this.. say a group of 2+ women at $30 each, that tend to work together and meet at the gym 2X per week and work out together. The trainer has a circulation of exercises they work through.

They ( family member ) has to maximize their time for this to be like a full time job... there are only so many hours in a day - and mid day is going to be void of clients - unless you target that market specifically - stay at home types. So early Am and later PM - to get to 4 a day start thinking 2 early am and then 2 later PM - the trainers I know that do this, its 6am and pm and 7 am and pm - and the ones we work with have a day job themselves in the middle.

hope that helps!

"I really don't have much experience with referral programs, so I'm reaching out to you guys for ideas."

I would suggest to look into new types of referral programs, for example, income sharing programs (ISPs). For the reason that it is a new type of referral program and many businesses do not have ISPs you may have a competitive advantage over other similar businesses.