What’s the Best Way to do Referral Programs? – DSP 238

Derek and Graham talk about the many tactics they’ve tried at Float On with developing referral programs. They’ve tried many things with varying success, from affiliates to endorsements to discount codes. All with varying success. The favorite tactic at Float On, of course, is giving away free floats and developing relationships with others in the community.

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Transcription of this episode… (in case you prefer reading)

Graham: All right, hello everybody. I am Graham and we are joined today with Derek Wyatt.

Derek: Yeah, that guy.

Graham: Who does a lot of our social media marketing in addition to being one of the main forces behind floattanksolutions.com which is what this podcast is for, so.

Derek: If you’re listening, job well done me.

Graham: So welcome again Derek, and Ashkahn’s not going to be with us today, because he is working hard on making sure the Float Conference happens this year. So that’ll be in mid-August, make sure to come out and join us. Hopefully we’ll get a chance to see you all there.

Derek: Float Con by Ashkahn.

Graham: Yeah, Ashkahn’s Float Con. And in the meantime, we’ve got a marketing question which is, “have you ever done a referral or affiliate program so other people sell floats for you?”

Derek: We sort of have through perhaps the Helmbot, you know, employees that is.

Graham: Yeah, so we haven’t really launched into a huge affiliate referral program that has been successful, and certainly not as large as other centers try to do. So, you know, in this case, usually, I guess, just to explain to the audience what we’re talking about in case you’re not familiar with some basic referral affiliate structures is I think there is usually one or two things that will happen here. Which is, you’re giving your customers or a select group, the ability to either get compensated with free floats or to get compensated with some sort of money for in turn, selling floats. Sometimes this will even look like you can sell bulk floats, like if somebody wanted to buy 20 floats at 50% off, and they could go resell them for more money would be almost like another option besides just referral or affiliate.

I would say of those, the most common that I see is for is there’s a discount, right? You open this up to all of your customers and any one of your customers can refer a first-timer. So if you refer someone over and it’s their first time coming to your business, they get like 20% off or whatever. You might see, if they refer over three people, then they themselves, get a free float. So everyone they refer gets 20% off, and then, as they refer more and more people they keep cashing in on floats. So that’s like the most common set up that I see. Is that, in your opinion, the most common that you see, too?

Derek: Yeah. It’s basically like if you bring in so many people you earn a float. I don’t know if that, even though it’s the most common, I don’t know if it’s the most perfect way to do it. So some of my thoughts behind something like that is, I almost look at it as a bounty, right? So like, “you go out and bring me three heads and I’ll give you your gold”. You know? It’s like when those heads find out that they were only brought in so a person can get paid, it’s really kind of some resentment, especially if it’s amongst close friends.

Like I had a buddy that ran a martial arts school and he would be like, “All right, bring in all your classmates and you’ll get a ticket for a raffle for an Xbox at the end of the season.” All these students would come in and they’d see their friends getting tickets to the Xbox. They’re like, “Where do I get my ticket?” “Well, you got to bring in your friends for a ticket to the Xbox.” “Well, I was brought in- Wait a second,” and they started seeing the true reason why they were brought in. It wasn’t because I enjoy this and I want to share it with you, it’s because there is a price on your head.

Graham: Yeah, so I was going to say, outside of the customer one, one of our kind of failed referral programs was with wellness practitioners. So trying to get masseuses and people who run general wellness clinics and acupuncturists, yoga teachers, to basically sign up. We do things anywhere from they’d just have brochures at our center and we’d have float brochures at their place to if they sent in a certain number of people to float, we’d actually compensate them with money or give them free floats in return. Pretty much all of those completely decayed within about a month or maybe two at the longest. They never really went anywhere and we never saw many referrals.

We did, on the other hand, start getting a lot of referrals from wellness practitioners who we basically made friends with and would offer free floats. Like a great example, which I think I’ve even given before on the podcast is we have an acupuncturist across the street, Chris Bonackson who’s great and he’s awesome and we love him. He gives free acupuncture to our staff pretty much whenever they want it, and we’re basically just like, “Hey, Chris, you’re great. We know you like floating, just come over and use the tanks whenever you want. We just want to support you and your practice.” As a result, he always has our brochures in his place. He always refers clients over to us. So it’s almost like the making friends and giving out free floats, in some cases, can be better than a structured referral program for exactly what you’re saying.

To get to my point of building on your point was for wellness practitioners, especially, it’s like they got into their fields a lot of times because they want to help people. They want to know that they’re doing the right thing by people. There’s this, I feel like they almost feel like a substitution of intrinsic motivation when you give them a reward. All of a sudden when they’re referring people over to float, they kind of look inside and they’re like, “Am I just referring this person over because I want a reward?” And then they’re almost less likely to do it. Yeah, weirdly, because they are getting rewarded for it, so. Yeah, that was an example of one that didn’t go well for us when we’ve tried it. That’s not like an all customers kind of thing, that was just wellness practitioners, too.

Derek: And I think, you know, there’s something that has to do with like the law of numbers, right? Like referral programs, but more importantly, like affiliate programs, it takes a lot of people to see that person’s blog posts with an affiliate link that links back over to your site for them to eventually use the discount code, or whatever the case may be, for them to actually receive any benefits. So a lot of times they don’t take off just because it takes a lot of audience to trickle down to actual conversions. So by the time people actually do start seeing some benefit, they might have lost interest in it, because it takes a while to get momentum for an affiliate or referral program to kick off.

Graham: Yeah, and I guess I do, I’ve always like the idea of a referral program. Building on what you just said, just with links on a website, for example, I guess there are a bunch of different ways to set this up, right? You can get custom affiliate links that you’re just paying per click over to your website on, you can get affiliate links where you’re paying per-

Derek: Conversion.

Graham: Yeah, actual purchased conversion based on cookies. I kind of think the best way to do it is just with a discount code.

Derek: Yeah, and actually there are some legal ramifications with affiliate codes that a lot of people don’t understand. If there’s an affiliate out there representing you, whatever they say, you’re held liable for. So, for example, in this fictitious scenario, I give Graham an affiliate code and say, “Place this on your website and whatever you need to do, bring people over to my site, when people click on it, I’ll pay you a dollar.” So they’ll say all kinds of things. “It’ll cure back cancer!” Like, you know what? Who’s responsible for that? It turns out it’s the float center. You’re still responsible for the actual message and wording that other people are saying about you online with affiliate programs. So that’s something to be concerned about, too.

Graham: Yeah, and if you’re launching into that, I guess making sure that you have your ducks in a row as far as the restrictions that are placed on what people are allowed to say and give them marketing material. It’s not something to go into without probably a little bit of consulting.

Derek: A lawyer.

Graham: A business lawyer, yeah. Where a discount code is a little more open. And again, it can easily cross that gray line into the court can just decide what you’re doing is running an affiliate program anyway. But putting out a discount code, asking for personal referrals, really common practice and I don’t feel like stumbles as much into the danger territory, but that can differ per area. So consult your attorney, we are not attorneys, in case you couldn’t tell by how we’re talking.

Let’s see, a discount code is nice and make sure there is also this nice symmetry of exchange going on where sure, the person who is giving out this discount code is ostensibly getting free floats or getting a discount themselves, but they are also giving the recipients something nice. They’re able to give their friends 20% off or give them present.

Derek: Being transparent, so if you’re going to, instead of doing like an exact bounty on someone’s head, you can do like a mutual benefit compensation. Like, “$10 off your next float and, oh yeah, everyone I also get $10 off, too.” So it’s like, “Okay, I understand I’m getting $10 off, but you’re also getting $10 off.” Be transparent about it and make it mutually like you’re evenly getting the exact same kind of discount, so it’s not like, “All you have to do is bring in three people and this person gets a free float.” You can still do mutual benefit discounts.

Graham: Sure, I guess in that sense, doing like a 33% discount and every three referrals someone gets a free float just kind of fits into that symmetry of exchange.

Derek: It’s still worth it for the person that’s spreading the word because after three, they’re going to get a free one.

Graham: Yeah, so I like that. Little shameless plug for the FloatHelm, too. FloatHelm makes it really easy to set up a referral program. So even though we haven’t done it too much at Float On, I know there are a lot of centers out there who are using them. I am kind of curious to see how that’s going.

I’d say, just kind of closing this out, one reason that we haven’t played around with them too much at Float On, is because our tanks have been very full since we opened. It’s always been, I mean, it’s been like a good scenario to have, right? You’re cranking along with your marketing, but if you are above 65, 70% capacity, thinking about how you’re incentivizing people coming in and rewarding them is probably worthwhile. In this case, doing a referral program is probably something I’d try either in the summer, it just may be a summer thing to test it out. You know, always test things before you give them a whirl. Probably only if I was at less that 60% capacity, I might kick this in.

Derek: Yeah, that’s a good point, too. Always test it out. That seems to be the Graham motto, too.

Graham: Test everything, yeah.

Derek: Test everything.

Graham: Because we’re often wrong and our assumptions are faulty. Even is something was true a year ago, a bunch could have changed and it could not be true now. So always test things, even if you’ve already tested them before.

Derek: One thing I think I would also add on top of everything is these referral codes or affiliate links or whatever the case may be, are often tied to a discount. If you’ve ever listened to an episode of this about marketing, we’re against discounts. Arbitrary discounts, group discounts, whatever the case may be. All you’re doing is just going out and putting a smattering of thoughts into people’s minds that, “Oh, I can probably, if I do the right Google search get $20 off my float at any given time.” And then why charge full price?

Graham: Yeah, that is very true. That is another reason we haven’t done it at Float On is we probably would want to go the discount model.

Derek: But the Helmbot, another plug, you can charge your most trusted people, maybe give away some floats and that will probably be a little more effective to get people to try floating and get somebody to get a little power to go out there and spread floats through the town. I know, who was it? Float Toronto that does that? That gives Helmbots to some of their top members?

Graham: Yeah, for sure.

Derek: And they can go out and give a handful of floats every month to people.

Graham: Yeah, and influencers, too. If you have a famous comedian who comes in and floats with you or you have a famous martial arts fighter or something like that, giving them the ability, the reins to give out free floats as they see fit, is both a really nice compliment and a great way to get in other people who they know and other influencers.

Derek: Right.

Graham: And it’s amazing, people will not abuse that. Or if they do, they’re the outliers.

Derek: Right.

Graham: It’s so like, as soon as you give people this kind of power to really take advantage of your business, it’s amazing how much they respect that and don’t take advantage. They do the exact opposite, in fact. Sometimes we have to convince people they are allowed to give out more free floats than they think they are. So, yeah, it takes a little leap of faith to do that, and even for members or something like that, be like, “Give out as many floats as you see fit.” Or, you know, “If you want to give out five or six floats a month, go ahead and do that.” They probably will even give out less than you say. So it’s a cool experiment to run yourself.

Derek: And as we’ve learned in the past, just because they are giving free floats, doesn’t mean they’ll use them. So the redemption rate is also another factor to consider.

Graham: Yep. And again, they’ll just think it’s awesome. Like it’s a really cool present to be able to give your best customers. So try that out, maybe as just another experiment, rather than running a series of discounts is just helping spread free floats a little further than you normally would.

Derek: I like it.

Graham: Okey-dokey. Well, if you have any more questions, go on over to floattanksolutions.com/podcast.

Graham: And we will talk to you all tomorrow.

Derek: Bye everybody.

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