Know-How Exchange : Strategy

Dear anusha.rajamani,

Won't the industry average depend on the industry? Retail is a pretty wide area.

Retail of what?

Cars, fine wine, vacations, handbags, shoes and groceries are all retail and each one of these areas has differing groups of people apportioning differing levels of value to them.

So, retail of what?
To whom?
Where?
In what market?
To which group of shoppers?
To which income groups?
At what price point?
On what frequency?
With what incentive?

Before figuring out "incremental anything" you need to know what's going to drive current your customers to refer their friends and colleagues to you, otherwise your projections won't mean anything.

To know this you've got to ask them, you've got to get inside their heads. Money or discounts alone might not be the driving factors.
You've got a lot more homework to do here before you can attache it to your card. you've also got to figure out if having the the card is really worth anything.

Just because it's worth something to you DOES NOT MEAN it's worth anything to your customers. What benefits do you offer the card holders and what value do they place on those things, if any?

I hope this helps.

Gary Bloomer
Wilmington, DE, USA

... So like a Costco or similar?

Anusha, the bad news is there just aren't any averages that are going to be meaningful for you.

Referral rates are going to be based on the relevance and attractiveness of the incentive to the existing account holder.

Referral success (i.e. those who take up the new store card) will be based on the relevance and attractiveness of the offer to the recipient of the referral.

Pick your targets carefully, make them a brilliant, relevant, attractive offer, and you might find more than 50% of the customer base decides to refer you to one or more of their contacts.

Get it wrong, and referral rates might be less than 0.2%.

I would suggest focus groups, pilot offers and split testing to see which offers get the best response.

Good luck.

ChrisB