advertising which the company undertakes: ‘It does not take many
of these “service encounters” to encourage the development of a
relationship either with Nordstrom or with the individual sales
person. Nordstrom does whatever it can to encourage these rela-
tionships.’
Customer base development (company-initiated
customer referrals)
Advocacy referrals (the previous subcategory) involve the cus-
tomers initiating the referral. In this second subcategory, the
company undertakes a set of activities or a programme, aimed at
their existing customers, leading to customer referrals. This may
involve a simple request for referrals from customers or offering
some form of inducement to the customer. Whilst advocates on the
relationship marketing ladder, described in Chapter 2 of this book,
will frequently be active in initiating referrals, ‘supporters’ – the
next rung down the ladder – whilst positive to the organization,
tend to be more passive. Asking for a referral can be a very good
way of generating business from this group of supporters. For
example, a study by File, Judd and Prince^5 of referrals by lawyers’
clients found that only 49 per cent of the clients reported they were
asked by law firms for a referral. Of those who were asked, 95 per
cent provided at least one referral, whilst only 8 per cent of those
who were not asked provided a referral. In most organizations we
have had discussions with, few of them have any formal processes
for requesting referrals.
Membership organizations represent one sector where consider-
able effort is made to use the membership base to reach further
members. American Express, The Institute of Directors, wine clubs
and many similar organizations have regular promotions aimed at
generating new customers by using their existing customer base.
Frequently these ‘member get a member’ marketing efforts are
accompanied by some form of incentive, inducement or reward. The
rewards may be offered at several different levels based on the
number of new members recruited. They typically include reduced
or free annual subscription, special privileges, Air Miles, gifts of
champagne and bottles of wine, Mont Blanc pens, or entry in a
special prize draw.
Referrals from customers are amongst the most relevant, effective
and believable sources of information for customers. Kotler and
The referral and influence market domains 227