related post: The Story of How JetBlue Turns Customers into Advocates
If you ask a cross-section of business people what they think about Zappos’ ‘customer first’ policy of referring customers to competitors (when they can’t find what they want on the Zappos website), you’ll get a lot of varied answers. Certainly won’t get a majority of agreement with this strategy.
There may be times when a customer enters your business and you don’t have the exact product or service they need. What should you do when this happens? Should you offer your competitor a customer referral? Or, just tell your customer there’s nothing you can do to help? The answers may surprise you.
The most famous example we could offer? In the 1947 movie Miracle on 34th Street, the man hired to play Santa at a Macy’s Store in New York City readily told Macy’s customers where to go to find that certain toy Macy’s was out of or where to buy a toy at a lower price. Those at the top were angered at first, but in the long run, the idea was an awesome promotional tool with newspapers boasting headlines, “Macy’s Sending People to Other Stores!”
Although this was a holiday movie, the idea behind referring your customers to competitors may be something to think about—for some good reasons.
Helps you engage
…with your customers in the best way, we could imagine. Talk about a way to be remembered and talked about.
Great opportunity
… to connect with other businesses in a joint effort that will benefit both you and your competitor.
True centric – customer-centric DNA
Companies have DNA — all of them. But not all are the kind that great businesses are built around. Beyond having a central vision (DNA), its influence on your day-to-day operations is equally critical.
Having a great vision written on the wall is meaningless unless it resonates across everything your team does every day. When you see a company that oozes that central focus, it reflects very strongly about the potential of the business to build on that foundation to create growth.
Zappos ‘refer to competitor’ tactic (when they don’t have an item in stock) — reflects an incredibly strong customer-centric DNA.
The primary focus is not only to maximize revenues but to get the customer exactly what they’re looking for. It’s also ‘un-corporation like’ to center on the customer to such a degree that, rather than trying to sell them something similar that is in stock, instead they are referred to a competitor to get the exact product they want.
People love to share the ‘exceptional’ story. Every time Zappos sends a customer to a competitor, they give that customer something worthy of sharing. Something that’s worth writing about and gets people wondering about what makes a business unique.
Getting prospects focused on your uniqueness is one of the biggest and most important marketing challenges. When small business gestures can create that chatter, then they have far exceeded the value of the actual transaction.
Sure Zappos is sending them to a competitor, but who’s going to have the better brand connection at the end of it?
Loyalty is as dependent upon trust as it is about more typical product-centric factors like pricing and benefits.
Customers recognize that they are likely to need the same products or services again and what their really looking for is to find a vendor that they can ‘trust’ over the long term to keep delivering exactly what they need.
Trust building opportunities are rarer than selling opportunities — so when they do come along it’s worthwhile to make the most of them.
Highlights your confidence
Finally, the process also shows off the confidence you have in the products you sell or services you offer.
Say you have an auto repair shop that does almost all types of repairs but you don’t have an alignment machine or your machine is not operational. What’s your best course of action?
If you refer your loyal customers to a repair shop you trust that does perform alignments, not only will customers be pleasantly surprised, they will come back to you for all their other auto repair needs.
Why? It’s based on the Miracle on 34th Street idea—“Macy’s told us where to buy the toy we wanted and at a cheaper price. How nice of Macy’s! I’ll be shopping there again real soon!”
And, customers will spread the word that your business has the customer’s needs at heart, meaning you are going above and beyond and don’t mind customer referrals to your competitors.
Today’s consumers are very savvy and they want quality customer service above all other things—often even price. Telling a customer where they can buy the product or obtain the service they need when you don’t have it ensures loyal and long-term customers.
And here is a great follow-up technique. Remind them of your top-notch referral system by sending out a postcard and ask, “How did your experience with ABC Company go?” and “We look forward to seeing you soon!”
Send customers to competitors with the right message
In a book by Doug Gold, Fun Is a Serious Business; the author discusses why you should mention your competition:
“It signals that, firstly, you are not at all frightened of your competitors and, secondly, it positionsyou as being a leader in the market, so confident of your position that you can afford to actually praise competitors.”
Think about this for a minute! Confidence and belief in your products or services is an absolute must in today’s competitive world and if you convey your beliefs via referrals, consumers will be swayed and begin to believe you really do offer what you say you do (even if that means referring a customer to a competitor now and then).
Try partnering with other businesses and be confident about your offerings if you too want to gain a steady and healthy customer base.
Takeaways
Have you implemented customer referrals to your competitors? If so, how’s it working for you? Drop us a comment, we’d love to hear your story!
Need some help in building better customer trust from your customer engagement? Creative ideas to help grow your customer relationships?
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Mike Schoultz is a digital marketing and customer service expert. With 48 years of business experience, he consults on and writes about topics to help improve the performance of small business. Find him on Facebook, Twitter, Digital Spark Marketing, and LinkedIn.
