Giving money away can be the key to business success.
To complement “An 8-Step Guide to Physician Referrals” in the April 2015 issue of MASSAGE Magazine. Summary: Giving clients a discounted session when they provide a new-client referral is standard practice for many massage therapists. Offering a second, bigger bonus has the potential to generate even more referrals, and can make good business sense.
When I present my Build a $100,000 a Year Massage Business six-CEU workshop, I tell attendees their neighborhood car dealership has many sales associates on staff. Then I ask attendees how many people they have selling massage in their businesses. The answer is usually zero or one.
Occasionally, some massage therapist recognizes my trick question and answers, “I have dozens of people selling massage.” That gets the attention of other attendees, and the therapist explains she’s referring to enthusiastic clients. This clever insight incurs ahas from other therapists.
Several years ago, I conducted a research study among about 200 massage therapists who were coaching clients of mine and students of my Build a $100,000 a Year Massage Business workshop. I discovered that when a client makes a referral, the average therapist sends a thank-you note to the referring client and a discount of about $8 off that person’s next session.
In my workshops, when I go through the steps to calculate what the average give-back is, this $8 gift usually feels pretty right to the group. That is, until I analyze what a client referral is actually worth to a massage therapist. What is generally revealed, depending on how many therapists are present and how experienced they are, is that the average client comes about once every three weeks and remains a client for about three years. Let’s do the math: At $75 per massage, that’s $1,275 per year or $3,825 over three years, not counting additional referrals a new client can bring.
The bottom line: A client brings a massage therapist $3,825 in new business and the therapist thanks her with a card and $8 off her next treatment. Is this any way to run a business? Some therapists say yes, looking at the margin between an income of $3,825 and an $8 cost to generate that revenue. (The truth is there’s really no expense in this case; the $8 is a discount off the next session—not a gift.)
I usually explain to therapists the irony here: They’re generally generous with their time, often giving clients more than an hour of treatment when a client’s body needs it, even though they’re only paid for an hour. But as the average $8 discount for a referral indicates, they’re stingy with their money.
A more generous approach is my win/win/win way to conduct a client referral program. Continue offering $8 off the next treatment and the thank-you card, but in the card, indicate that in six to nine months, you’ll send another thank-you.
Then, half a year or three quarters of a year later, analyze how much revenue the new client has added to your business. This is simple to do when you look into that client’s folder and tally how many sessions he’s had. (I assume you keep a file on each client, in which you record the date you see him, what you noticed in his body, and who recommended him.) Let’s say that after six months the new client has seen you 12 times and paid you $900 for your services.
I recommend opening up your checkbook and writing a check for 10 percent of that total—$90—to the client who referred him. Accompany the check with a second thank-you note, in which you express your commitment to win/win/win scenarios, explaining each win: The new client enjoys the benefits of regular massage; you receive extra revenues; and the referring client gets this check for caring about both your new client and you. Encourage her to use the money any way she wants: for a facial, a gift for her kids or grandkids, a donation to her favorite charity. The choice is hers; it’s her money.
As we saw in the NCAA basketball tournament during March Madness, each game, one team won while another lost. Win/win approaches are so much happier than win/lose ones. Win/win/win is even more enlightened. So why not be enlightened and as generous with your money as you are with your time?
Coach Cary Bayer is an American Massage Therapy Association keynote speaker and marketing coach (themassagemarketingcoach.com). He has worked with Quality Inns; Oscar-winning actors Alan Arkin and Pietro Scalia; comedian David Steinberg and director Judy Henderson, both Emmy winners; and 300 massage therapists. He has created 14 National Certification Board for Therapeutic Massage & Bodywork-accredited workshops, as well as two DVDs for massage therapists.