Need a terrific, proven, low-cost way to grow your business? Finding more referrals and using the ones you have to better advantage is a simple, cost-effective way to gain new business, and regain old customers.
For example, the folks who run my fitness club are masters at referral marketing. They’re constantly running a promotion for referring new members with discounts, free training or free stuff. Signs, banners, stickers and mailers make it impossible to miss. Millions of small business owners know the magic of referrals, which offer instant credibility for what you sell. Doctors, dentists, consultants, attorneys, Realtors and other professionals have always relied heavily on referrals to drive business. So why don’t more of us use referrals effectively? Mainly because it’s harder than it looks.
For one thing, referrals come in different forms and flavors. If someone merely provides you a name and email address, that’s low-grade referral. But if a customer actively talks up your product or service, sets up a meeting or brings the prospect in the door, that’s a Grade A referral.
Here are seven keys to getting more and better referrals:
1. Implement a referral-generation plan: Referrals aren’t automatic. Some business owners assume that a great product or terrific customer service will generate referrals by default. Not so. You have to learn to ask, and make sure employees are on board as well. Don’t be shy. Most customers are open to being asked for referrals. Some even appreciate the opportunity to tell friends, family and associates about something good they’ve discovered.
A word of caution: The worst time to ask for a referral is at the cash register or when you present a bill. Look for opportunities earlier or later in the process when customers are more receptive. There’s really no predetermined time to ask. Do it whenever opportunities arise.
2. Provide some ammunition: Don’t ask customers to recommend you to others without offering them some backup. It can be as simple as a supply of your business cards, or a link to a special page on your website. Or it could be a brochure your latest newsletter or some other type of printed material that describes what you do and can reinforce the referral.
3. Offer Incentives: The type of incentive you offer must fit with the kind of business you run. It could be a discount, service credits, an upgrade, a free item or some other trigger that will entice clients to provide referrals. Don’t be afraid to test offers to find out what works best.
Communicate details of your referral program to your best customers through whatever means you have available, including a blog, newsletter, email or customer mailings. And be sure to thank customers when they make referrals.
4. Get the right information: When asking for referrals, consider using a form, checklist or web-based system that requests details that will make the referral more valuable. A simple name and number isn’t really a referral at all. It’s just a lead.
At the other end of the spectrum are referrals where the customer actually facilitates a meeting, visit or purchase by the referred person, in person, by email or otherwise. This makes the customer an active agent on your behalf.
Between these two extremes are referrals where the customer authorizes you to use their name when contacting somebody, a letter note or email from the customer to the referred person, or an introductory call.
5. Target your most influential customers: If resources are limited, consider seeking referrals only from your most influential customers. These might not actually be your best customers, but they are the people whose opinions would carry the most weight with other people in your industry, community or customer base. By targeting these influencers, you avoid spreading yourself too thin or generating weak referrals.
6. Target related businesses: The health care profession is one of the most adept at fostering referrals between complementary disciplines – specialists, imaging services, physical therapists, medical equipment suppliers and others. Consider the same strategy yourself. Contact businesses that provide complementary services to your own and ask for referrals.
7. Build your relationships: This takes time, but it’s critical because many of your most influential customers won’t provide referrals until you gain their complete trust. You’ll want to treat each customer contact as if it’s critical to your next referral. Through each sales, marketing or customer service “touch” you are building a foundation of trust that that will one day lead to a valuable referral.
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Filed Under: ManagingSmart
About the Author: Daniel Kehrer, Founder and Chief Content Officer of BizBest Media, is a senior-level leader in digital media, content development and online marketing with special expertise in startups, SMB, social media and generating traffic, engagement and leads. He holds an MBA from UCLA/Anderson and is a passionate entrepreneur (started 4 businesses), syndicated columnist, blogger, thought leader and author of 7 business and financial books.