Referrals are one of the best ways to find new customers for your small business. Regardless of your type of business, referral marketing is critical. But finding and making the most of referrals is something of an art. Since word of mouth is one of the major ways for a business to increase their market share, referrals are a tool worth mastering.
This post will demonstrate the power of referrals for building your client base. Then, it will show you some of the tried and true methods for finding referrals and turning them into new customers.
The Benefits of Referrals
Increasing referral business comes with many benefits to your business. Here are the major advantages:
Referrals Reduce Expenses
One of the biggest benefits of referral business is that it allows you to reduce the time and expense associated with moving through the sales cycle. Referrals remove the need to spend energy on time-consuming cold calls. That opens you up to spend more time nurturing relationships, engaging with customers, and closing deals.
Referrals Tighten the Sales Cycle
The faster you’re able to move through the sales cycle, the more prospects you can turn into customers. An efficient sales cycle is the hallmark of a great seller, and referrals are one of the most powerful ways to fast-track it.
Build Your Customer Base, Leading to Further Referrals
Successful referrals will create even more successful referrals, making a positive feedback loop. By making the most of referrals from current customers, you gain new customers. These customers can then begin giving you referrals as well, and so on.
What all of these benefits add up to is increased revenue. As you use referrals to gain more customers, you’ll be earning more revenue and growing the business.
Steps to Building Your Referral Business
Building referrals is a matter of providing great service along with careful planning, goal-setting, and strategy. To master it and make your referral business soar, follow these steps:
Set a Target
The first step to building your referral business is to set a goal. Make an ambitious but achievable goal for how many referrals you want to get, and set a goal date for achieving that number. Without a concrete goal, you’ll be firing blind, so make it specific and stick with it.
It helps to create milestones along the way to measure your progress. For example, if you want to get 15 new referrals for the month of October, you might set a goal of getting two by the end of the first week, three for the second week, four for the third week, and six more by month’s end to reach your goal.
Perfect Your Timing
In sales, timing is everything. Someone who is ready to buy now might not have been ready yesterday—and the might not be ready tomorrow. To make it more likely that you are reaching out to a customer for a referral in the right way, at the right time, here’s a trick.
Once they express that they are thrilled with the service they received, this is the best time to ask for a referral. Let them experience your services or products, and then ask how things are going after they’ve had enough time to become satisfied customers. Since they’ve just complimented your business and told you how happy they are, they’ll be in a positive mental state that will compel them to pay it forward and send more customers your way.
Employee referrals can be great too. They already know your business well, and can judge if someone is a good fit to become a customer.
Focus on the Right Customers
Not all customers make for great referral sources. Focus on those who seem truly ecstatic about the service and care they’ve received. Also keep in mind the customer’s network. Don’t ask for referrals from customers who don’t have lots of people in their network who would be a good fit for your business. Maybe you saw a client post on social media platforms or online review sites how great their experience was with you. This client is giving you the perfect opportunity to do some online referral marketing.
By focusing on customers who are thrilled, and who know a lot of people who would be a good fit to become customers as well, you’ll make each of your referral requests far more productive.
Identify the Perfect Customer
To make sure you get the most from each request, be sure to say something about the kind of customer you’re looking for when you ask for a referral. Provide a clear picture of the type of person you think you would be able to deliver maximum value to, so your current customer doesn’t end up referring you to customers
who aren’t a good fit.
Create an Incentive Program
To power up your referrals and take them to the next level, an incentive, reward program, or customer loyalty program makes all the difference. By offering a reward to customers who make referrals for you, and some kind of incentive to the new customer as well, you’ll increase the number of referrals that lead to new customers. Have a referral form ready for customers that you think are ready to use it, and make it simple to fill out so the referral process is as easy as possible.
Say Thank You
This step is critical, but all too easy to forget. After a customer makes a referral, make sure to acknowledge it with a personalized thank-you. This might be a thank-you card in the mail, but could also be a phone message. (Don’t send a text message for this, as it’s too impersonal). However you do it, every single referral should get a warm thanks!
Increasing your referrals isn’t hard, and it’s one of the best ways to grow your business from your existing customer base. Online content marketing with blogs and social media is one other detail that shouldn’t be ignored, as this increases your online presence, enhances your appearance of expertise and prestige, and will build trust that will help with generating more referrals.
With the time and energy it shaves off the sales cycle, and the self-reinforcing feedback loop it creates to get you more business, there’s no tool more powerful than referrals to increase revenue for your business!