Customer referrals are one of the best and most cost-efficient ways that a small business can grow. Referrals are similar to word-of-mouth but even better because the best ones bring purchase-ready customers or clients right to your doorstep or website, complete with an existing customer’s endorsement.
The magic of referrals is that they provide instant credibility for what you sell. So it makes sense to not only foster more referrals but also be smarter about the ones you generate. Some referrals happen “organically” when customers simply do it on their own. But there’s also much you can do to foster even more and better referrals.
Finding and using referrals effectively, however, can be harder than it looks. Referrals come in several different flavors. For example, if someone merely provides you a name or email address, that’s a low-grade referral or just a lead. But if an existing client actively talks up your product or service, sets up a meeting, or brings the prospect in, that’s a high-grade referral.
Here are some things you can do to boost your referrals:
Put a referral plan in place
Don’t assume referrals will happen automatically just because you have a great product or service. You should have a plan for generating them. Basically, you have to ask. Don’t be shy. Most loyal customers are open to providing referrals. Some even appreciate a chance to tell others about something good they’ve discovered.
But ask at the right time
Timing is important. Many businesses ask for referrals at the wrong time. The worst time to ask is at the cash register or when you present a bill. Instead, look for opportunities earlier or later in the process when customers are more receptive to talking up your business.
Provide some support
Don’t merely ask customers to recommend you to others. Offer some kind of backup or support. For example, it can be as simple as a supply of business cards, or a link to a special page on your website. It could also be a brochure or some other type of printed material that reinforces the referral and describes what you do.
Offer appropriate incentives
Incentives aren’t always necessary but can often be helpful. If you do offer an incentive, it 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. Test different offers to find out what works.
Get the right information
When asking for referrals, consider using a form, checklist, or web-based system that gathers information to make the referral more valuable. A simple name and email address is a start, but other information on what the potential customer needs would be helpful.
Check out Extole, a cloud-based software platform that helps businesses generate referrals.
Target your most influential customers
If resources are limited, consider seeking referrals only from your most influential customers. These might not be your best customers (those who spend the most money with you), but they are the people whose opinions would carry the most weight in your industry or community. By targeting these influencers, you avoid spreading yourself too thin or generating weak referrals.
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.
Build your relationships
This takes time, but it’s critical because many 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 marketing or customer service “touch,” you are building a foundation of trust that will one day lead to a valuable referral.
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