If I could ask everyone who reads this article what their best source of new business is, the most popular answer will almost always be “referrals” or “word of mouth.” And it remains true: The recommendation of a trusted friend, contact or colleague to a new customer or prospect about your business leap-frogs you several steps forward in building trust with them.
But, if I could also ask you to describe your process for referral marketing to ensure a steady stream of referral leads into your business, I’d be willing to bet that most of you do not have one.
What I see many times in working with clients on a referral marketing program is that they get referrals for new business, they like it, and time moves on but, this is usually considered nothing more than a “lucky accident.”
This is an unfortunate thought process, and here’s why – while referrals are your best source of new business:
If your current referral marketing program consists simply of, “I hope one comes in this week,” there are definitely things you can and should do to ensure a steady flow of high-quality referral leads into your business.
Referrals can come from both happy customers and from referral partners with whom you share a common target client base.
You do not have to constantly pester your happy customers for referrals. You can easily generate a good number of positive referrals by:
Another idea to generate referrals is to leave postcards, business cards and notes with your customers to hand to others – but don’t just include your run-of-the-mill contact information. Include a customized offer so you can track and thank those who refer you and show your new referral customers how you do business.
Similar principles apply when you work with other companies who you can refer to and who can refer to you. While running an effective referral program takes some effort, it can yield dramatic growth over time.
First, identify who your referral partners are, or who they could be. Are there certain individuals and companies you consistently do business with and who share a common target market? For example, if you’re a home builder, your partners could include Realtors, lenders, moving companies, and insurance agents. If you’re a restaurant owner, look to your suppliers, local art galleries, movie theaters or craft breweries for marketing partnership opportunities.
Once you have identified who your partners are, stay in touch with them at least twice a month. This may be through a call, email, lunch, or coffee but try to personally and regularly connect with your best referral partners and learn what’s going on in their business, bring them a referral, and update them on your business.
And, when you close a referral from a partner, thank them. Gift cards, a thank you event for all your partners, or even cash compensation can all work. I have a colleague who keeps a spreadsheet of all his partners and assigns points (which convert to cash and prizes) for referrals. This method works fabulously to grow his business – so much so that he does very little other marketing and has basically grown a sales force for his business that are not included in his overhead! Think of it this way – what’s a new customer worth to you? Would you pay $100 (or $50 or whatever amount) for a high-quality referral lead that turns into a new customer? The math gets compelling pretty fast when you think about what a good new customer is worth when it comes from a referral.
To grow new referral partners, be sure and educate them about how important referrals are to your business and how you handle referrals once received. The quicker they understand your process and care in working with referrals, the sooner you will see results from your efforts.
If word-of-mouth and referrals are where most of your business comes from today, why not double-down and put a system in place to develop a steady stream of leads from these referral sources? Effective and highly profitable referral marketing can quickly become your one trusted and consistent source of new business.
Most cities have formal networking groups that exist specifically to help you gain more referrals. For example, I am a part of a Business Networking International (BNI) chapter in my city, which has been a great source of new business as well as more referral partners. Unlike many other groups, BNI only admits one person per profession into each chapter, so you could be the only builder, restaurateur, salon owner, etc. in the chapter, which means all of the referrals for that profession go to you. Such groups pay for themselves very quickly in their ability to deliver new referral business. Visit such a group this month (or call me and you can visit mine) and see if it’s a fit for your business.
If you’d like to discuss your referral marketing or any other aspect of your marketing program with a small business marketing expert, please give me a call (501) 485-3048 or drop me a line: email@example.com.