December 28, 2009

No matter how you slice it – referrals are still every small businesses best source of new customers.  But think about the last time you got a referral – what happened?  Someone called you up and mentioned a previous customer’s name.  They said that this person spoke highly of you and that they’d like to have you come out and bid on a project. 

Chances are you probably got about 8 or of 10 of those customers.  Why? A referral is a stamp of approval from a trusted source.

So if that’s the case – why do so many of us treat referrals as if they were some kind of happy accident or surprise gift?  Take just a minute here and do some simple math with me.

Take all the customers you had this year.  Sum up all the revenue from those jobs.  Now what if each of those customers brought you one more customer just like them?  Your revenue would nearly double – just like that!

So – let’s stop treating referrals like an accident and start treating these referring customers like the enthusiastic salespeople that they are.  Here’s how:

1. Develop a referral guideline that outlines what sets your company apart, describes your ideal customer and tells the person referring you the things that this customer might say that should trigger them to think of you.  Write this guideline down.

2. After a customer’s job is completed, and you’re ready to finalize the paperwork, sit down with you customer and explain that you only work with great people – just like them.  Bring out your referral guideline and “read” it to them.  At the end, ask them if they can think of anyone right now who might fit this description.  Ask them if they wouldn’t mind making an introduction in the next week – don’t put this off.    Ask this customer to tell you what they loved most about the job and working with you.  Write it down and ask them for their permission to use it as a testimonial.

3. Put all your customers on a mailing list – either hard mail or e-mail.  Both is better.  Stay in front of them.  Invest in useful small gifts and mailings that match your business.  Stop in and check in on the work you did, ask if there’s anything you can fix for them (around the job you did) all this takes is your time – but no money and it yields gold in referrals.  This again an opportunity to ask them if any of their neighbors might need some help.

Building referrals is the same as building relationships.  Your referrals are a free sales force and all they require is some care and feeding.   Your only investment is time and energy, but they payoff is HUGE.

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About the Author: Ivana Taylor is CEO of Third Force, a strategic firm that helps small businesses get and keep their ideal customer.  She’s the co-author of the book “Excel for Marketing Managers” and proprietor of DIYMarketers, a site for in-house marketers.  Her blog is Strategy Stew.

Join the conversation ( 6 )

• Egbert Oostburg 1 year 12 months and 16 days ago

  

  I had to include this post on my blog. If so many business consider their referrals as their best income channel, have they created a system to not only thank and garner more referrals, but also demonstrate to your fan that their input and actions is of considerable value to the business?
  Thanks, Ivana!

• TJ McCue 1 year 12 months and 20 days ago

  

  You are so right, Ivana. When I think about where I get most of my business, it is when I've followed some of your process. Now if I followed all of this process, I might have a lot more biz! Thank you.

• PAUL ROSENFELD 2 years 1 months and 9 days ago

  

  Great piece Ivana. At Intuit we learned 2/3 of all business a typical business gets is from existing customers and most is from referrals. I like how you try to formalize the most important "invisible" marketing program.
  
  I understand you and Bob are chatting and look forward to connecting with you soon. Best, Paul @Fanminder

• Ryan Hanley 2 years 1 months and 10 days ago

  

  I whole-heartedly agree with both Jill and Suzanne. Jill: Staying top of mind and the "first choice" the next time the same needs arise. Suzanne: I will be putting together my referral guidlines this New Year's weekend and will implement into my Service/Sales strategy going forward.
  
  Thanks for the great piece Ivana...
  Ryan H., www.ryanhanley.com

• Suzanne Shaughnessy 2 years 1 months and 11 days ago

  

  I think this article will be the foundation of my New Year's resolution! Thank you for the ideas and inspiration!

• Jill Fehrenbacher 2 years 1 months and 12 days ago

  

  This is great, and it's something I feel is often overlooked in customer service. Delivering excellent customer service isn't about making that one experience good for a consumer, it's about making sure you're their first choice the next time the same need arises. However, too often, a company offers excellent customer service, creates a referral opportunity, and then never follows up. This accounts for many missed opportunities, I'm sure.
  
  All in all a truly insightful post.