Grow Your Business with Referrals

By: Shaun Barry

If you want to promote your product or service more effectively, let your customers do it for you! That’s the power of referral marketing.

Referral marketing is the least expensive and most powerful form of marketing you can use to increase sales and build your customer base. It works by using satisfied customers and vendors to refer new customers. It’s effective because consumers feel more comfortable making decisions based on trusted recommendations. For example, you are more likely to use the plumber your friend recommends, rather than one you saw advertised in the local paper.

To successfully use referrals to grow your business, you have to ask for them – from your customers and business associates. Start with your best customers and those vendors with whom you do the most business. Referrals from happy customers carry immediate credibility. In fact, a study conducted by NRS Consumer Research (a Madison, Wisconsin consumer research firm) found that builders who rated 91% or better in customer satisfaction gained six or more referrals from previous buyers, while those with ratings of 67% or lower did not receive a single referral.

When a customer raves about your product or service, or a vendor thanks you for your business, ask them for names of people they know who are in the market for your product or service.

You are more likely to gain referrals if you offer your customers and vendors a reward or incentive, such as a gift or a discount when they purchase from you again. Make it easy for them to recommend you when you are not around. Give them your business cards to pass out, and make sure those cards list the web addresses and social media websites for your business.

Once your customers start referring you, acknowledge their referrals in ways such as posting their testimonials on your website. If you promise a reward or incentive for each referral, be sure you deliver on a timely basis. Old-fashioned thank you notes with your signature go a long way, or send an online greeting card to automate the task for you while still delivering a thoughtful message.

Another way to increase the number of referrals you receive is to ask satisfied customers and vendors to recommend your service or product through online services such as Google reviews, Yelp, Angie’s List, and social media sites such as Facebook or Twitter.

In addition, join your local Chamber of Commerce, trade associations, and community organizations. Involvement in these groups is a great way to be immersed in your profession, give back to your community, and make important connections that can lead to valuable referrals over time. Participate fully in the referral process these groups follow because the process is a two-way street. If you refer your associates to potential customers, they will do the same for you.