Tutorial Details
Subject: Marketing
Difficulty:
Published: January 2, 2014

Referrals are undoubtedly one of the best ways of generating new business. Not only are referrals a free or low cost source of customers, but they also tend to become your best clients or customers. This is usually because those that get in touch have a positive opinion formed about your business and are comfortable by what you have to offer before you even begin to provide or sell them the service.

A recommendation from a friend, family member, colleague or associate could be the deciding factor that influences someone to select your company over another.

Whilst referrals can be the best source of new custom, very few businesses actually influence customers, friends and family to recommend them.

The comfort and ease of which you feel towards asking others to refer your business is dependent upon your confidence and the belief that you provide a quality service, that you are comfortable with your pricing structure and that you believe you add great value to your customers lives or businesses. If you feel comfortable and confident in your business, then you will have little hesitation in asking others to refer you.

In order to increase the number and frequency of referrals you must have a structure in place that influences and encourages others to refer you.

This is where you will need to create, develop and master a referral program that works for your business.

You may question as to exactly how you could influence your customers to refer you, and what you could do to increase the frequency and quality of the referrals.  However you will soon realise that you have an abundance of options available to you once you begin to thing outside of the box and create slip stream processes that both your referrers the customers understand, and your staff are aware of.

Asking for Referrals

It may seem obvious to ask people you know to refer business your way, but it’s likely that you don’t or haven’t as of yet. Politely asking friends, family and associates to refer customers to you is not offensive and it’s highly unlikely that it would be taken the wrong way.

We recommend you inform your friends, family and associates of the services that you offer, how those services help your customers, what your typical client base includes and how much your services cost. It may sound like a long winded ordeal to deliver all of this information, but it’s not and it will pay off in the long run.

Example:

We’re a web design company that works with start-ups and small businesses, we help companies get online and attract new customers. Our services tend to cost anywhere from £120 – £1,500, so there’s an option for everyone. If you come across anyone looking for some advice, then feel free to send them our way.

Contact Acquisition

You could offer incentives or an exchange of likely referrals with your current client base. It’s likely that your customers associate themselves with other businesses that also require your service. This is why an exchange of contact details could work tremendously well with your current customer base.

It’s advised that you contact the clients that you share the closest relationship with before you begin to propose this to everyone.

Some customers will not be up for this form of marketing; these tend to be the cautious, conservative businesses that are happy with how things are and do not have great ambitions to grow the company.

Offers

Vouchers, discounts and trials are all great marketing tools that help your friends, family, associates and current customers or clients refer your company.

It’s most effective when you have a hard, physical copy of your offer that customers can pass on. Not only will this thoroughly engage and lead the conversation, but the whole notion of ‘giving’ someone something immediately makes your referrers feel comfortable in passing your information along. Not only is this but they will feel even more comfortable if they are able to pass on a good deal, don’t forget that a discount is not the only way to add value to a deal, adding an extra service or product is an effective way to add value to an offer as it usually costs you far less than reducing the price.

Incentives

Companies such as Sky and most Gym’s are great at offering a ‘shared’ incentive for current and new customers to benefit from joining the group or going through with a current offer.

This type of incentive can be far more effective than any other as there is a mutual and multiplied benefit to being part of the deal. An offer such as introduce a friend and receive one months free membership or refer a friend and receive 5% cash-back (basically a commission) are effective ways to incentivise others to refer your services. The immediate thought that springs to mind for most small business owners is that they don’t like the idea of losing a percentage of every sale that they make. This is an extremely closed and negative outlook on business and marketing.

Once you realise that marketing is effectively ‘buying’ new customers as cheaply as possible, you soon become very open to any concept that includes giving as well as receiving. If you spent £1,000 on advertising that generates 2 new customers worth £2,000 each then you’re effectively paying 25% or £1,000 to buy those new customers.

How is this any different ‘other than it costing you a lot less money’ to pay for referrals that you receive? You don’t need to be a marketing wiz to realise that cost of 5% is far less than paying out 25%. Obviously these are just made up figures but you get the point.

Email & Social Media

Sending offers, deals and voucher codes via email or social media are other strategies to promote and share your offers. Not only is this cost effective for you as there is very little to no outlay in having this set up and sent out, but it also enables your recipients to pass on or redeem your offer.

Summary
The key to a successful referral strategy is to have more than one strategy in place. Never become reliant upon one form of marketing or one means of generating new business for your company. Many businesses have collapsed through the reliance on one or two strategies; any business that relies on such methods is treading a very thin wire.

Ultimately if you want referrals to work for your business, then you must act upon making this happen through effective strategies and processes that help others refer your business.

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