Every small business owner I speak with tells me that most of their best customers come from referrals. But get this, many of these small businesses have no system or process to get referrals. In this article, I’m going to show you how to create a referral program that leverages your existing clients to get referrals.
Why are Referrals Important?
Every business referral you get saves you thousands of marketing dollars. Referrals are important to your business because they become loyal, profitable customers. Customers who are referred to you by someone else are not just more loyal, but more profitable. According to an AMA study, referrals are 82% more likely to stay loyal to your business and have 25% higher customer lifetime values.
How Can I Get Referrals Fast?
The way to get referrals fast and consistently is to get into the referral business. Instead of focusing solely on your product or service, recognize that you are in the business of generating referrals.
Structure your business in a way that inspires and makes it easy for both potential customers and your existing customers to provide client referrals.
There are two ways to do this:
- Make sure that every part of your business is designed to delight your customers so that they provide a client referral.
- Create multiple customer referral programs that make it easy for your customers to provide online reviews, and that remind clients to refer you to their friends and family.
Keep reading for unique referral marketing ideas and tools that will help you develop a customer referral program that is seamlessly and naturally integrated into your business.
Design Your Business to Get Referrals
Believe it or not, your best referral program is providing a killer customer experience. This starts with everything from the sales process to customer service and support.
Instead of putting all your attention on your products and services, focus on your current clients and look for every opportunity to generate referrals.
Here are a few easy ideas that will cost you absolutely NOTHING and drive more than 80% of your customer’s experience.
Feature your contact info prominently: Post your phone, website, email, and social channels everywhere! Make it easy for customers to contact you no matter where they are.
Create and keep updating your Google My Business information: Google is your home page! your current clients are more likely to mention your name and city and referral prospects will Google your business. So make sure that your listing has your work ours, images, and any other important information a new client might need.
Focus on friendliness: Every person who contacts and comes into your business wants to give you money! And, the quality of their first experience will determine whether they complete a transaction or not. Neither you nor your team has the luxury of wearing your frustrations on your sleeve.
Deliver the very best on time, every time: Customers are willing to overlook cosmetics and pay more if they consistently get outstanding product and service quality.
Build a Customer Referral System
I took a class on building a referral system a few years ago and had a major epiphany: Referrals are not supposed to be a surprise! They are not something you hope for. Referrals are not some magical benefit that falls from the sky – at least they are not supposed to be.
If you had a magical marketing tool that means possibly hundreds of free salespeople evangelizing your company, product, and or service — you don’t just leave that up to chance, do you?
Of course, you don’t. You treat it as a customer-generating process that will consistently yield all the wonderful, ideal customers you could ever want.
So where do you begin?
- Decide to treat referrals like a systemic process that you follow every day.
- Develop a Referral Guideline – it’s basically a selling sheet for your company that you share with the people who refer you.
- Set goals around the system.
- Work it every day.
The Power of Referrals
One of the most important and powerful ways to grow any business is through the recommendations of existing customers. When current clients tell their friends and loved ones about your business, their referrals are more meaningful and powerful than other forms of advertising, and it doesn’t cost you a thing.
While word-of-mouth advertising tends to happen organically, influenced by your products and services, but out of your direct control, referral marketing is a targeted system that improves word of mouth marketing and generates referrals. Referral marketing:
- Generates word of mouth
- Reaches your target market
- Generates more brand engagement
- Increases customer loyalty
- Provides great marketing ROI
Referral marketing is a formalized process that generates high-quality referrals, rewards loyal customers, and grows a business. It’s one of the most effective direct marketing strategies.
Tips for Getting Customer Referrals
There are many methods of formalizing a referral process to generate more referrals and more positive word of mouth for your business. Here are some of the tools that successful DIY referral marketers use.
- Referral requests. In many cases, simply asking for a referral is all you need to do to generate positive word of mouth. Requesting positive reviews on social media, Google or Amazon, or LinkedIn and TrustPilot helps to generate good word of mouth and social proof.
- Referral rewards. Offering a reward to loyal customers is a great way to generate referrals. Many marketers offer rewards like discounts or credits, or brand swag in return for high quality referrals.
- Exclusive offers. One very effective strategy is to create exclusive offers for both the referrer and the referred customer. For example, “share this promo code and earn a 5% discount every time it’s used” or “you and a friend can both get $10 off with this exclusive offer.”
- Referral links. Referral links are the best way to find out who your most loyal, influential referrers are. Giving your best customers exclusive referral links allows you to track each purchase back to the source, providing powerful metrics for your referral marketing strategies and ensuring that rewards are distributed accurately.
Ask For and Make it Easy to Leave Online Reviews
The best customer loyalty program is providing existing customers and new customers an amazing experience. And if you do that, you won’t need to ask for online reviews. Your satisfied customers will rush to leave a review and share their experience with their friends and neighbors.
But that doesn’t mean you shouldn’t ask your most loyal customers to leave an online review.
How to Choose an Online Review and Reputation Management Tool
There are a ton of online review and reputation management tools for small businesses. But how do you know which one to choose?
Here’s what we recommend:
- Choose a tool that allows customers to leave a review on multiple platforms with just one click.
- Make sure that it has a feature to hold reviews in moderation and not publish them directly to the platform
- Use a tool that sends you a notification whenever anyone leaves a poor review so that you can fix the problem before the review goes live.
The Customer Referral Program I use to Provide Referrals Consistently
In this section, I’m going to show you how a few simple tasks each day can start generating powerful referrals without taking time away from providing exceptional service to your loyal clients.
Many business owners either forget to ask for referrals or feel uncomfortable “bothering” current customers to get new referrals.
But, if you create a routine that easily fits inside your day, the only thing you’ll notice is an increase od new clients.
1. Pull a List of 250 of Your Closest Friends
Like most marketing activities, it all starts with a list. I started mine by looking through my address book. You can just go through your LinkedIn and Facebook contacts and easily come up with a list of 250 people and put them on a spreadsheet. Your only criteria are that they might know someone who is your ideal customer.
2. Tag People on Your List as Friend, Partner or Influencer
Next, you want to put these people into one of three categories; friend, partner, or influencer.
- Friends are people who know you well enough to give you constructive feedback. If you ask them to do something, they won’t hesitate.
- Partners are people who sell a different product or service from you, but to the same customer.
- Influencers are your ideal customers’ trusted advisors. If they ask a customer to do something, they will.
Of course, people will most likely fit into more than one category, but you’ll have to choose which category they fit into the most.
3. Create a Referral Guideline and Share it Everywhere With Everyone
Now that you have a list of people and they are grouped into categories, you want to figure out what you are going to tell them about your business. This is where the referral guideline comes in.
The referral guideline is a 1-page sales sheet on who you are, what you do, the kinds of clients you serve. It’s easy to read and easy enough to understand so that when you review this with your referrers they get it.
There are 3 basic sections to a referral guideline:
- What sets you apart. In this section you give us your Unique Selling Proposition. Tell the referrer in as few words as possible what you do and what sets you apart from others that do similar things.
- Your Ideal Customer. This is a descriptive profile. It needs to be clear and vivid enough so that I would recognize your prospect in less than 30 seconds. “Men over 40 who wear glasses” for example.
- Referral Triggers. Things that a potential referral might say that would make me think of you. “I’m going to get new glasses”
- How to refer me. Educate and train your referrers on what to ask or what to say to potential clients.”Those are terrific glasses – where did you get them?”
- Thank your referrer. Some people have a referral fee, some people simply refer because it’s a service they provide. Be clear on where you stand – but be sure to have the conversation of how your referrer wants to be thanked.
Building referrals is just as important now as it was in the past. In fact, I think it’s much easier and more cost-effective now to develop and build those relationships than it had been in the past. What I think is more difficult is keeping those referral conversations alive and focused.
Social media tools make it infinitely easier to find and connect with people, but because so many social media tools use a timeline format you can see and start a conversation one minute and forget about it the next simply because the screen has been refreshed with new conversations and posts. This makes it difficult to move referral and opportunity conversations forward.
4. Set a Task Goal
This is the most powerful step of them all. Instead of setting an OUTCOME goal such as getting three new customers, you’re going to set a task goal. This is a task that you are going to do — a behavior. The result of the behavior is irrelevant – it’s the DOING of the behavior that defines success.
Here are some examples:
- Schedule 10 referral conversations with friends for next week.
- Meet with 2 influencers this week.
- Ask for a referral who can benefit from my product or service 8 times this week.
Notice that these are BEHAVIORS, you either did them or you didn’t. There is nothing stopping you from completing any of these tasks. There’s no pressure other than to complete the task.
When I first started this process, my tasks were similar to what I shared. My goal was to have 10 conversations each day and schedule 3 meetings each week. When I stuck to this schedule of tasks, I was getting one OUTSTANDING new client each month. If I skipped any of these tasks I got NOTHING.
5. Conduct Your Referral Meetings
Remember how I told you to categorize the people on your list into friends, partners, and influencers? It’s time to look at that list and focus on your friends.
The purpose of these calls is to call each friend and review your referral guideline. Think of this as a practice run. Here is a proposed agenda for this meeting:
- Tell your friend that you are building a referral system and that you’ve come up with an outline you’d like to review and ask for their feedback.
- Review the guideline from top to bottom.
- Ask if there’s anything they didn’t understand or weren’t clear on.
- Listen and make notes.
- Thank them for their time
- Ask if they know of anyone who might benefit from your product or service.
- End the meeting.
6. Update Your Referral Guidelines and Contact List
After meeting with your friends, you will have achieved two things; first, you’ll improve your referral guideline and update anything that wasn’t clear. And second, you may have actually received a few qualified leads in the process.
Go through your “friends” category first before you reach out to any partners or influencers. This will not only help you get more qualified leads, but it will also make asking for referrals a habit.
Use your referral guideline like one of your marketing materials. It’s always a good idea to send this to potential business referrals and ask them to have it in front of them.
7. Schedule Calls With Partners and Influencers
Now, you’re ready to schedule calls with partners and influencers. Your agenda for these conversations should look like this.
- Thank them for taking the time to meet. Tell them that you’re running a referral strattegy that’s focused on getting new business by referral and that you’re looking forward to learning about their business and potentially providing referrals to them as well.
- They won’t have a referral guiideline, but you can ask them questions based on your referral guideline. Find out what their business needs are and how you can help.
- Now it’s your turn. Hand them your referral guideline and review it word for word. This will feel uncomfortable, but it’s critical to the process.
- Ask them who they know that might benefit from your product or service. Help them come up with new leads by asking leading questions such as “Do you know anyone who has recently….” for example.
8. Repeat Daily and Measure Results
Now, you might think all this will take an entire day’s worth of work. Well, I won’t lie to you the set-up probably will. In reality, you can spend a day planning and strategizing your referral system but once it’s done and you’ve focused your efforts, all it will take is about 15 to 30 minutes a day of working your system to keep those relationships and sales opportunities flowing your way.
9. Write and Send a Handwritten Note
If you really want to stand out, especially with influencers, send a handwritten note thanking your potential referrer. Most businesses don’t thank their referral sources, but if you consistently stay in touch with your referral sources, you will be top of mind when they are referral ready.
Why This Lead Generation System is Your Fastest Path to Cash
Not only are referrals the most popular direct marketing strategy for most businesses, but a referral program is also the one marketing strategy that you control 100% because it’s driven by your doing those simple tasks of scheduling meetings and generating referrals.
When you run a referral business, you aren’t dependent on marketing agencies, fancy websites, or social media campaigns to send you a potential client. All you need is to leverage Linkedin contacts with your spreadsheet of potential referrers and a dedication to completing your daily tasks. BOOM. You are referral ready.