This is the first of a series of short articles sharing ideas about how you can implement your own referral program easily and without a lot of expense or effort.
A simple, low cost referral program will generate your highest quality customers. Referrals are the lifeblood of small business and creating your own referral program is at the foundation of a successful business, no matter what that business is.
Referrals Carry Powerful Credibility
Referrals by a credible third party that has experienced firsthand the benefits of doing business with you are the most powerful promotional messages your business can have. When the person giving the referral is a friend of your prospect, they are even more powerful. We all believe that a friend would have no ulterior motives but to do what’s in our best interest. We believe what a friend says much more than we believe hearing the same recommendation from a salesperson whose sole purpose is to make money from us.
Research has shown the power of referrals. According to Paul and Sarah Edwards, authors of Getting Business to Come to You, up to 45% of most service businesses are chosen by customers based on the recommendations of others. This is backed up by a recent Dun and Bradstreet survey which found referrals to be one of the two most popular small-business marketing methods (the other one is advertising).
Referrals not only bring new business to you, they tie your current customers to you even more tightly. Customers that give referrals become more loyal to you and your business. Once someone makes a public statement about you, psychologically they become more loyal to you and your business because now their reputation is on the line with yours.
Good Customer Service Doesn’t Automatically Generate Loads of Referrals
Customer service is critical to the success of your referral program. And, it is the foundation of the referral process. But just because you give good customer service, it doesn’t mean that you will get a lot of referrals. You have to be executing a referral plan if you want to capitalize on the good you’re your customer service is creating.
Maybe you’re like other small business owners who think referrals will happen by themselves if you give good customer service. This simply isn’t true. If you do not take deliberate and proactive actions to create referrals, the chances of you receiving the referrals as you want are slim. Your best customers are ready and willing to give you referrals as was shown in the statistics above, but you need to show them how.
Referrals Are Not Word of Mouth Advertising
Word of Mouth advertising happens when one of your customers or friends mentions your small business in a casual conversation. It’s not intentional or planned. It’s just someone having a conversation.
You want a methodical referral system in place to capture qualified prospects through your association with other people. By its definition, a system is a process that produces predictable results. A system can be turned on and off like a light switch at will. Your business needs word of mouth advertising but don’t mistake that with developing a methodical system for generating referrals.
Stay tuned for part 2
