Referral Marketing: How it can help your business

Would you go to a hairdresser who was not recommended to you by a friend? Or trust someone to do your tax return? According to a recent Nielsen online Harris poll, 82% of Americans say they ask for recommendations when they want to buy something. Whether you’re a tax consultant or a potter, referrals are important for both business and profit.

Referrals from people who know and appreciate your work can also be a powerful and inexpensive way to build trust and attract new customers. Your customers have the power to grow your business, so how do you use it? Let’s look at the five pillars of reference marketing:

  1. Provide added value.
  2. Inspire people to tell you about yourself.
  3. Ask for word of mouth.
  4. Reward people who refer.
  5. Celebrate references.

1. Start with a good product or service.

The best products and services benefit from the most natural referrals. If you have something people want or are excited about, other people want to try it too. You have to offer value to your customers, but doing just that little bit more really makes the difference. How to use SEO for your business

Some business owners make the mistake of doing exactly what selling means, nothing more, nothing less, said Bill Cates, president of Referral Coach International, a company that works with organizations and entrepreneurs to get more references and personal introductions. Increase your chances of a reference by providing excellent customer service from the beginning to the end of your services.

“Ask good questions, share good information,” Cates says. “Do it so that you close the sale and are worth getting a reference.” For example, instead of just cleaning out a customer’s closet, you can ask why your customer wants to clean out the closet and how he or she wants to benefit from the new system. If you’re an insurance agent, you can explain why you recommend certain products and how they protect your customer. With this approach, you connect with your customers in a more personal way and offer more value, which increases the chance of a reference. Selling on Etsy: Tips for Entrepreneurs

Joanna Alberti, owner of the gift and illustration shop philosophies and named in Businessweek’s “Top Five Under 25,” says a personal recommendation is far more effective than any ad. “My illustrations are so personal to my clients that a personal bond is created. And as a thank you for that, customers automatically recommend me to their friends.”

2. Inspire people to tell you about you.

Clients who have experienced your work are great candidates for a reference because they have first-hand experience with your company. But these aren’t the only people who can refer others to you. Even if a neighbor or friend has not used your services as a personal trainer or ordered a gift package from you, he or she can still provide a reference. Cates calls these strategic allies, but he also explains what the challenge can be. “They probably like you and they trust you, but they can’t really explain the value you can offer.”

That’s why it’s your job to make sure these people understand your target audience and the benefits of your business in order to refer the right people to you in the right way. Explain what type of customers you work with and why. What common goals or obstacles do your customers have and how can you remove those obstacles for them? 9 ways to increase sales in your store

Tip from GemSleek

Make it easy for your friends and family to talk about your business. Make sure they always have enough business cards or postcards and don’t forget to thank them when they refer a new customer to you.

3. Ask for references.

Some entrepreneurs are rarely recommended because they are too shy to ask, or they ask in too vague a way. Questions like: “Do you know someone we could help?” or “Who should know we exist?” don’t usually yield results, according to Cates. “Successfully asking for referrals is by asking for an introduction from someone you know,” he says. For example, if you’re connected to someone on LinkedIn, you can see which connections are of interest to you and request a personal introduction or an email introduction. People respond more quickly to a specific request than a vague one because they don’t have to guess. 5 tips for growing your business

Your relationship with your customers should benefit both sides. Therefore, the best time to ask for a reference is just after you’ve exceeded their expectations. Maybe you have just catered for a company party and your customer is happy with the reactions, or you recently gave a ceramics workshop and the group is ecstatic about their handmade items. Thank them for their patronage and ask them to promote your business while you’re still fresh in their minds. You can do this in the following specific ways:

  • Leave a stack of business cards or referral cards with your client to hand out to friends who are excited about the event.
  • Ask your client to post a photo of your event on social media and tag your business
  • Ask your customer to write a review online.
  • Ask if friends or neighbors might be interested in your product or service.

“It’s hard to ask customers for referrals, especially if you’re a small business because it makes you feel like you want to pat yourself on the back,” Alberti says. “But if customers love your product or service, they don’t mind at all, so don’t miss out on this valuable opportunity.”

4. Reward people who refer.

Depending on the type of business you have, you can reward people who refer. Cates says this works best when the new customer and the referrer are both rewarded. Gyms often offer current members a free month or another reward for bringing in new members, and the new member gets the first month free or discounted from the regular price. Rewards for referrals could include:

  • A percentage discount on your next purchase.
  • A free gift or service for customers who refer multiple people (for example, a free trial or upgrade)
  • Be the first to see special promotions such as free shipping or delivery, an exclusive invitation to an event, or a new product or service

Of course, even with a nice reward, you still have to provide value and make people want to refer. Otherwise, no reward is good enough to bring someone in, because a bad recommendation will give them a bad reputation. If you want customers to recommend you, they must genuinely believe in the great value and service you provide or the referral will be of no use.

Celebrate references.

Even if you don’t offer a reward for referrals, thank the people who recommend you and let them know. Cates suggests recording this message for your voicemail: “Leave a message after the beep. If you have been referred to us, please let us know who to thank.” This could be the first interaction a new prospect has with your company. This way you let it know right from the start that you accept and appreciate referred people. Some entrepreneurs write in their email signatures: “We welcome referrals.” 11 creative business card ideas for Real Estate

Tip from GemSleek

Thank customers who send you referrals with a personal email or a handwritten thank you card. It’s a small gesture, but it can make a big impact on your customers.

By creating a culture where you provide value and value recommendations, you position your business as customer worthy and get lots of referrals, which are good for your business in the long run.

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