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Doubling your Referrals

Posted by eLaunchers on Apr 17, 2018 4:00:00 PM

eLaunchers

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What if I told you that you could put an inexpensive system in place that would effectively allow your business to grow itself? For most business owners, a large part of their customer base is comprised of referral customers. These people found out about the company’s products or services from the recommendation of a friend or colleague who had a positive experience purchasing from that company. 

If your business benefits from referral customers, you will find that these customers arrive ready to buy from you, and tend to buy more often. They also tend to be highly loyal to your product or service. Seem like great customers to have, don’t they?

Referral customers cost less to acquire. Compared to the leads you generate from advertising, direct mail campaigns, and other marketing initiatives, referral customers come to you already qualified and already trusting in the quality of your offering and the respectability of your staff.

With a little effort, and the creation of a formalized system – or strategy – you can not only continue to enjoy referral business, but easily double the number of referral customers that walk through your door. All of this is possible for a minimal investment of time and resources.

 

Is Your Business a Referral Business?

Referral based businesses benefit from a stream of qualified customers who arrive at their doorstep ready to spend. These businesses put less focus on advertising to generate new leads, and more focus on serving and communicating with their existing customers.

Generally speaking, a referral program can generate outstanding results for nearly any business. Since most referrals do not require any effort, the addition of a strategy and a program will often double or triple the number of qualified referrals that come through a business door.

There are, however, a few types of businesses that will not benefit from a formalized referral strategy. These are businesses with low price points – like fast food restaurants and drugstores. Their customer base is large already, and their efforts would be best spent on increasing the average sale.

A referral program can:

· Save you time. Referral strategies – once established – don’t require much management or time investment.

· Deliver more qualified customers. Your customer arrives with an assumption of trust, and willing to purchase.

· Improve your reputation. Your customer’s networks likely overlap, and create potential for a single customer to be referred by two people. This encourages the perception that your business is “the place to go.”

· Speed the sales process. You will have existing common ground and a reputation with the referred customer.

· Increase your profit. You will spend less time and money generating leads, and more time serving customers who have their wallets open.

 

The Cost of Your Customers

You don’t “get” customers, you buy them. The money you spend on advertising, direct mail, and other promotions ideally results in potential customers walking through your doors. For example, if you placed an ad for $200, and 20 people make a purchase in response to that ad, you would have paid $10 for each customer.

Referral customers cost you next to nothing. Your existing customer does the work of selling your business to their friend or associate, and you benefit from the sale. Aside from the cost of any referral incentives or coupon production, there is no cost involved at all. Referral customers cost less and require less time investment than any other customer. That means you can spend that time making them a loyal customer, or a devoted fan.

 

Groom Your Customers

Referral strategies can allow you to groom your customer base. As we have previously discussed, 80% of your revenue comes from 20% of your customers – these are your ideal customers. These are also the people you have established as your target market, and are the people you cater your marketing and advertising efforts toward. You also have a group of customers who make up 80% of your headaches. These are the people who complain the most and spend the least.

Use your referral strategy to get more of your ideal customers. Spend more time servicing your ideal customers – do everything you can to make them happy – and less time on your headache customers. You can even ask your headache customers to shop elsewhere. Then, focus your referral efforts on your ideal customers. Ask them to refer business to you, and reward them for doing so. Try to avoid referrals from your headache customers – chances are you’ll just get another headache.

 

Referral Sources

Take some time to brainstorm all the people who could potentially refer business to you. Think beyond your business, to your extracurricular activities and personal life. There are endless sources of people who are ready and willing to send potential customers your way.

Here are some ideas to get you started:

 

Past Relationships

No, not romantic relationships. I’m talking about anyone you have previously had a relationship with, but for one reason or another have fallen out of touch. This includes former colleagues, associates, customers and friends.

Including them in your referral strategy can be as simple as reaching out through the phone or email, and updating them on your latest business initiative or career move. Gently ask at the end of the correspondence to refer anyone who may need your product or service. They will appreciate that you have attempted to re-establish the relationship.

 

Suppliers and Vendors

Your suppliers and vendors can be a great source for referrals, because they presumably deal daily with businesses that are complementary to your own. The opportunities to connect two of their customers in a mutually beneficial relationship are endless. These businesses should be happy to help out - especially if you have been a regular and loyal customer.

 

Customers

Customers are an obvious source of referrals because they are the people who are dealing with you directly on a regular basis. Often, all you have to do is ask and they will happily provide you with contact information of other interested buyers, or contact those buyers themselves. 

Your customers also have a high level of product knowledge when it comes to your business, and are in a great position to really sell the strength of your company. Remember from the Testimonials section, the words of your customers are at least 10 times more powerful than any clever headline or marketing piece you could create.

 

Employees and Associates

Give your employees and associates a reason to have their friends and families shop at your business with a simple incentive program. These people have the most product knowledge, and are in the best position to sell you to a potential customer.

This is also a way to tap into an endless network of people. Who do your employees and associates know? Who do their friends and friends of friends know? A referral chain that connects to your employees can be a highly powerful one.

 

Competitors

This doesn’t seem so obvious, but it can work. Your direct competitors are clearly not the ideal source for referrals. However, indirect competitors can refer their clients or potential clients to you if they cannot meet those clients’ needs themselves.

For example, if you sell high end lighting fixtures, the low-budget lighting store down the street may be able to refer clients to you, and vice versa. You may wish to offer a finder’s fee or incentive to establish this arrangement.

 

Your Network

Don’t be shy about asking your friends and family members for referrals. Too many people do not provide enough information to their inner circle about what they do or what their business does. This doesn’t make sense, since these are the people who should be the most interested!

Take time to explain clearly what your business is all about, and what your point of difference is. Then just ask them if they know anyone who may benefit from what you are offering. You could even provide your friends and family with an incentive – a gift, a meal, or a portion of the sale.

 

Associations + Special Interest Groups

This is another place you likely have a network of people who have limited knowledge about what you do or what your business does. The advantage here is that you have a group of people with similar belief s and values in the same room. Use it!

 

The Media

Unless a member of the media is a regular customer of yours, or you are in business to serve the media, this may not seem like an obvious choice either.

The opportunity here is to establish a relationship with an editor or journalist, and position yourself as an expert in your field or industry. Then, next time they are writing a related story, they can ask to quote you and your opinion. When their audience reads the story, they will perceive your business as the industry leader.

If the information provided in this post about doubling your referrals seems like something you would be interested in, click below.

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Topics: Blog, digital marketing, how to, referrals

 parthiv shah

 

Are you one of the 99% of small businesses who are spending money on marketing but unhappy with results & ROI?

I can help you establish controls and measurements so you can know, understand and MEASURE what is working and what is not working in real time. In one hour I will help you identify your KPI (Key Performance Indicators) and connect all your digital marketing assets (website, social media, finance) to a digital dashboard and a mobile app so you can track and measure everything going forward in real time.

 

 

 

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