Do referrals as a marketing strategy make sense for your business? For most businesses the answer is yes. Many people strive to make referrals the backbone of their marketing strategy. After all, with a referral based business your conversion rate is generally higher than average and you marketing costs can be well controlled. What are you doing to generate strong referrals for your business?
First, ask yourself who do you give referrals to?
If you are like most people you give referrals to people and businesses that have impressed you and operate with integrity, strong follow up and consistently good service. Make sure your business lives up to that standard. Survey your current customers to be sure you are meeting their highest standard.
Second, why should people use your service and recommend it to others?
People need to understand what you do, and everything you do. Have you effectively gotten that message across? Are you sure? Many people feel they are effectively communicating the breadth of their services to their clients, prospects and alliances, but are not getting the full message across.
Third, who is your target market and do people understand who that is?
People need to understand who a good customer is for you before they can effectively refer business to you. Make sure you have educated them on who they are. Developing a focused target market is critical to building your business. You will find that telling people who you are looking for gives your referral partners to find them. If your target is too general, there is nothing to trigger that this may be a good referral.
Fourth, what are you offering?
Many people operate always listening to WiiFM – What’s In It For Me? Would be nice if everyone followed the principle of serendipity, but that’s probably a future tip of the week. What benefit is there for people to refer business to you? Do you return the favor by referring business back to them? Do you offer an incentive or commission for the referrals you receive?
Finally, do you express gratitude for those referrals?
Make sure you let people know how much you appreciate their referrals. So often, we forget to take a moment to say thanks. A simple hand written note is a fantastic way to show your gratitude. A token of thanks or item of value is appropriate when a referral has lead to closed business for you. The value of the thank you gift should be commensurate with the level of profit you earn from that sale.
Referrals are an effective, cost-efficient way to build business. Remember to be the type of businessperson someone would be proud to refer to and ask for referrals from your fans and partners. Building a referral business is not a passive marketing strategy. You need to provide great, consistent customer service. You need to educate your referral partners as to what you do and for whom you do it. You need to tell people that you want referrals and ask them to refer you to others. Finally, you need to thank people for their referrals so they are encouraged to keep providing them.