Word-of-mouth or customer referrals are one of the most cost-effective forms of bringing in new business.
Referrals are generally recommendations from satisfied customers, where one person tells another person about your product or service. Given the business potential from obtaining customer referrals, being able to drive referrals from your regular customers can provide significant benefits to your business.
Businesses can receive referrals organically, however, introducing a formalised process can increase your chances of word-of-mouth sales. Here are some ways to successfully generate more referrals.
Make your customers happy
The first and foremost principle to gaining customer referrals is to provide excellent customer service to your existing customers. An existing customer is unlikely to refer your business if they are dissatisfied and continually have negative experiences. Before you consider asking for a referral you must be sure you are delivering value to your customers consistently.
The best time to ask for a referral is when you exceed your customer’s expectations and receive a compliment. Jump on this opportunity to ask your customer if they know of anyone else who could benefit from your products or services. If you feel hesitant to ask face-to-face, follow up with an email to ensure they are satisfied and ask if they would like to refer your business. You may consider creating a referral program on your website where satisfied customers can write testimonials and reviews.
Remind your customers
Asking for referrals should not be a one-off occasion; rather the same approach should be applied to each satisfied customer. When prompting a customer for a referral, ask them questions such as “have you considered this purchase as a gift for a friend or family member”, or “would you like to buy one for a friend at a discounted price?” etc. Do not ask the customer for names of prospective customers to maintain confidentiality and privacy.
Introducing a referral program where the referring customer receives a discount or special offer is another way of triggering referrals. Motivating your customers through a monetary reward can kick your referrals into overdrive.
Recognise your referrers
Following up to thank your referrer is a great way to show your appreciation. Whether the referral results in sales or not, referring customers should be personally acknowledged as providing a referral is a very generous gesture on their behalf.
The worst thing you can do is get a referral and forget about it. Not only could you lose the respect of your referring customer but it can appear unprofessional. Instead send a handwritten thankyou note or personalised email as soon as you gain the referral. You may choose to publicly acknowledge their referrals either through your business’s newsletter, social media platforms or throughout your office.
Establishing a set process to deal with how you will communicate with referrers from the time you receive their contact information will ensure each referrer is dealt with equally and receives the same appreciation.