The power of referrals

Referrals are a beautiful thing. When a customer comes to your business as a result of a happy customer saying how much they love you, then you should be dancing in the street. In the referred person's mind .you are the business or service that they will choose for a long time to come.

Referrals are an incredible way to build your business because of the quality clients or customers you get as a result. People who are referred to a business are incredible for three reasons: They are less resistant to your prices, they tend to buy more and more often from you and they tend to be a source of referrals since that's how they were introduced to you in the first place.

It's a sad but true fact that most businesses just don't leverage the power of referrals the way they should. Most people leave their referral marketing up to pure chance. All businesses should be doing all they can to generate referrals.

To start with you need to have a referable business to begin with. Take a good hard look at your business. Is doing business with you enjoyable. Do your employees look like they just got out of bed? Do they show up late? If you have a lot of unresolved customer complaints, poor customer service issues and shoddy business practices, chances are you're not going to get many referrals. Most people will not want to subject their friends and family to that kind of abuse.

However if you get some referrals already, and you provide good customer service, then you should be actively looking for those referrals. I'm going to share some areas with you that will help generate business from referrals, month after month.

Have a referral rewards program.

Don't leave your referrals to chance. Actively seek out referrals from your customers. One way to do this is to have a solid referral program in place. What would a referral program look like? How about something like this: Refer a friend and get $10 off your next service. Or give away movie tickets, free oil changes or something that would be valuable to your customer. If you own a restaurant why not give away a free entree for every referral?

If you do give something away like an oil change or free lunch, this can also be an excellent way to set up a joint venture opportunity with another business, especially if they service the same kind of customers that you want to work for. You might even be able to work out a discount for the reward or get it for free because you are introducing your customer to someone else's business. Just make sure you communicate the true value of the reward to your referring customer.

Do not get cheap here! Think about how expensive advertising costs can be. Now think of how cheap a referral is. Usually it costs nothing. So why not spend something on your customer who sent you the referral? Not only will they get all sorts of warm and fuzzys about you, but also they are going start referring even MORE business to you.

Also reward your client with recognition. People love to be recognized for accomplishments. So if you put out a monthly newsletter, put a section in it of all of the people who referred you that month. At the very least they should get a letter or a phone call, sincerely thanking them for their referral.

A great way to make sure every one knows about your referral reward program is to have something tangible to give every client that explains your referral program. We use little cards that have a place for clients to fill in their name address and phone number. Then the client can give these cards to their friends or family.

The cards have a special offer for the new client. It's a win, win and win scenario. We get a new client, our client gets a reward and the new client gets a great introductory offer usually a free sampling of our service.

Remind your customers every chance you get about your referral program. If they are billed monthly from you send a note with the bill that mentions the current reward for a referral. Mention your referral program on your voice mail recording, business cards and Web site.

Educate your clients about your referral program. The best time to do this is on their first transaction with you. Simply explain to them how much you enjoy working with referrals and this is how you would ideally have your business operate, exclusively by referral. Don't be afraid to ask for the referral especially if you are providing a solid customer experience.

So, be creative, reward your customers and go out and get some referrals.

James Leal is the owner of JL Marketing Solutions a marketing consulting service in Reno. Contact him at


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