There is a little-known fact out there that could grow your business exponentially, yet many business owners are not taking advantage. This key to success has converted small businesses into industry leaders. You may be wondering, how are these businesses seeing growth year after year? Well, the answer is simple: referrals. Referrals, or word of mouth marketing, is known to be a very powerful tool for generating growth. According to John Jantsch, best-selling author of The Referral Engine, 64% of SMB’s claim that over half their business comes by way of referral. However, within that group of SMBs, 80% admitted they had no system in place for generating referrals. In this post, I will list some steps you can take to start generating referrals today.
Many business owners do not generate referrals because of one simple reason: they don’t ask. But before you start asking every customer for a referral, you need to ask yourself, “is my business referable?” Make sure your products delight your customers and give them a reason to want to tell their friends about you. After that, just ask!
One of the best ways to encourage more referrals is to reward customers for referring you. This can be as simple as a thank you call or email, or it can be carried out in the form of a gift or reward. Either way, customers will feel appreciated if you thank them.
Once you start asking for referrals and begin receiving new business, it can be hard to manage all your referrals coming in. Having a system that tracks referrals is a great way to stay organized. Look for a referral management system that can store information provided on forms from your website. Once the qualifications for the referral reward have been completed, your referral system should send out a thank you email with information on how to receive their reward.
Net Promoter Score
Your customers are your greatest asset. They can tell you what you’re doing right and where you can improve. The net promoter score is a great way to ask your customers how you’re doing. It asks, “how likely are you to refer us and why?” On a 10-point scale, customers who answer 9-10 are promoters, 7-8 are passives, and 0-6 are detractors. Take the percentage of customers who are promoters minus the percentage who are detractors and you’ve got your score. Compare your score on an annual basis to track how you’re doing. This also gives you great insight on what’s working and what needs to be improved. To learn more about the Net Promoter Score, go to www.netpromoter.com.
“How did you hear about us?”- There are many ways for a new customer to come to you, landing pages, Google search, and referrals are just a few. If you don’t have a ‘How did you hear about us’ section on your new customer/client forms, you’ll never know where they came from. For example, if you found out most of your new business came from Google Ads, wouldn’t you want to budget more money for it? The same goes with referrals. If you receive a new customer through a referral, it is important to thank your current customer for doing so. If you decide to offer rewards for referring customers, just remember that money has been shown to be a less effective reward when compared to products or gifts.
Another great method of keeping your current customers engaged and referring your business is through gamification. Gamification is the concept of applying games to non-game applications and allows your customers to earn points for actively referring your business to their friends. Offer prizes for your top referrers each month and encourage others to join in on the fun.
As you can see, there are many ways to encourage more referrals and help your business grow from the mom and pop on the corner to the industry leader. If you are on the hunt for a platform to generate and manage your referrals, I encourage you to try MioDatos. You will not only be able to manage your referrals, but also generate emails, consolidate your contacts, and post to all your social media accounts all from the same easy-to-use platform. Have you had success with these tips? What did you do?