Business referrals are a valuable method of receiving new customers and hot leads. Market research indicates that referral business closes and converts more than 60% of the time1. However, collecting referrals can be easier said than done. Here are 5 best practices to help you better utilize this powerful tool.
Focus on Customer Benefits
Even if someone is your company’s biggest fan, it could be difficult to convince them to take time out of their day to spread the word about your business. In order to maximize referral efforts, focus on the benefits of being a brand ambassador first and foremost.
Of course, to do this, you must establish how it will be beneficial.
This typically means offering a tangible incentive to them. It could be monetary: e.g. a discount on your product/ service, non-monetary: e.g. access to a product before the general public, or any combination of the two. It is up to you to decide how you want to incentivize customers to become your brand spokesperson.
Ask for Them! And Mention Specifics
In an informal survey from 2010, nearly 80% of SMB owners admitted they had no system of any kind to generate referrals2. Many salespeople for whatever reason simply don’t ask. Clients cannot be counted on to make the effort without knowing it will be worthwhile.
Only 15% of clients voluntarily offer referrals without advisors asking for them3. If you do not ask, you will not receive them. However, if you are clear about whom you would like your friends and clients to talk to and what the benefits are to all parties, they can focus their efforts.
Leverage Social Media
Referrals can come from other places besides your current customers. You have got a ready-made list of potential brand ambassadors in your social media friends and followers. Many of these people would likely use your product or service but simply do not know about it. In a sense, referral generation is a numbers game. The more people aware, the more likely qualified leads can be cultivated.
According to the Pew Research Center, 67% of adults use social media 4. Of this demographic, the average social media user age 18-64 spends 3.2 hours per day (!) on social media websites5. If you think your targets market is part of this 67%, you now know a great way to reach them where they reside most.
Keep Track of Progress
Knowing who you have contacted and how they responded will ensure a more thorough approach to referral generation.
By keeping track of responses and contacts, you can better shape your strategies. You’ll begin to get a better idea of who is most interested in your services. Once a true target audience becomes clear, you can truly begin to make progress toward referral cultivation.
Say Thank You!
This might be the easiest part to referral generation. But it can be overlooked. Contact the referral and the person who gave the referral after a transaction is complete. Touch bases to let them know you appreciate their business and ask if there is anything else they need. Not every interaction needs to be a sales pitch.
These best practices require proper organization and management to be effective. Without a structured system to track your referral efforts, you will not be gaining the most from them. MioDatos is a tool that facilitates the generation of quality referrals, enabling users to effectively manage and track referral efforts.
1 Zahorsky, Darrell. “7 Sure-Fire Ways to Build Your Referral Business.” About.com Small Business Information.
2 Jantsch, John. “The Realities of Referral.” The Referral Engine: Teaching Your Business to Market Itself. New York: Portfolio, 2010. 11. Print.
3 Vasishtha, Preeti. “Want Referrals? Then Just Ask.” NAIFA’s Advisor Today. N.p., n.d. Web. 21 Feb. 2013.
4 “Pew Research Center’s Internet & American Life Project.” Pew Internet: Social Networking (full Detail). N.p., n.d. Web. 21 Feb. 2013.
5 “Social Networking Eats Up 3 Hours Per Day For The Average American User.”MarketingCharts. N.p., n.d. Web. 21 Feb. 2013.