Ask any established business their number one way of getting new business and most will say “referrals.” Follow up that question with, “How do you get those referrals?” and the typical reply will be “provide great service” or “ask.” Inquire again what “great business” means or how they specifically “ask” and you will most likely be met with puzzlement.
The fact of the matter is most small businesses let referrals happen, rather than deliberately designing a referral system to obtain new business.
If referrals are the number one way of getting new business, don’t they deserve a fine-tuned system for attracting them?
3 Reasons to Love Referrals
- Trust: Customers that recommend your services have enough confidence in your business to stake their name on recommending you.
- Free Marketing: Word-of-mouth referrals are free advertising.
- Snowball Effect: The more customers you have, the more referrals you can get. The more referrals you get, the more customers you will have.
Why Do Customers Refer a Company?
Customers talk about businesses that are interesting or have something unique to offer. Customers like to refer businesses to friends and family that make them look savvy or smart for discovering a business that is “that much better” than the competition. Additionally, customers are afraid to refer businesses that could potentially make them look bad if the friend or family member to whom they referred the business has a bad experience.
So how do you “ask” a customer to make you more money and put their reputation on the line? The answer is simple: Be unique. Give them a good (read: “different”) reason to proudly show off to their influential network.
Herein lies the reason businesses fail at having a successful referral generating system. They simply don’t promote a unique angle to their business. These are the same businesses that try search engine optimization or pay per click, and fail because they are driving traffic to a website that is unprofessional, hard to navigate, and doesn’t have any copy that gives the reason to hire them. FAIL! They give up, concluding that SEO and PPC don’t work.
Don’t be that person. Who is “that person”? It is the business that touts the same old tired, generic rhetoric about their features (not benefits), service menu, and what great customer service they have…just like all of the competition. Is there a competitor that doesn’t boast “great customer service” lingo on their site, too? Everyone says that, which is why it doesn’t mean anything.
Diving Into the Customer Service Rabbit Hole
The best way to find out what customers value as unique customer service is to ask them. When I was in my early 20s, I started a lawn service and landscaping business. I employed the traditional bootstrapped method of hanging flyers on doors at 5am (so nobody would yell at me for soliciting). I picked up a few clients and quickly received several referrals from some of their neighbors.
Not fully understanding how or why I received the referrals, besides concluding it was my “excellent customer service,” I was at least smart enough to ask several of my customers why they hired me and why they referred me. It turns out I was offering weekly edging and most other companies offered biweekly edging. My customers liked the fresher look of the weekly edging. Hello, unique angle.
Asking your current customers why they hired you or why they referred you can give you a powerful marketing angle to build on other than the wasted verbiage of “we have great customer service.” Customer service may be your differentiator, but learning what your customer most values about your service is the goal.
Feed Your Referral System
One of the fastest ways to kill any momentum you have built up with your referral system is forgetting to thank the person that referred you. This ‘thank you’ can come in many forms, but your goal is not to forget. Examples of this simple gesture could be a thank you card (handwritten to show personalization) or a phone call thanking the person.
Numerous statistics show that “bribing” customers with financial rewards for referrals doesn’t really work, so it is best to stick to personalized appreciation.
Asking for Referrals…Like a Ninja
White Belt: The standard way of asking for a referral is to ask at the peak of the customer’s confidence in your company. For many, this is at the completion of a job (unless you are giving them a bill at that time).
When the customer’s confidence is highest, you simply let them know you’d appreciate any referrals they could send your way and you hand them several business cards for passing along including a magnetic business card to keep you top-of-mind with a daily reminder on their refrigerator.
Blue Belt: Seasoned referral system businesses claim that fear is a stronger motivator than the desire to impress. Although a customer may be confident in your service, there is still a chance that if they refer you, there is a chance that their friend can have a bad experience, ultimately reflecting poorly on their recommendation.
Smart business owners take the risk out of referring them by offering something of value for their customers to give to friends, family, or other potential referrals.
For example, you can create a special page on your website, only accessible via the special link on your dedicated “referral business cards” that gives a 20% discount and “preferred treatment” classified by whatever value added extra you allocate to referrals.
Purple Belt: Ninjas with purple belts go for the soft sell when it comes to referrals. Patience is a virtue, grasshopper.
Let’s say you are a plumber and just completed an emergency drain cleaning for a new customer. At the end of the cleaning, you ask the customer if you could get three email addresses of friends, family, or co-workers that might be interested in your free guide on “preventing drain clogs.” You send your eBook to the newly acquired names, informing them on how to prevent clogged drains like their acquaintance. Who do you think they will call first if they have plumbing issues?
Brown Belt: Brown belt referral ninjas see the referral before they even get a customer. They realize the importance of referrals and have the referral process top-of-mind before signing each potential customer.
Armed with this knowledge when it’s time to provide an estimate, they inform all potential customers that they offer a discounted rate for customers that can provided three referrals for their service and ask if they like to take advantage of the X% discount before they receive the estimate.
Asking for the three referrals in advance gives the prospect adequate time to think of potential referrals for the business owner. Now all the business owner needs to do is simply exceed expectations to get the gold at the end of the rainbow.
Black Belt: Regardless of the strategy you use for asking for referrals, 99% of the time, you are limited to a small window of opportunity for acquiring a referral. Black belt referral ninjas use an email marketing program that sends out regular value added content and keeps their business top-of-mind with all past customers. This way, you can receive repeat business, testimonials, have online reviews written, and referral business. When you provide such compelling content on a regular basis, your customers feel obligated to return the favor.
In the end, referrals will never work if you don’t take care of the A,B,C,D’s of your business:
Always price right. If you are priced way higher than the rest of the market, your chance of referrals decreases.
Be likable. People do business with people they know, like, and trust.
Concentrate on reliability. Nobody likes a business that shows up late for appointments or doesn’t answer the phone.
Do high-quality work every time.
Put a system in place to enjoy the benefits of referrals and you’ll quickly find that you will never have to be concerned about generating leads again. Used in conjunction with a well-managed digital marketing plan and you will soon be able to buy that island in Fuji you always dreamed of.Share