Here are some interesting facts:
# Most customers will refer you when they are asked to do so.
# Most people, when referred to a business by someone they know, will go on to buy from it.
# Referrals are the lowest cost way of winning new business.
# Many businesses say they are dependent on referrals but most do not have a formal referral process.

The graph below summarises the results of research conducted by Nielsen which shows just how influential referrers are and how impactful a referral program could be for your business. In short, when making a purchase decision, 90% of consumers say their most trustworthy source of recommendations is from people they know. Similarly, 53% of businesses say their most trustworthy source of recommendations is from colleagues or friends.

If you’re frustrated about the effectiveness and expense of your current marketing efforts, why not develop a more robust referral process? It will cost you next to nothing and could be highly profitable. Here are eight simple steps to help you do it:

Give customers a reason to refer you This starts with good customer service. You already have customers who are delighted with your service (these are the people you will ask to refer you). Make sure you understand why they are delighted and that your operational process can ensure you will repeat the experience again and again. A referral process is like any other marketing activity in that it includes a promise to deliver customer satisfaction. If you fail to deliver on that promise your referral processes will compromise you, your customers and your business.

Make sure you are referable A personal recommendation is great but further proof of capability can seal the deal. Testimonials are a good source of third party proof, case studies are even better. These need to be accessible and the best way to achieve this is to put them on your website or other social media. A video or a photo, can add the final touch – people like to deal with people not anonymous websites.

Create a profile of your perfect customer Identify the type of customers you want to attract through the referral process: Where are they located? What do they do? How big are they? What needs or problems do they have that you can solve etc? Don’t waste effort by referring to the wrong type of customer - the more clearly you can define your perfect prospect, the more successful your referrals will be.

Identify people who will be willing to refer you You could do this in two ways. Firstly, get into the habit of asking for referrals whenever anyone complements you on your service. Asking them to help you when they are still feeling the glow of a good experience will make it easy for them. Secondly, write a list of key customers from which it would be valuable to get referrals. Some of your customers will be more influential than others, they will have more contacts you could tap into and they will be well respected in their industry, social and business networks. These are the people who could be very powerful advocates of your business.

Make it easy for your customers to refer you Your customers may be very happy to refer you but may not be sure how to do it. Help them: Tell them about your perfect customer and give them a “cheat sheet” or a short statement of capabilities. Failing that a simple script can help them feel comfortable in this space: How do they know you? What do you do? What have you done for them? What else can you do? How can you be contacted?

If you have a really good relationship with a potential referrer, you could ask them to send an email (which you can supply) to some specific targets and to copy you in. That way you can follow up the introduction directly and the fact that you have been referred to them means they will be more likely to take your call / reply to your e mail than any cold calling system.

Don’t be shy – start a new habit If someone is pleased with your service they will probably be pleased to refer you. Always assume your clients will be happy to refer you and if they are uncomfortable they will tell you. If they are, find out why so if your service is at fault you can fix it. Here are three simple ways to start building good referral habits:

  1. Build the expectation when you begin working with a new customer and make referrals part of your initial agreement i.e. if you do a god job they will refer you.
  2. Whenever a customer compliments you, respond with a thank you and a request for referral.
  3. Make the most of every networking opportunity. Step out of your comfort zone and ask for referrals. Give yourself confidence by planning in advance what you might say.

Say thank-you and give as well as receive Always say thank you to a referrer and do it in a meaningful way. A simple phone call or email may be all that is needed. Some people may appreciate a good old fashioned card while others an offer of lunch. Better still, if your customers are in business themselves, offer to refer them. Be generous – help them and they will help you. That’s how successful people work.

Keep a record, monitor and evaluate If you’re serious about referrals, treat this process as you would any other important business activity: Document it and keep a record of your activities and results. This will help you measure the success of your referral program – just as you should for any other marketing activity.

If you want to grow your sales, why not improve your referral processes before your competitors start improving theirs. If you’re not sure how to do this, find someone who can help.