Referral Strategies
Referral Strategies
Customer Referral Systems:
How to Go from Small to Big
At its core, a customer referral is asking your previous customer to reach out to their friends and family and get them to recommend your business. Referrals are a more systematic version of word-of-mouth marketing and there are literally 100s of ways you can set up a referral system within your company. But before we jump too far ahead, let’s ponder why they are so dang effective at growing your business. Growth happens because customer referrals are a double-win. You win the first time because you pay very little for a sales lead, and you win again when the lead converts to a sale. The great thing about these kinds of sales leads is that a referral has a much higher closing rate than a lead generated from marketing.
To get your previous customers on board and to turn them into a member of your sales team, you will need to offer them, and the person they recommend, an incentive for acting on the referral. For example, an incentive would be a future discount, or simply offering cash back to them. Another aspect of getting the customer on the same page as you is explaining to them the true value of your product or service. You remind your previous customer how much better their life has become after they got service from you, and by recommending your company, they are actually helping their friends or family achieve the same true value. A Better future.
Referral Basics
Here is a quick rundown of the steps you need to take to get a referral. After, that we will look at a detailed referral system that runs inside of your business.
Below we see what it looks like person to person.
A Referral System
Realize the power and honesty of doing customer referrals, now take a look at how you can execute your own referral system within your business. A referral system has a back end and a front-end part, one that runs within your company and one that interacts with a customer.
The back end of the system is how you reach out, track, and evaluate referrals. The front end is the actual details of the referral, what the current client gets and what the person they recommend also gets.
Steps to making multiple referral systems:
Step 1: Developing the Customer Profile
Before you start asking the customer for referrals, look at your current customer base and fill out this demographic template. Remember, demographics look at common features a group of people shares within a population. By doing this you can target your average customer and this will help when you sit down to draw up the details of the referral you promote.
| Income: | Wealth: | Age: |
| Gender: | Ethnic Group: | Neighborhood: |
| Region: | Business: | Marital Status: |
| Religion: | Hobbies: | Political Views: |
| Clubs/Teams: | Automobile: | Subscriptions: |
| Education: | Investments: | Health: |
| Mental Health: | Homeopathic: | Smoker: |
| Drinker: | Drug user: | Vacations: |
| Buying Preferences: | Job: | Landlord/Tenant: |
Once you have determined your average customer, this becomes your ideal prospect,
the person who uses your service is likely to develop a stronger relationship with you.
Step 1.2: Benefits You Can Offer Customers
A way to look for benefits to offer is by thinking about negative things customers are experiencing.
In this step, we are determining what your customer wants above all else. We are looking for pain points, quality problems, and a lack of professionalism in their experience so your business can be the solution. Let’s go through a series of questions about customers and your company to begin thinking about what your referral could be.
Questions about Customers:
Since we have already developed the average customer, now let’s think of what the dream customer looks like, and what do they need? What pain points are they experiencing in the home? What old or poor-quality things are in the home? Did the previous company educate them? How are they treated in the industry? Is there something all customers want? What is the commonly sold product/service?
Questions about Companies:
Be honest and dissect your company and your competitors. What do you offer that other companies do not? What is the best thing you offer? What is the worse part of your service offering? What do other companies offer that you do not? What problems is the customer having that you can solve? What is holding you back from offering a solution?
After coming up with an answer to these questions, you should have a better picture of who your customer is and what they want. The next step is set the customer so they successfully refer clients to you.
Step 2: Who do your customers meet?
Clients often do not realize how many people they encounter in their daily life and your goal is to make them realize that. Do not assume they know, but instead set them up for success by helping them locate who they know. Ask them what groups they are a part of or if they interact with any larger organizations?
Vendors | Customers | Employees |
Website owners | Relatives | Prospects |
Relatives | Neighbors | Friends |
Church | Charities | Writers/Editors for Publications |
Special Interest Groups | Government agencies | Other Businesses they use |
Clubs | Teams |
|
Be direct and quite simply tell them to reach out to these people and refer like-minded people to you as clients.
Step 2.1: Hold your customers accountable
You need to handle your previous client quite a bit because they are not trained sales staff. So, you will need to hold them accountable, or they will simply forget or not care enough to find you referrals. Hold them accountable by making them feel invested in providing referrals to you. Set a goal for them!
For example, the price could be dependent on them supplying you with two referrals within a certain time frame or offering them a hefty cash bonus to the previous customer and a discount for the new customer they bring in.
No one works for free unless they truly value the relationship with you, or you reward them for their time.
Step 2.2: Reaching Out
It should go without saying, with every close, a referral should be offered to the client, as a part of the initial deal or after the fact. Speaking of facts, not every customer is going to buy into your referral program, so at some point, you will need to reach out to old customers or ones that passed up the first time around if you want a constant stream of referrals coming in.
When reaching out to the customer for referrals, anything goes, write to them, email them, text them, call them, and even go visit them. Attend trade shows, go to festivals dressed in a company uniform, talk to as many people as you can about your company, and make it something you do every single day.
Reach out to businesses and realize a B2B referral is a symbiotic relationship between you and another company owner. So, go to an adjacent business, and if you are doing mostly in-home services, reach out to someone who does landscaping stuff and offer that company a little quid pro quo.
Learn to Love Rejection
Yes, you are going to get rejected quite a bit, sure the first few will hurt your pride, but simply power through and keep asking customers for referrals. You miss every shot you don’t take.
Step 3: Finding the referral that works
At a higher level, each referral has some common traits to them and typically follows that three-act structure: ask for a referral, a client carries it out, and a new customer contacts you. Let’s look at the features of a good referral so that when you go to customize them for your business and industry, you hit some of these notes.
- The company has a great product that gives value to the purchaser and has top-notch service
- Ask for a referral upfront as a part of the deal
- Ask for a referral when the customer is the most satisfied or engaged
- Builds on the strengths that are already inside the company
- Educates the customer on why referrals are so important to give
- Rewards them with some kind of finder’s fee
- Follows up on all referrals in the short-term and long term
- The referrals convert at a 20-30% success rate
- Fit well into the company’s industry, geography, and culture
- The referral being asked is direct and specific
Examples of Different Referrals
(1) Outside of your service area
Approach a business that offers the same services as you but is outside your area of service. Tell them, you will recommend clients to them when they fall in their region and outside of yours, but only if they also do the same for you. While you can approach them before you find a customer to send them, it is better to go once you have a customer on deck.
(2) We don’t offer that service
Let’s say you offer residential services, but you get a call for a large-scale service on a commercial building, approach a commercial-only company and ask them to exchange referrals. You will send any commercial lead to them, and they send any residential lead to you.
(3) Offer an unbelieve referral incentive
Give away a free system if a customer brings you 8 or more referrals, the higher the value, the more ridiculous the incentive, and the more it will catch the eye of the community at large. Imagine an offer so good that the local newspaper would want to write about it.
(4) Partner with a similar service company
Approach a company that is in the same industry as you but does not offer the service that you do. Ask the company to offer your service to customers and in return, they get a cut of the profit.
(5) Join an Association
At first, there will be some work as you participate in the things the Association requires, but once you build a reputation within the organization and you promote your company’s services, you will gain a lot of referrals.
(6) Write a personalized letter to clients
Select a short list of your previous customers and write them a personalized letter asking them to refer people they know to you. Incentive them with profit sharing of some kind based on their referrals. Don’t forget they could also be other businesses too.
(7) Two For Deal
Offer a discount to a customer who buys the service twice. You see it in the supermarket all the time, buy 2 and get them at a reduced price. Why not offer the same thing to a customer. If they bring a friend who also needs the same home service, you knock a chunk off the price. Advertise this deal and suddenly convert your customers into little salespeople.
(8) Cold Hard Cash
Determine how much the cost is to bring a customer in the door. If it is costing $10 or more dollars, then consider sending previous customers a referral program where you deposit cash into their account for every customer, they refer to you. The cash amount you send to them is the cost per customer you previously determined. This way you are not spending anything more than you already were.
(9) Buy a company and negotiate a referral system
When a competitor is going out of business, and you choose to buy the company. Make sure to also get the previous accounts manager to contact the previous customers and introduce them to your new company. Create a unique referral program for those customers and offer it to them. This is a much better way than cold calling all the customers on a client list.
(10) Gift Box
A great way to ask for a referral is by pairing it with a gift box. After a customer has purchased something from you, send them a small gift box with local products in them, usually, something they can eat. Inside the gift box include a small card thanking them for their business and asking if they have any friends or family that could also use your products/services.
(11) Ask only after a compliment
When a customer pays your company a compliment for the work you have done, hand them a small referral card. Request a referral from them since they are so pleased with your service. Suggest that you would love to help one of their friends or family achieve the same level of happiness.
(12) Show excitement about your work, brag about your referrals
The first step is to always be excited about what you do, this plants the seed for the referral. The next step is to act on small talk queues. For example, if they ask if you are busy, you respond with a “Yes, we have a ton of satisfied customers these days just like yourself! Word of mouth about our company is really taking off maybe you have a friend or family looking to upgrade something at home. Send them our way and treat them right.
(13) Speak to the future and help the client imagine a successful referral.
When you talk with a client or prospect, talk about the future and their place in it. Instead of talking about now and what they need, show them the future they could have. People love imagining things and staying positive. Instead, if you come off as needy, clients lose confidence in you since you are acting from a position of weakness. Your position in the conversation is now negative.
When we think about referrals, it is better to convince the client how many people they know, and how much money they can also make from possible referrals.
(14) Business Card Gift Card Referral
Write on the back of your business card that anyone can hand in this card for $50 off. The way to turn this into a referral is only to give that version of the card after the sale is closed with the current customer. Depending on your services company, chances are they will not have the need for it, but what they may do is give it to a friend or a family member, so the value of the card does not go to waste.
(15) Explain your business survives because of referrals
Explain that the only reason you can give great service, fair price, and low-pressure sales tactics is the need for your clients to get at least 2-5 referrals for you. The reason for this is your competitors spend most of their day tracking down sales leads and at worst cold calling people all day long. Instead of delivering a quality experience, they are stressing over finding clients. The discount is upfront and dependent on them getting you a referral.
(16) The Post Card
When a sale is closed, the service is rendered, and the client seems impressed, hand them three prepaid postcards with the address left blank. Ask the client to fill in the address of three people they know on the spot, and then offer to mail it for them. You can also include a bonus for them and the future client in the form of cash or a discount if the referral converts.
(17) B2B Discount
Approach a local business that sees a lot of customers in a day, a car sales staff for example, tell them they can refer clients to you, and you will give them a discount. This way the car sales staff can use your business as a throw-in to sweeten the sale of their car.
(18) The Mailed Gift Card
After a sale is closed, ask the customer for three names and addresses of people they know. Tell the customer you will send these people a letter containing a gift card for your company’s services. The letter is addressed to the potential customer and from their friend/family member so it has a very high chance it will be opened.
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