The Power of Referrals

Word of mouth advertising is the hallmark of any successful business. The importance of such advertising, besides bringing new customers, is its low cost. The trick is getting new customers in order to build your referral network.

Building your Referral Network

Advertising is an effective means of targeting potential new customers, be it coupons, online, telemarketing or phone book ads. However, getting the customer to call you is only the FIRST step of the process. Customers need to have a positive shopping experience; someone who has a good experience will typically refer their friends to your company. Statistics show that if a customer has a negative experience, they will tell many more people about it than they would a good one, so that's just one more reason to always go above and beyond.

When your product or service provides value and your customer is satisfied, the chances are that that experience will be conveyed to others. How do you generate such outcomes? Well, to begin with, people need your product or service. If this criterion is met, your next step is to provide excellent customer service, in a timely and courteous manner. Most businesses recognize this and put a great deal of effort into these functions to generate referrals.

Here is the best part, the more time and energy you put into developing referrals that you convert from existing or new customers, the more likely you are to increase the number of new referred customers. Thus, improving revenue flow and making your business grow.

Managing Referral Leads

Here are a few thoughts on how to successfully develop, reward and monitor your referral leads:

First, a referral lead from a customer or coupon is unique and should be treated as such. Every customer is special, but referred customers should be handled in such a way that they will refer other customers as well. Never miss the opportunity to sell customers on how important you consider their patronage. Make such customers feel important with a special offer or an event. Your sales and administrative staff should be involved in this effort as well. By doing this you will have sent a very important message to your customers that may cause them to send other friends or neighbor to your company.

Second, make sure you treat each new referral as you would any other customer, i.e., make sure you learn what they need, how your product or service will best meet their needs, and how you will assist them in selecting the right product or service to meet their needs. Almost all customers need to understand how your company’s product or service will give them added value. Do not assume they are completely sold on your company.

Third, you need to show your appreciation to the customer that gave you the opportunity to serve the referral. How you decide to do this is really a personal preference. Some gesture of appreciation such as a thank you note or a discount for subsequent purchase may be in order. Whatever you decide, make sure you communicate how important their faith in your company is appreciated.

Even if you are already obtaining a number of referrals, imagine the improvement to your bottom-line could be if you were to increase your effort in this regard by as little as five percent.