What if you could guarantee that all your leads were qualified and interested in your services or products before you made the call? Referrals allow you to skip the cold call and the initial warm-up message--and get straight down to business on your first encounter with a prospect. If someone the prospect respects and trusts has referred them to your business, then you also bypass the process of gaining their trust. With a referral, you can jump over the initial stages of the sales process for the more productive and promising part of closing the deal.
- According to the New York Times, 65% of all new business comes from referrals.
- People are 4 times more likely to buy when referred by a friend, and 92% of people trust referrals from people they know, says Nielsen.
- The Wharton School of Business claims that the lifetime value of a new referral customer is 16% higher than a non-referred new customer.
However, asking your customers for referrals can be awkward. What if they say no? You don’t want to jeopardize your greatest asset: customer relationships. Have no fear! According to Texas Tech, 83% of consumers are willing to refer after a positive experience—yet only 29% actually do. So, the real problem with referral-based selling isn’t getting your customers to refer your business--it’s making sure that you actually ask them!
How To Ask For Referrals
Once you get enough customers passing business your way, all of your sales can be in-bound and referral-based! Until then, it’s time to start generating referrals. Here’s a few tips on how to get started, aside from “Just Ask!”
Create a timeline.
- You don’t want to ask customers for a referral right away; they need to trust your brand before they would ever recommend to their friends. For example, you can send your customers a follow-up email a week or two after they’ve made a purchase asking them if the product or service lived up to their expectations. If the customer responds positively, you can send them another email asking them to spread the good word. To find out the best timeline for your business, send your customers feedback forms at different times in the follow-up process and see when you get the most positive response.
Create a platform.
- If you make referring easy for your customers, they’ll do it more often! You can build a referral tool into your website, add a referral button to all your email communications or give customers the option of sharing all your marketing materials with a friend. Make sure customers can always make a formal referral, and define how those referrals will work--will their friend know who referred them? What do your customer and the person they referred get out of the interaction?
Incentivize your customers.
- All the best referral programs give customers a reason to give referrals, aside from simply doing a nice thing for a company they trust. You want to reward both your customer and the person they referred, sweetening the deal for everyone! You can offer a free services, credit towards their next purchase or an extra-long trial period if you offer tiered pricing. Check out this article from ReferralCandy about successful referral programs.
Make a habit out of asking for referrals.
- When a client compliments you, thank them and ask them if they know anyone else who might benefit from your services or product. Use client meetings as an opportunity to mention the power of word of mouth for your business. Make sure to jot it down in your notes as a reminder!
Keep track of your top referrers.
- Your best customers can also be your best salespeople. Once you know who your biggest fans are, you can continue to research why customers love your product or service, how you can improve it and how you can better reach your target market.
Interested in more sales tips for small businesses? Check out these related articles:
- Convert Your Customers Into Evangelists & Watch Your Business Grow
- Why you need a customer loyalty program
- Cozy Up To Hot Leads With Warm Calls