Small businesses can gain a lot from using the influence of their existing customers to gain new customers. And often times, they rely on this word of mouth interaction.
People are actually 4 times more likely to buy from a business if referred by a friend. This is exactly why small businesses seem to do well with organized word of mouth marketing, like a referral program. To bring even more benefit to small business, referral programs improve customer acquisition, but they do so at a cheaper cost than traditional marketing.
So how can your small business get more referrals? We’ve broken down the key steps so that you can successfully have a business based on referrals.
Before we dive in too far, you need to first understand that you need to have the right mindset. Creating a referable business doesn’t just happen overnight. In fact, it should be one of your long-term strategies. So, to help foster referrals, you first need to make sure your current customer relationships are built up.
Here’s what you should be doing if you want to use the power of referrals to grow your business.
Obviously, customer service is a major component when it comes to the customer experience. And a good customer experience can lead to your success which is the foundation for referrals.
Make sure you are giving customers the best service out there. Because ultimately, your customers are coming to you for a service.
Here’s an example. Let’s say you’re an interior designer: a potential client calls you and leaves a message asking if you have time to meet with them while they are in town (they will only be in town for 1 day… tomorrow). As a professional designer, you know that fitting them into your already hectic schedule is a long shot. However, you make sure you respond to their message promptly and respectfully to let them know that you can’t meet during their requested day. You do, however, follow up with ideas for alternative meeting options like a Skype meeting. You also throw in that you would be willing to meet with them for an early morning coffee (before your regular schedule starts). By giving them options, you put the ball back in their court.
The bottom line is, the customer service you provide sets the foundation for you to become a referable business.
You may be thinking, shouldn’t we be focused on getting to know our customers, not the other way around? Yes, that is true. But, by letting customers know who you are, you are creating a business that customers can know and trust. Besides, customers refer people, not businesses.
Think about it. You will likely refer a business because of the experience you had with the employee. Think of any realtor, car salesman, photographer… you get it. People will only refer a service or business if the product is good, and the person selling the service is personable.
It’s a lot easier for a customer to be interested in you if you take the time to get to know them while letting them get to know you as well. It’s definitely a two way street when building a relationship. So when you’re getting to know customers, remember there might be some awkward silences. This is especially true for businesses that start with one on one meetings. But if you take the time, and use it wisely, you can use this time to get to know your customer before jumping into the main point.
Just an FYI: be careful you’re not oversharing. TMI can quickly make someone feel uncomfortable. Not to mention it looks unprofessional.
Your online reviews are almost like a personal recommendation. Most of the time, people read reviews to decide on whether or not they would buy what you are selling. So, when your business is able to keep up on good reviews, it helps build referrals. Not to worry, even if you have a few bad reviews to your name, people will still consider you if they see you are actively working to fix those customer’s problems. So make it a habit to respond to negative reviews, especially.
Additionally, even if a person is directly referred to a business from their friend, there is a good chance the referral will take a few minutes to read some online reviews. Hence, reviews mean referrals!
So, if you’re in the market of starting a referral program, you may want to also make sure you are active on some review sites. Don’t be afraid to get yourself out there (this helps you look like a credible business also!).
Tip: When you see a customer write a very happy review, there is a good chance they will refer to your business as well. Make a note of these people, and when you start a referral program, reach out to them first!
You know your business better than anyone else, but that doesn’t mean the market isn’t saturated with businesses similar to yours. So even if your product is superior to competitors, it might not be enough.
So, what you should do is find areas where you can go above and beyond for your customers. Customers are spending their money on you, so whenever you have the chance you really should try to go above and beyond. This is what will help keep your business in the buzz, as going above and beyond is what keeps people talking about you.
The more help you provide for your customers the better off you’ll be. Whether that mean reminding them of what they should do next, or even giving a few extra tips on how to use the product better. You definitely don’t have to break the bank or even go overboard, just being super helpful and nice can be the perfect amount of ‘above and beyond’.
Really, you should be going “above and beyond” for every single customer.
If you’ve already been paving the way for referrals to happen, that's great. You probably have some word of mouth working in your favor, and new customers are already coming in. It’s safe to say you understand how to get referrals. But, how do you put it all into play to get even more referrals?
Look for patterns and trends within your referral demographics. This is easiest if you track your prospects and referrals in a spreadsheet. Or it can be even easier if you use referral software.
Let’s say you’re a B2C business. You could find that middle-aged men respond to you better, or maybe young professional women. If you’re B2B perhaps you’ll find that other small businesses, particularly startups, refer you most often. Whichever the case, this gives you some ammunition to dig a little deeper so that you can understand what type of person refers you, and what type of people need/like what you have to offer.
Tracking patterns can help you determine who you should be focusing on and pulling out all the stops for. Additionally, you may learn that you have a few super customers who advocate for you time and time again. Look into why these people love you. (Also note: These people should be given recognition!)
Showing you appreciate your customers efforts can set you apart from competitors. So if you know who has been referring you, why not give them a shout out. You can send them an email or tell them on social media (public recognition can be a huge referral booster). If you keep fostering these types of relationships you are better able to stay connected to your target market. Good rule of thumb, if they refer you once, they will likely do it again.
Note: Only use public shout outs if your business isn’t typical a ‘secret’ service. You don’t want to embarrass your customer.
A simple thank you thank is an easy way for you to express your appreciation. You should be saying thanks even when a referral falls through. This tiny act of kindness can reinforce a person to refer again.
Let’s go over a few examples of how you show appreciation to referrers.
eCommerce: A quick email including a thank you is plenty. To top it off include a coupon for store discount or free shipping as an additional way of saying thanks.
Service type business: give them a freebie or discount off their next bill. If you are a software company upgrade their account or give them an upgrade for a period of time. If you’re a lawn service give your referring customers an add on service or a discount off their next apppoint. If you’re a realtor, drop off some local goodies or a tray of cookies.
Your gesture doesn’t have to be expensive or complicated. A small, simple gesture can easily let them know that you value what they are doing.
If you can’t give monetary rewards remember a shout outs on social media or a thank you letter (or email) is perfect for saying thanks and a great way to fuel future referrals.
Setting up a system for referrals to happen can give your customers the extra boost they need to refer. If you’ve already been getting referrals just from word of mouth, using a system to invite and track the process, can provide customers with yet another reason to share.
There are a ton of referral marketing solutions on the market. Referral software makes it easy for you to manage, track, and even distribute rewards. They also make it easy for everyone else to refer you. Just be sure to check what you are allowed and not allowed to do if you want to use incentives, some businesses may have to find non-monetary ways to incentivize referrals.
People have their own version of the story they want to tell to their friends. So the best thing you can do is make yourself a good character in their story. This is probably the easiest way to make yourself referable.
Having someone personally recommend you is a huge compliment. And there really isn’t a better way to find customer than to have your name or business brought up while someone is having a fun night with friends.
So take a little time to get to know your customers. And take a little time to show them your appreciation. By doing so, you’re increasing your chance of having your name passed on. You don’t have to work hard, you just have to be smart.
Megan Mosley is the marketing specialist at Referral Rock who believes every business has the potential to increase their word of mouth. When she's not working, she enjoys sipping on coffee and hanging out with her dog, Mollie.