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New Business is Great, but Referral Business is Better. Build a System to Stay in Touch and Reap the Referral Business!

Ongoing cultivation of customers and clients is the key to long-term success. What makes referral business so valuable? When people come to you based on a referral, they know you as someone they already trust—as “John/Jane Smith”, not just a voice on the phone or a picture on a Web site. The people who’ve referred your services have already sold them on your business and prequalified you for them.

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The beauty of referral business is that when they call, it’s already a "done deal", and you’re going to get the business. Since the referring friend was so happy with your service that they took the time to refer you their friend that new customer is now expecting to be satisfied with your service and as such will be much easier to please.

The beauty of referral business is that when they call, it's already a done deal and you are going to get the business.

The best customer is one who has been referred by a friend of theirs and is already satisfied with your service based on their friend's pitch on your behalf.

The beauty of referral business is that when they call, it’s already a "done deal", and you’re going to get the business. Since the referring friend was so happy with your service that they took the time to refer you their friend that new customer is now expecting to be satisfied with your service and as such will be much easier to please.

Referrals are not only easier to acquire than new business but also cheaper. Just ask the president of any fast food franchise and they will tell you that it is cheaper to ask customers if they would like fries with their meal rather than pay for commercials to sell French fries. That one-to-one point of sale communication adds $1.50 per sale over a million transactions making a substantial profit from a simple question.

It’s a whole lot less expensive to maintain the attention of people who know your service, like you, and trust you than to get the attention of people who don’t know you or your service. New business requires advertising dollars, referral business is free because your customers are walking advertisements, and they have a much broader exposure base than you could ever afford to have.

You might be asking yourself now; “Do I have referral business? If so, how much? If not, how do I get it?” The answer to all those questions; “Ask each and every customer you can, then ask them again.” If you don’t let people know that you need referrals you won’t get many. Don’t assume your customers can read your mind or care how your sales are. Even if customers really like you, they may not understand how valuable referrals are to your business and that is not their job anyway, it’s yours.

There is a theory, whatever’s on the “top of your mind” falls out of your brain and into your mouth, and then you talk about it – that theory is called “top-of-mind awareness.” Your best and most immediate source of referrals is your current customer base. Make it a daily exercise to have your sales force, in a purposeful, respectful and proactive way, ask customers for referrals. When you tell customers once, they’re happy to share your name with their friends, but it’s not important to them, it’s not their mission. Don’t push customers too hard as that will only annoy them. Every time you have contact with your customers personally or online it is a good idea to ask them again.

If you’re professional about it, everyone you know is a potential source for referrals. Do your dentist and doctor have your business card? How about your sales force’s dentists and doctors? You can’t be shy or uncomfortable about letting people know about what you do. It’s essential to make referral building a regular part of your marketing activities. You need to continue to remind friends and customers you don’t see on a regular basis to refer you to their business contacts, clients, friends, family, and coworkers. You need to stay top of mind to keep getting the business. Here’s how.

If you don’t already have a database that contains every past customer and customer going forward, start one. Make time every week or two to add new contacts and update information on current ones. A good idea might be to send a friendly letter, email or even call your customer at the end of every transaction.

Along with any letter or email you send be sure to include a coupon to save them some money next time they come in. Include an additional rebate if they refer a friend to your services. You might say; "Hi Joe! It’s been a joy to serve your branding and promotional products needs. I’d like to thank you for your business by presenting you with this 20% OFF coupon that is good for whatever you would like from our catalog next time you come in, additionally if you refer a new customer to me I would like to give you 50% off on (you pick the item but it must be something they would be interested in). If you have any questions, please don’t hesitate to contact me I always like hearing from you."

You will get business from using this technique. Most customers never hear from a business they have visited again after the transaction is over. When you communicate with your customers in this way they will remember you and you will be “Top of Mind."
Once you’ve got a basic list in place, prioritize your customers by their referral potential. Designate people who’ve already given you at least one referral in the last year as “A” clients. “B” clients are those you’ve sold something to in the last three or more years who might have sent you a referral in the past but not recently. “C” clients are those clients who have purchased something from you in the past but have never sent a referral to you.

Concentrate the majority of your effort on the “A” clients and try to send out a personal letter or email with information of value every month. Call or visit your “A” list at least quarterly. What about “B” clients? Go back and reestablish your relationship with “B” clients. Treat them like “A “clients for a year. If they make a referral in that time, they stay on your “A” list. If they don’t, boot them down to the “C” level.

An obvious addition to this strategy is to not let your clients know that they are on an alphanumeric list of this type as they may be offended with your classification of them. I guess if you are an “A” list customer then it wouldn’t matter too much, but you don’t want to indicate to the “B’s” that you are ready to press the red button and downgrade them to “C”.

The bottom line is that you should call as many as 10 people on your customer list each day. No need to make it an hour long call, but cover the bases. Ensure a good feeling between them and you and say goodbye. Some people are better on the phone or talking in person than others. No matter if you are good at communications or not you should have a list in front of you as you call your customers. Lead them in the direction you want to go and get ideas for new products and ways to improve your business. If you are somewhat diligent and hit your list a few times a week you should be able to contact every “A” customer before starting over again the next quarter. This strategy not only brings in business but it enables you to have intimate knowledge of your customer base and stay “Top of your customer’s minds.”

A good way to keep your “A” customers and turn your “B” customers into “A” customers is to show your emphatic appreciation for their referral efforts. When you find out from new customers that they came to you through a referral, make sure you thank those who sent that business your way. You should at least email them or call them and if the referral is worth enough to your business then send them a small gift like a pair of tickets to something or a gift basket.

In your email or phone call you should keep the referrer in the loop by saying something like, “By the way, I met with your friend Steve that you referred to me from XYZ Company on Tuesday. Thank you again for the referral!” Or; “I just want you to know that Steve over at XYZ just got the same plaque program you have. Again, thank you for the referral.” This tact makes people feel important and want to refer you again.

Once a year you could host a customer appreciation party or charity event at a park, restaurant/bar or banquet hall. The party should be independent from a holiday celebration, but it would be alright to have it coincide with a grand opening, anniversary or other business related or charity related date. Hosting and participating in charity events not only helps a good cause but also provides a great reason for you to reach out to past customers.

The idea behind this is to gather your customers together in one place, present them with some food, drinks and a couple gifts and get them talking to each other. Most importantly float around and talk to everyone in person. Express to each one how important they are to you and how you appreciate their business. Also let them know how important they are to your referral campaign and to let everyone they know about your business. Take business cards from your customers, help their business with referrals in the same way and they will also gain referrals through the law of reciprocity.

Staying connected is the main point here and you can only see so many people face to face or over the phone every day. While there’s no substitute for the personal touch, social networking sites such as LinkedIn, Facebook, and YouTube are a great way to supplement one-on-one contact, especially with younger customers. Update your profile on LinkedIn and you can immediately e-mail it to all your registered contacts. Create a clever holiday video, upload it to YouTube, and send it to customers. It’s much more memorable than another card.
The final step in referral building is to see if what you’re doing is working. Track calls as they come in to see if the business came from a referral or another form of marketing. What’s a good level of referral business? Ideally you want to have 50-60 percent of your customers referring to you each year, if you do the right things, your referrals will keep growing and so will your business.


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