4 Reasons Why Referrals Make Great Business Sense

Referrals. Gold for your business.

With the popularity of Facebook and online forums, establishing a good referral system is essential to your business prospecting activities.

Yet, when working with clients we are often surprised that many do not have a formal strategy in place.

Not having a referral strategy in place for your business is leaving money on the table.

Different Kinds of Referrals

Developing your strategy begins by being conscious of the power of referrals.

The more expensive something is going to be, the more likely referrals are to be the deciding factor.

This does not mean that more expensive is necessarily better. Rather it means the decision is more measured when it comes to items at a higher price point.

Similarly, when putting our trust in someone to handle things that are very personal to us…like our health. Or haircuts. Special occasions that will not be repeated.

Two of the main types of referrals are:

1) Online Reviews

How often do you check the online reviews on TripAdvisor when you’re in a new town? or on Facebook when you’re thinking of using a business for the first time?

I’m willing to bet you do that quite a lot! Am I right?

2) Personal Recommendations

When was the last time you went to a restaurant because a friend kept on raving how great the food or the service was?

Have you ever asked a family member/friend to recommend a reliable plumber/electrician to take care of your dripping taps or broken fans?

I do this on a regular basis because good tradies are hard to find!

Similarly, doctors, dentists, web designers, accountants and a myriad of other professionals.

The Trust Factor

If you’re like me, then you probably like to give your business to, and place your trust in, someone that comes recommended by somebody you know and trust.

When you’re new to a place, or looking for a service for the first time where do you look before making a decision?

These last few months I’ve been spending a lot of time in a new location – Bribie Island – I’ve found a hairdresser, a masseur as well as my airconditioning installer and electrician all through referrals.

Most of these referrals came from online recommendations in a local community group Facebook page. I then did my own due diligence and checked out their websites and also the profiles of the reviewers.

If you’re in business your online profile deserves your attention because you never know when you’ll be ‘snooped’ by a potential client.

Referrals definitely work!

Referral strategies need to have a key place in your business.

Even more so now that there is so much happening out there in the social media landscape. Tapping into that landscape is GOLD.

4 key benefits to your business

1 ) Customer acquisition costs are minimal.

Your happy customers are doing the marketing for you.

Of course, this only happens if you give good service and are attentive to your customers’ needs.

This means going above and beyond what is expected.

2) Customer retention rate is higher.

If people are happy with your services, they are most likely to keep doing business with you.

However, you also need to remain front of mind, so it’s important to maintain contact via a strategic communications plan.

3) The marketplace is crowded.

There is so much going on out there in “internet land.”It makes getting your message to stand out from the crowd difficult.

Who better than to recommend and refer you than happy clients/customers?

Remember, we value the advice and recommendations of our friends.

4) Conversion rates are generally higher.

A prospect introduced to your business by someone they trust is far more likely to convert into a new client/customer for you.

Spotting a potential referral opportunity

The old adage that an unhappy customer will tell everyone and a happy customer usually won’t say anything much is definitely true.

What this boils down to is this…

Communication.

You need to make the ASK.

1) Ask your customer to spread the good word about your business.

2) Be quite specific in your ask.

3) When you get a referral be sure to follow up and THANK whoever made the referral for sending business your way.

4) Continue to keep in touch AFTER the job is finished.

Keeping in touch is a vital part of the relationship building. You’re going that extra mile to make sure everything is running smoothly or, in the instance where there may be a problem, you can immediately offer a solution BEFORE it becomes a bigger issue.

If you haven’t got a system in place, it’s not too late to start!

You’ll be surprised at how easy it really is once you are open to creating and maximising the opportunities.

Need some help working out HOW to ask for referrals? Ask us and if you’re struggling to choose a business consultant to work with – check out our tip sheet.

Fly like a dragon
Michelle

Michelle Hanton is a multi-award winning bespoke business strategist, working internationally as a consultant, coach, speaker and writer. She has a keen interest in the not-for-profit sector and is the former CEO of Lifeline Top End, and founder of Dragons Abreast Australia, a national charity dedicated to the promotion of breast cancer awareness.