Remember the last time you received a referral and acquired a new customer? Referrals are great way to build new business in any economy. Referrals have two key advantages over other methods of getting new business:

1. Unlike other forms of marketing, it costs little to obtain the new customer. In a difficult economy, we want to find inexpensive ways to market our products and services.

2. The prospective customer comes pre-sold. You already have credibility with them because of the referral.

Usually when a potential new customer arrives at your business they will have a number of questions about your products or services. They may want to know about your background, how long you have been in business, will you still be here tomorrow, what is your pricing, and will you be able to provide service after the sale. These are just some of the questions they may ask.

But what about the customer who was referred? They are pre-sold and generally have far fewer questions. They are much easier to bring on board. This being the, case we ought to be much more diligent about utilizing referrals in our business.

So how do we go about it? Don’t sit there and wait for referrals to come, take action!

Step 1: Establish a program that strongly encourages and rewards referrals.

Most satisfied customers will gladly give a referral without expecting to be compensated. You’ve helped them, it gives them pleasure to help you. But it doesn’t hurt to offer something more tangible. Think about rewards that you can offer existing customers in appreciation of their referrals.

Step 2: Put reminders everywhere.

On your invoices, make sure there is a printed reminder about your referral program. If you have a newsletter, make sure the referral program is prominently mentioned somewhere in every issue. In your office or store is there a visible reminder? What about on your website?

Step 3: Don’t be afraid to come right out and ask for referrals.

You can use a subtle approach like printing on the back of your business cards a benefit or discount for a new customer referred to you. The benefit or discount could be for the new customer or for the one doing the referring.

This is a low key no pressure approach. If they don’t want to do it, they don’t feel they have to. But if they were already inclined to give a referral, this gives them a push to do it.

You can be more aggressive. Simply make a practice of asking current customers for referrals. This has been a successful approach for many business, although it isn’t for everyone.

Whether you take a subtle or aggressive approach, implementing a strong referral program is a must for every small business.

Owners of most very successful small businesses devote 75-80% of their time and effort in marketing to new and existing customers. Over the past few years many businesses have lost sight of this. Make sure you are focused on your marketing efforts or you may see your market share dwindle in these trying times.


by Steven Schlagel