|Referrals, a photo by gccrepair on Flickr.|
How did you find out where to have your hair cut, or where to find reliable and reasonably priced auto service? Have you noticed lawn signs in your neighborhood showing that the same company is painting five adjacent houses?
You probably rely on referrals to trusted product and service providers more than you realize. When you need to purchase something important you go to someone you trust and find out who they trust to provide it. (Of course you'll also be warned off of replicating their bad experiences, and these stories might be quicker to come to the surface!)
You and your business could be generating more new business from referrals. But if you're like many businesses, you haven't developed and implemented a strategy to make it happen. Here are some of the reasons we've been told:
- "I just don't ask routinely."
- "I don't want them to think that I need the business and am begging."
- "What if they didn't like what I did all that much? I'm a little worried that they wouldn't refer me."
- "I don't know whether I should pay them in some way, or whether that's even ethical."
The foundation for customer referrals
If you want referrals you need to start by creating service experiences that are referable. Service that consistently goes above and beyond the call of duty can create positive buzz about your business. Sometimes showmanship in how you serve customers creates a reason for people to choose to buy from you rather than from Brand X. If you don't have your quality buttoned down, start there. Fix the things that you know right now might not be showing you in your best light.
If you're throwing up your hands because of some recent boo-boo that has gotten you down, relax. You don't have to be perfect to generate more referrals. You will have some customers that love you because you work hard on their behalf, even if things don't go exactly right every time. Good recovery when mistakes happen can help you solidify a good customer relationship.
Setting customer referrals up from the outset
Let prospective clients know from the beginning that your goal is to provide the kind of experience and results for them that will make them want to tell somebody else about you. By doing this you're creating a positive expectation, and the expectation will help your client notice the good things you're doing. If there are specific standards that you strive to meet, tell them - like "We ship within 24 hours of receiving your order." But only promise what you will consistently deliver.
If you will be asking them who they know that might benefit from your services, let them know. You might go as far as to make that part of your deal. A coach we know quotes the investment for his coaching services as "$_______ plus two referrals." And he's specific about what the word referral means. "A referral isn't a sales lead. A referral is when you make my phone ring two times from someone who is seriously considering using my services."
If you're setting up the referral expectation at the outset, follow through on the expectation along the way by asking your customer who they think might benefit from the same thing that they purchased from you. Of course it's only reasonable to expect a referral if they like what you're doing, so you might have to be partway through your process before they are comfortable enough to vouch for you with somebody in their circle.
Sometimes a helpful prospect or a center of influence will provide a referral to you even if they are not in the position to buy. For this to happen the referral will be on the basis of you and your relationship with them, not on the service or product you provide. If you want a referral you will need to ask for one, and since this individual will not have bought from you (yet,) you will help them refer to you more effectively - and help to jog their memory - if you provide a description of your ideal client. Tell them the circumstances that lead people to buy from you, or demographic or psychographic information about your customer base that will help them sort their contacts for a good fit with you.
Paying for referrals
This is a matter of taste in some instances, and a matter of ethics in others. For retail services you might provide an across-the-board referral bonus. For professional services though, consider this: does the referral lose some of its credibility if the referrer stands to gain financially? We have a policy not to refer in exchange for money specifically because of that conflict of interest.