11 Free Ways to Generate Referrals
This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.
Want to generate referrals without spending money?
Start by considering the motivation of those who generate referrals, who will most likely be satisfied customers or industry colleagues. These people don't really care so much about promoting your business. Instead, the best kind of referrer wants to solve a problem for a friend or mutual customer. Your mission, then, is to convince potential referrers that your business will perform as expected in the best interests of the persons or businesses being referred.
So, instead of conjuring up ways to persuade people to promote your business, concentrate on creating a business that uniquely, reliably delivers results that people need and want. This approach will allow you to build a strong referral base.
Here are ways to elicit, not solicit, referrals.
1. Offer a product or service that is unique in the marketplace (proprietary or better yet, patented) or is packaged, presented, and delivered in a way that is difficult or downright impossible to obtain otherwise.
2. Be reliable, even if you can't be unique. Construct a product or provide a service that matches established standards (set by your business, your customer, or your industry) and performs as expected, every time.
3. Truly understand and convey your market positioning to potential referrers (such as current customers, colleagues in complementary businesses, and even competitors with whom you are friendly) so they will be aware of the very specific problems that you aim to solve. Even prospects who decide not to buy will refer those who have needs that fit your company's offerings.
4. Build relationships with industry colleagues who frequently have contact with your targeted audience and will make referrals (e.g., web development firms who refer customers to graphic designers and photographers; wedding planners who make referrals to caterers or florists).
Take care of these customers so that the referring business can be more productive and focused on its niche, rather than expending resources in educating clients on methods of specifying and purchasing outside products and services. And, if your product or service helps these colleagues elevate their professional presence because of an association with your business, then you'll build a valued source of referrals.
5. Be easy to find and contact. Do the obvious: have business cards handy for customers, run a search-engine-friendly website, engage in social media. List contact information prominently, making it simple and fast for customers to get in touch with your business.
6. Interact with customers consistently and consistently well. Let customers know what to expect and meet those expectations. Instill professionalism and kindness in your employees, so that they will display these characteristics in their communications with customers.
7. Pay attention to each customer's needs. Delivering a proprietary product or superior service is important but quickly assessing needs, giving sound advice, and selling the right product or service is critical.
8. Be an approachable expert. Stay on top of industry trends but spend just as much effort talking with people (mostly customers), learning about their needs, and gaining new insights from others. Your knowledge will grow exponentially and you'll continue to refine and expand your business in a way that matches demand, even in changing conditions.
9. Cultivate influencers, those who not only tell people about your business but also talk with people who then take action.
In my business, some customers continually tell me that they make referrals on my behalf; what's peculiar (to these customers, but not to me) is that those who receive the referral very rarely contact me. Note that making a referral is not the same as producing a referral that results in a sale.
For whatever reason, a limited number of customers may produce an excessive amount of qualified, eager-to-buy referrals. Some call this phenomenon the 80/20 rule, reference the "numbers" game in the language of a cold-calling sales representative, or think of mavens and connectors as described by Malcolm Gladwell in The Tipping Point; others assert a more democratic word-of-mouth process. My experience tells me that there are those who influence more dramatically than others, though I've never predicted which of these customers or colleagues will be most likely to incite action.
Nevertheless, everyday, non-influential customers can generate one-off referrals, which are also valuable. Encourage anyone who attempts to make a referral in a way that appropriately represents your mission.
10. Find ways of doing business with those outside of your original customer target. Expanding your horizons may mean adding payment options, extending credit terms for the first time, launching an ecommerce site to complement your brick-and-mortar presence, or creating online services to reach a broader audience.
11. Thank all customers who attempt to make referrals (not just the ones who produce them) and let them know how much a referral base really means to the success of your business. Showing gratitude will encourage referrers to keep spreading the word.
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