6 steps to generating a flood of new clients through the power of referral marketing

It’s no secret that word-of-mouth referrals are among the top ways to get warm leads that are easy to convert into dream clients. It's also incredibly cost effective. Here's how you can get tons more.

How to get a steady stream of referrals to your business

NOTE: This post contains affiliate links.

You’re probably already aware of the power of referrals to get more clients.

It’s no secret that word-of-mouth referrals are among the top ways to get warm leads that are easy to convert into dream clients. It's also incredibly cost effective.

What's more, a 2011 study published in Harvard Business Review found that referred customers generate higher margins and higher retention than other customers, making them more valuable in both the short and long run.

So why do so many companies get haphazard results?

While word of mouth is one of the most effective forms of marketing, it's also one of the most difficult to control.

And most businesses and entrepreneurs leave word-of-month marketing up to chance.

They allow the process to be passive. 

In order to excel at driving new business through referrals, a business must do two things:

1. Be referable: Offer amazing service. This is fundamental. Adding value and delivering on client expectations provides the foundation for word-of-mouth marketing. Even the most robust referral system won’t generate results if you can’t offer an outstanding customer experience.

AND

2. Develop and implement an effective referral program. Once you’ve refined the customer experience piece, then creating and practicing an effective referral program can have a major impact on your bottom line.

Too many companies believe that providing value and amazing service to their customers will automatically result in referrals with no further effort on their part.

Unfortunately, great service is not enough to get a consistent flood of referrals.

Until you take steps to set up a referral program, you will continue to wait in an empty corn field muttering, “If you build it, they will come.”

fieldofdreamscorn.jpg

If you do not ask for the referral, you are not likely to get it. 

It’s not because your clients don’t want to give one. It’s more likely that they are busy and your company is “out of sight, out of mind” unless you are there to remind them.

However, many entrepreneurs and business owners are reluctant to ask for a referral because they are afraid.

They worry that they are being too pushy or rude.

Or, they are embarrassed to ask for referrals because it feels like they are begging.

Many entrepreneurs are concerned that asking for a referral from a present or past client might result in damaging their relationship. 

Let me assure you.

Based on my years of experience with my own requests for referrals and testimonials, as well as helping clients to set up a referral marketing program that your fears are unfounded. 

People will happily give you are referral. And even if they refuse, it will not damage your relationship with them.

If you provided them with great service in the past, they will hire you in the future.

How to get a consistent stream of new clients by setting up a referral program

Below I’ve outlined the main steps to creating a referral system, with specific suggestions for putting it into practice.

Remember every business is unique, and your system will need to be tailored to your industry practices and marketing strategy.

Step 1: Target your dream customers:

Targeting the right people is essential for the success of your referral system.

A deep understanding of your dream customers makes it easier to describe your perfect prospect to referrers. 

Step 2: Identify your top referrers:

Then, identify your “dream referrers”—these are people who know your company and already think highly of it. They are already brand advocates for you. 

Typically, they have some sort of pull on your prospect, either through a personal or working relationship. Referrers can be existing clients, past clients, vendors, complimentary service providers, and/or business friends.

When I work with my clients, I recommend that they start with a list of 20-30 people they think could refer clients to their business. 

Step 3: Ask for referrals:

Develop a methodical system to ask for referrals from your clients and other referrers.

When you ask for referrals from your clients, set up your system so the "ask" is at key points in your customer relationship.

You can also include “referrals appreciated” reminders in your email signature, newsletter correspondence, and on your website. This is a good option if you have a broad base of referral sources that you reach out to on a regular basis.

If you have forms that you deliver to customers on a regular basis such as receipts of payment, this can be another place to print this message.

Be sure to incorporate referral language into your client appreciation materials. Not only are you nurturing your client relationship, you’re asking for referrals in a more intimate, less invasive way.

Step 4: Recognize your referrers:

Make sure that you always, always, always say "thank you" to your referrers.

When you show your referral sources that you appreciate their support, you’re ensuring their continued enthusiasm for sharing your message.

There are many ways to thank your referral sources.

Simple correspondence is effective and affordable. Make a phone call, send an email, or—better yet—send a handwritten note to express your appreciation. Because most people have forgotten about the good ol’ handwritten note, you’ll stand out by writing one.

Giving gifts to referrers not only recognizes their efforts but encourages additional referrals. Send a gift card, or grant them discounted products or services to express your appreciation when one of their referrals converts.

Step 5: Incentivize your referrers:

Depending on your industry, you may want to consider incentivizing referrals for key relationships.

Certain companies have relationships with the sales reps of complimentary software or types of services. There is often an opportunity to explore a formal spiff arrangement.

This approach definitely isn’t for every company or every industry, but we’ve found it does work well for certain sectors. 

You can also incentivize customer referral from your employees.

A variation on this can be a cross-referral agreement if you are in the position to refer clients to your referrer's company. 

Step 6: Measure referral marketing efforts:

In order to leverage your referral system for the best results, it’s critical to track your referrals and analyze key metrics.

With the right amount of measurement, you can answer questions like:

  • Who are my best referral sources?
  • How does my referral conversion rate compare to my overall lead conversion rate?
  • What’s the ROI for my referral system?
  • How can I refine my referral system for a greater ROI?

Like every type of marketing, tweak and improve your referral system over time. 

Asking for a referral: here's how to do it

The first time you ask a client or partner business for a referral, you may be nervous and it might be awkward.

Just keep in mind that you are asking people who already trust you and know what a good job your company does. Your customer wants to see you succeed and will not be annoyed by your request.

I have two methods that I like:

1) Take your referrer out to coffee/lunch/beer. 

Connect with her or him. Ask how business is going. Ask about life. Be a great listener.

At some point, this person will ask how things are going with you. This is a great opportunity to tell them about a new service/program/product at your business and ask them if they know of anyone who would be interested.

For example, let's say you are a web designer. You can answer like this:

"Things are great! We just launched a new website package. It is tailored for female life coaches and I am so excited about all that I have included in it. {Describe in more detail}. Do you know of anyone who would be a good fit for this? I'd love to reach out to them!

2) Email your referrer.

Shoot an email to your referrer. Give them a nice greeting. Let them know that you have some openings in your schedule (or will soon) and can accept a couple of new clients. Ask for their recommendations. 

For instance, let's say you are a photographer. You could write:

Hi Jane, Happy 6-month anniversary. I hope you and Emile are doing well!

Can you believe it's already been 6 months since the wedding!! I had so much fun there and met so many great people. 

I am currently booking this coming summer's wedding and family photo-shoots and am reaching out to all of my clients. I'm currently offering a discount for friends of my clients (that's you!). So, if you have any friends who are getting married or having babies, send their names and emails my way. 

And, if you are would like to book a photoshoot for you and Emile, I'd love to work with you both again.

I look forward to hearing from you!

Best, David Engalls

Touch in with your referrers at a regular basis and see who they can send your way. You'll be amazed at how many people have suggestions.

If you want to take a deeper dive on the topic of referrals, here are three books that will help you (click through to see book on Amazon):

1) Endless Referrals by Bob Burg: In this book, the author shows you exactly how to maximize your daily contacts, utilize your tools both online and off, leverage your relationships, and generate ongoing sales opportunities.

2) The Go-Giver also by Bob Burg: This book is fun because it teaches via a story about a young man named Joe. He gets advice from a legendary consultant know simply as "The Chairman." Joe learns that changing his focus from getting to giving—putting others’ interests first and continually adding value to their lives—ultimately leads to unexpected returns such as greater fulfillment and more business..  

3) The Referral Engine by John Jantsch: The well-known marketing strategist behind the blog, "Duct Tape Marketing" shares his most valuable lesson: how to get your customers to do your best marketing for you. Word- of-mouth referrals are what drive business today: People trust the recommendation of a friend, family member, or colleague - Jantsch gives ways to get a ton of them to your business. 

Set referral marketing up as a system

Incorporating these elements into your marketing strategy will put you on track for an effective referral system that drives business and makes you more profitable.

Turn it into a repeatable system that is part of your regular operations. You'll be amazed at how much business you will get as you nurture the relationships with your referrers and make it an intentional part of your marketing. 

Your turn

Now I want to hear from you!

Have you started implementing a referral program at your business? What are your favorite tactics to use to bring in referrals?