At first glance, it seems like a no-brainer.
“Easy. A blog in www.ducttapemarketing.com says “People make referral decisions about the same way they make purchasing decisions.” No-brainer, right? Wrong.
See, the whole process of purchasing something is more complex than it sounds. When you buy something, both logic and emotion play huge parts. Let’s say you’re buying a shirt. When you decide whether it is reasonably priced and it fits, you use logic. When you try to determine whether it will look good on you or anticipate what your friends will say, you use the emotion.
Problem is, you unknowingly do it in reverse order – you get hooked emotionally and back it up with logic. That’s what science says.
So, how does that draw a parallelism with referrals?
In order to have your business considered as someone worthy of a referral, you need to tap the logic and emotion formula – preferably in equal parts. In other words, people have to believe you can help, have a fair price, and will do as promised (logic), but, they must also feel good about helping you, trust that the person they referred to you will be treated well, and in general, like the experience of doing business with you (emotion.)
Now that we’re done with the science, let’s do the math.
According to Infusionsoft’s Small Business Market Research Sales and Marketing Report, 72 % of new business comes from referrals and word of mouth. In another study, Nielsen has found that 84 % of its respondents say that recommendations from people they know is the most trustworthy of all advertising.
- Referral leads convert roughly 30% better than leads generated from other marketing channels. (Tony Nissen,R&G Technologies, 2013)
- People trust friends and family more than virtually any other information source; they pay 2x more attention to recommendations from friends than other sources. (Mckinsey, 2010)
“So the question really is: How do we make clients refer us to others?
#1: Product Knowledge
Make sure your current clients know about all the products and services you offer and how you help so they can either refer within their company or to others they know. Too often, sellers assume their clients know more about them than they do. If you’re a consulting and advertising firm and a client uses only your consultants, for example, make sure they know how much you’ve helped fledgling companies take off with the help of your advertising team’s efforts. Cliché as it may be, a person cannot give what he does not have. Arm him with all the knowledge he needs about your products and services so that he can maximize it.
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#2: Under promise and over deliver
Be it in relationships or in business, this nugget of wisdom never fails. The first time I heard someone say this, I thought it was the wisest piece of business advice I had heard in a long time. Now of course, I know that it is really a bit of a cliché, but one thing I also know is that clichés become clichés for a reason – they are usually true.
If you want clients or customers to refer business to you, then one of the best things you can do is offer folks, not only value, but extra value. Do more than people expect, do more than you are paid to do. If you give more than you get, you can bet that you won’t be in debt.
No wonder this always works, the psychology of FREE stuff in generating leads.
#3: Inspire confidence
It’s risky referring someone—what if it’s not successful? Some people fear if they refer a business and it doesn’t go well, it’ll hurt the relationship. You can inspire confidence in your referral sources by letting them know that, say, 80% (or whatever) of your business comes from repeat customers. Every engagement with a customer is an opportunity to impress them and build a relationship. It also provides a great opportunity to ask for a referral.
Think about it, after you complete some work for a client and they’re really happy with it, you’ve got them in a high emotional state. Provided you delivered a good level of service, they’ll be more open to recommending some other companies that might find your services valuable.
This beats just calling customers out of the blue and asking for referrals.
Next time you engage with a customer that you think might be a potential advocate, just ask them: Do you know any other companies that would find out services valuable?
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#4: Offer a reward
For example, add a note or insert in all your invoices that you give out prizes for referrals. Maybe a gift certificate in a clothing store or maybe even a significant discount on their next transaction will do – anything but cash. The point here is, by focusing on adding value to your customers, they will be motivated to help you.
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Also, you can add value to your customers by offering extra training on new products, putting on a lunch for their staff, or even simple tokens. Each of these examples shows that you are investing in the relationship and you care.
This speaks volumes when it comes to asking for referrals and creating customer advocates. You go a long way to building trust and your customers will feel more comfortable referring others to you.
Speaking of which, our referral program for sales leads could be one great example. Check it out!
#5: Treat the vendors and suppliers like partners
In the same vein, treat your clients as partners, too. Make sure they’re aware of who and how you help. Let them know you view them as a strategic partner, and tell them you hope they’ll do the same with you. Create formal channels to share referrals.
A study by Wharton School of Business 83% of satisfied customers are willing to refer products and services. But only 29% actually do.
Why? Most are inclined to believe that that their relationship with you ends when the services they paid for have been delivered. Transactions have become so casual and impersonal that even if they are satisfied with the product, they won’t go the extra mile and refer you to others. But if they feel that they are being treated as partners and there actually is a semblance of a meaningful business relationship, convincing them to refer you to others won’t sound like you’re asking too much.
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#6: Give a referral
Yes, it’s one of the best ways to get one in return.
You deal with companies which have business objectives, too. You refer some to them, chances are, they’ll do the same to you.
Remember, most referrers are motivated to help you because you helped them, and don’t seek a lot of reward for themselves. Plus, keep their effort in perspective. All they do is make the connection, which takes a few minutes of their time, and you do the rest of the work, so it doesn’t need to be a big reward. The best reward would be a referral back to them, if appropriate for their line of work.
Generating referrals is not rocket science. It takes a bit of work, but it should be cemented as a personal mindset into every opportunity that you have with your customer base. Asking for referrals must be second nature, like breathing.