There truly is one simple trick that won’t fail to generate more leads for your business, and yet you probably are not taking advantage of it. In short, the secret is:
Ask your current clients for referrals
Sounds simple, but keep reading to learn how you can add referral marketing to your sales cycle and learn about one very effective technique you can implement today that will help generate a constant flow of referral leads.
The sale cycle for most businesses is something like this:
There is one thing missing in the cycle, and it is one that is forgotten by most businesses: REFERRALS.
Very few business owners ask their clients for referrals, even though it is simple and is considered the most cost-efficient marketing technique.
Will it Work for Me?
Referral marketing gets results for any type of business.It doesn’t matter if you are a web company or run an offline business.
The one thing all businesses have in common is customers. Customers are humans and (surprise!) they also know of other humans (on average we each know 190 people, according to Facebook)
Many web companies make use of referrals to grow their customer base by offering something for free when a referred user becomes active.
DropBox (a cloud storage business), for instance, increases your free storage space each time you refer someone. When Gmail launched, users were asked to invite up to seven friends. Hotmail automatically added a line in the footer of each message sent that invited people to also open a free email account.
Don’t think that you need to run a web business to be able to implement a referral system.
I know of a swimming pool maintenance company that has used a very effective referral strategy. They ask new customers to place a pamphlet about their business in all of their neighbor’s mail boxes. Not only does the new customer get a discounted rate but the original customer gets the same discount.
Zurich Insurance asks customers to make referrals and offers a $100 shopping voucher to both the referring person and the new customer.
How Do I Implement a Referral Strategy?
You have several options when deciding to implement a referral marketing system. They generally fall under these three categories:
1 – Just ask
The simplest and cheapest strategy is to simply ask your customers for referrals post-sale. When asked, your customers could send you the contact details of people they know who may need your service.
2 – Offer an incentive
You could offer an incentive which could take the form of a discount (on the current or any new purchase), a shopping voucher, a gift… each time a customer referred becomes a paid customer.
3 – Offer a double incentive
The double incentive approach is similar to the previous model in which both the referrer and referee get an incentive, like the pool maintenance and insurance examples. It is considered to be the most effective method but also the most complex to setup. Each time you offer an incentive, you need to track who referred whom and who received what. It is generally easier to manage if you run an online business and there are tools out there to help you manage your referral program (more on that below).
Are you ready to hear about my simple yet Super-Efficient method ?
As I mentioned, the easiest and most cost-effective method is to simply ask your customers for referrals. The method I am presenting to you now falls under that category.
This method works for any online and offline businesses, makes no use of incentives, and doesn’t need anything else other than the address of your customers (which you should have), and a bit of time.
Here it is:
Simple, huh? It’s unfortunate, but it’s rare to be thanked by companies. The simple gesture of thanking is very effective to connect further with your customers.
By asking for referrals and explaining that you are growing your business,
- people understand your need
- and are in the right frame of mine to help you spread the word about your business.
A friend of mine, a mortgage originator in Australia, uses this method as his ONLY marketing activity. When I signed up to Aweber (a newsletter online service) I received in the post a letter thanking me for having signed up, and it was signed by their CEO. I felt special!
Don’t Ask Just Once
My Australian friend goes one step further in reaching out to their customers and sends birthday cards each year. People love the fact that he remembered their birthday, and he gets a constant flow of fresh referrals each month!
By regularly connecting with your customers and asking for referrals, people are more likely to think of you next time they hear of someone needing what you sell.
You could send birthday cards, but you could also send cards for Christmas, Halloween, and other occasions.
Perhaps a more unique approach is to find a quirky event and sent out a card then. For instance, August the 6th is Wiggle Your Toes Day.
I bet your customer will remember you if you were to send you a card on that day. (Here is a web site where you can see these funny international days)
How to Automate your Card-Sending
The cards you send should be personalized. If you have a low volume of customers, you could handwrite each and every card. Otherwise, a personalization by name and a signature should be sufficient.
If you don’t want to manually write and post cards each year, you could automate the process with a service called SendOutCard .
The cost is roughly 1$ per card sent. You upload the contact details of your customers, set a sending and any recurring date, and your cards get sent automatically.
So it’s really “set and forget” and the bulk of your work is to upload the contact details of your new customers, which may not take more than 15 minutes each month.
Other Tools for more Complex Referral Systems
The card-sending method is simple to implement; but if you are looking at creating a more complex referral system, there are a few tools you could investigate. In saying these systems are more complex, I am referring to the implementation of incentives and ways to track referrals.
How Many Customers Will I be Able to Generate?
The number of customers you will be able to generate, well, depends… It’s impossible to give an exact figure, but consider this: According to Nielsen, people trust recommendations from friends and family 92% of the time and more than all other forms of marketing.
By implementing a referral component in your sales process, you will get more customers. Period.
Keep it simple.
I am a firm believer in keeping things simple. Sending thank you and yearly cards is easy to implement and relatively cheap. So before you start imagining a double incentive system with tracking, ask yourself if it would really be worth your time. Perhaps you start with a simpler method before going all in? But by all means, do try.
You will never be able to track all referrals.
Tracking referrals is quite hard and you will never know 100% of the time if a new customer has been referred by someone. You could ask during your sign up process where customers have heard about you; but don’t expect to track all referrals, even if you are using a refer-a-friend tool.
Make referral marketing part of your sales process.
Referral marketing should be implemented in your sales process and should not be a once-off marketing campaign. Make sure that all new customers are asked for referrals. The idea is for you to automate as much as possible to keep on having a flow of fresh new leads.
Word of Mouth Marketing Association – the official trade association dedicated to word of mouth and social media marketing.
White papers from Extole - Case studies and best practices
Some great books and resources to learn more.
I am interested to hear what you think of my trick for gaining new customers; and if you have a successful referral marketing method, please do share it.