The easiest strategy for getting referrals

Posted July 21st, 2007 by Dr James Pratt

Before I move on from our topic of different referral strategies, I want to talk about what is perhaps the most effective, yet underused referral strategy that I know which is to...

...simply ask for them.

Many business owners and executives, professionals and even sales people have all sorts of mental hang-ups about asking for referrals. However, most of those hang-ups are invalid and I find that those who ask, get!

Now, here's a secret about customers or clients who refer that can be worth a great deal of money to you. Understand that the person who refers once can and will refer many more people, many more times if motivated to do so. Once a customer or client has referred someone to your business, then that source of referral should be worked like the goldmine that it is.

You should know that massive research by major corporations to consumer direct sales companies and organisations indicates that the average person has an immediate circle of influence of fifty-two - fifty-two other people! The typical executive, for example, knows about fifty other people at a similar executive level in his/her own or closely related industries. This number tells you that each customer or client who comes through your business could bring you as many as fifty other customers or clients.

You should also know that research by the American Management Association indicates that the average satisfied customer only tells three other people about the satisfactory experience. Moving that person from telling three to telling fifty does require some definite action on your part. That action needs to focus on the giving of recognition and
appreciation.

When a satisfied customer sends someone to you, the sender should immediately receive some recognition and appreciation. Possibly a quick thank you note or telephone call at bare minimum. That should happen right away. Subsequently some type of thank you gift is usually appropriate and effective.

You could send steaks, books, clocks, calculators, small electronic items, knife sets, all sorts of things. I recommend gifts that you do not ordinarily sell, and a different gift each time the person refers. You will really be amazed at the positive results from this kind of action.

You'd also be surprised, incidentally, at the negative results of not doing this. The client who refers once and fails to get recognition and appreciation will probably never say anything to you, but to herself/himself and often to a friend or associate she/he does say, "Can you believe it? I sent that guy a customer and never got as much as a thank you."

And then she/he never refers again.

Again, it's interesting to note that a basic success principle often discussed in personal development context is also a marketing strategy. It's called the, "Attitude of Gratitude."

Finally, if you want to even more directly stimulate referrals from your customers or clients, you might want to consider the second party gift certificate idea. Here's how this works:

You're a satisfied regular customer of a clothing store. The owner of the store says to you, "John as you know, most of our customers come as referrals from other customers and we appreciate that and try to encourage it. This month we're doing something interesting that you might want to help us with and be able to do a favor for your friends too." The store owner then gives you a ten dollar gift certificate negotiable only by a second party that you, the customer, addresses to and signs over to. This idea works extremely well for just about any kind of retail business, service business, home products business, restaurants, stores, beauty parlors, carpet cleaning companies and so on.

If you'll use this idea, you'll again want to follow it up with recognition and appreciation to the customer who does pass along a coupon that is ultimately redeemed by a new customer.

In my next blog we'll move to another form of advertising that works for ANY and EVERY business which is "testimonial marketing."

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