Why Referral Business Is So Valuable
With so much money invested on innefective advertising, it's time to look at some good old fashioned ways of generating new business. One tried and tested way is by referral.
Here are three reasons why referrals are so valuable?
1. Customers who refer are more likely to stay with you and as a result, spend more, adding to their lifetime value.
2. Referrals are more likely to become customers. Why? Because they have been recommended to you by someone they trust and who in turn, trusts you.
3. Referrals who become clients are likely in turn to generate referrals because they understand the process.
What's the best way to generate referrals?
You have to earn them! You have to treat your customers as friends. The result is that they will want to introduce you to people they know who in turn can do business with you.
It's back to that Trust thing again isn't it? By showing you care about them and about their lives, your level of trusts increase. Remember the three things people think about before doing business with someone?
1. Do I like the? 2. Do I respect them? 3. Can I trust them?
By taking the time to develop relationships, trust increases, as does the likelihood of referrals.
By delivering a high standard of service in an appropriate professional environment or fashion, you are demonstrating your professional competence. The combination of this and your capacity to develop relationship will in turn earn you the right to ask for referrals.
I guarantee that if you did nothing else but began asking your customers for referrals on a regular basis you would instantly see an increase in referrals coming into your business.
The best time to ask for a referral is when a customer gives you a compliment or expresses any kind of gratitude towards you or your business. Tell them that your purpose in asking is to build your business. There is absolutely nothing wrong with that.
In fact, a client who really likes you will actually feel honoured that you have asked for their help.
Don't be afraid to tell your clients whom they should be thinking of as referrals (i.e. people under a lot of stress, people who are health conscious, people in pain) ? be specific. You get what you ask for!
OK, so now you've gained sufficient trust and respect to ask for referrals, what do you do when you start getting them? Simple. Make a fuss of them by means of reward and recognition. Just as with children and dogs, rewarding good behaviour makes certain that the behaviour is rewarded.
Do it publicly, too. Create a Referral Recognition wall in your reception area. Put the names of people you've rewarded up there. Run a referral incentive program that rewards more for more referrals.
Remember we're talking about the cost of client acquisition and retention here. Far better to pay for the client after they've spent than to gamble on attracting them!
With a Reward for Referral program, your costs are a fixed item for every new client, too, making budgeting far easier.
Ask yourself this question: Do I currently know my exact cost of customer aquisition? If the answer was "no" you should look closely at a referral reward program.
About the author: James Yuille is a sales and marketing consultant and trainer with over 32 years experience. He is based in Brisbane, Australia. His free weekly sales and marketing newsletter provides topical information for business owners and salespeople. Find out more at http://www.jamesyuille.com
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