For a small business, marketing and sales are probably the most critical business tasks you will take on. Without the prospect of new sales, it would be impossible to grow, thrive, and compete in today’s fast-paced business world. However, the most qualified leads don’t come from cold-calling – they come from referrals, making this one of the most effective ways to build your bottom line.
Why referrals are important
Referrals are critical to business growth. They reduce the time you spend focusing on new sales and allow you to devote more attention to customer care.
Referrals also increase your closing ratio by a significant margin because your prospects are already eager for what you have to offer. Often, they will have already seen your solutions in action so you can skip all the time you’d typically spend convincing them to buy because they’re already sold.
Referrals are their own reward
Referrals help to build your customer base, but they are also self-perpetuating. Your happy clients will spread the word without having to be convinced to do so, meaning you have brand ambassadors doing a lot of your legwork for you. As your customer satisfaction grows, so does your authority, which will attract more new customers into the fold, both online and in the terrestrial world.
Referrals are cost-effective
If you have a thriving referral program, whether it’s formal or informal, it reduces the time you and your staff spend focusing on sales. This allows you to channel those resources back into other activities, like innovation, service delivery improvement, or devising ways to become more efficient.
Create a referral program
A great way to encourage referrals is to offer your customers an incentive. This can be done in a variety of ways; for instance, you could offer your customers discounts on products or services for every successful referral or create a rewards program with incentives that increase for more referrals – for example, offer a ten percent discount for the first referral, and notch that up to 20 percent for five referrals.
At Business Workspaces, our referral program is helping us grow while our members save money on their office expenses. It’s a win-win for all involved!
Asking for referrals
Some business owners may hesitate to ask their best customers for referrals, but keep in mind that these people are your strongest advocates. Frame your request from the standpoint of being a problem-solver. First, talk about how your product or service has solved a problem for them, and then ask if they know any other, similar businesses who are experiencing the same issues.
Solicit online reviews
The best time to ask for referrals is when your customer is showing great enthusiasm for a job well done. This is the moment you should encourage them to rate and review your company online. Whether you focus on Google reviews, Facebook, LinkedIn, Yelp, or Trip Advisor, online reviews go a long way to encouraging new business. In fact, studies show that 84 percent of people trust online reviews more than they do word-of-mouth recommendations from their friends or family.