Back in the marketing day, word of mouth accounted for a large percentage of new
customers. Of course, today things have changed—or have they?
You might be surprised to know how much business still comes directly from referrals. According to the New York Times, they are responsible for about 65% of new business. And, according to a Nielsen study, Over 90% of consumers surveyed reported that they trust recommendations from people they know.
What’s so great about referrals from a marketing standpoint? They cost little or nothing. They don’t require the investment of human and monetary resources necessary for most marketing campaigns. And, they are organic. People are coming to you because of the quality of your products or services, so there’s no need to sell. You already have willing buyers.
Is a customer referral program right for you? If you have decided to give it a try, here are some tips:
Follow through on each sale
The path to customer referrals starts with the sale. And, as all good marketers know, no effective sales cycle is complete without the follow-though contact. Why does it matter? A follow up call or email does more than just thank them for the sale and ask if you can be of further assistance. It also encourages customers to recommend you to others. You can ask for one during your follow up contact, but even if you don’t your customers will remember your consideration and pass the word around.
Ask your customers
Before you opt for potentially expensive compensation programs (“refer a friend and get $20 off on your next purchase!”), try the simple and easy approach: ask your satisfied customers to recommend you to others. Most will be glad to do so, but might not think to do it unless you ask.
Incentives can work, but why not see how much new business you can get for nothing more than an email or phone call contact? An incentive program can be added later, as resources allow.
Simplify the referral process
Making it easy for people to refer you improves the odds of getting the word of mouth recommendations you’re looking for. A phone number or link is usually enough, and you can even create a number and/or URL specifically to handle customer referrals. This helps you keep track of the sources and their contact information.
Toot your own horn
Do you get a lot of business from referrals? Do you have a high referral rate per paying customer? This is a great selling point for your company, so don’t be afraid to mention it. A good rule of thumb is that if your referral rate is at least 25%, it’s worth bragging about.
A customer referral program can also be handled by an outside service. But, whichever way you choose to do it, keep in mind that your customers can become your greatest allies when it comes to attracting new business. Let them do some of the work for you, by encouraging them to refer you to friends, family and colleagues. If they like your products and services, you won’t have to pay them to praise you. They will do it because they want to.
* Image courtesy of stock.xchng
