The Importance Of Referrals

There is often debate as to whether it is a good idea to ask people to refer your business. Some businesses believe that if they get it right, referrals happen. Although this may be true in some cases, you may be leaving money on the table.

According to the New York Times, 65% of all new business comes from referrals. On average, two-thirds of consumers make purchases because someone they know recommended a particular product or service.

Let us look at some interesting facts about referrals:

• People are four times more likely to buy when referred by a friend or someone they trust.

• Over 83% of satisfied customers are willing to refer others to your business, yet only 29% ever do.

• Referred customers spend on average of 13% more than regular customers.

• Referral programmes are amongst the least expensive marketing strategies.

Some people are nervous about asking for a referral for fear of appearing desperate. Do not fear asking. People may think your services or products are excellent. Yet, they may not think of spreading the news with others. 

There are two types of referrals.

Experience-based referrals come as a direct result of someone working with your business. A previous or existing client is a prime example of an experience-based referral. 

Reputation-based referrals come from people that have heard about your business. An example of a reputation-based referral is someone who has seen your advertisement or engaged with your content online.

Both types of referrals are effective ways of getting new business and growing your business. However, experience-based referrals are more powerful. Research shows that over 50% of referrals usually come from previous clients.

As part of your business growth strategy, you should put a referral strategy in place. 

Start by defining your inner circle. These are the people you can approach for referrals. Then determine the strategy to approach each of these segments.

The image below is an example of an Inner-circle base.

Here are a few tips on how to get referrals into your business.

• When asking for referrals, phrase your question as a request for help. People love to help others, especially when they already know and like them.
  • "I was wondering if I could get your help with something?".
  • "Can you do me a favour, I was wondering if you know of anyone who May benefit from my services, could you introduce them to me?"

• Overcome your fear of asking
  • Fear of asking for introductions is a significant opportunity lost. Force yourself to work through the fear, and you'll thank yourself later. What is the worse that could happen? Someone will say "I have no-one to refer you to". 

• Research your competition, this way you will know what they offer against what you do. This will also help you find your uniqueness or USP.

• Define your audience, define and work on your inner circle.

• Add a human touch- Be Authentic.

• Leverage your entire network, leave no-one off your radar.
  • Approach your past, and current customers, industry connections, friends, family members, social acquaintances, friends of friends -everyone is fair game. 

• Set goals for yourself on how many referrals you can ask for in a week, a month, a year.

• Get specific about your ideal introduction. By doing this you will help others refer the right people to you. Give examples about the types of referrals you are interested in connecting with, define your personas.

No matter how big or small your business is, you can benefit from referral marketing. Even if you are 100% confident, you offer the best customer service in your industry. You should still always have a referral strategy in place.

For specialist business growth strategies, contact Coach Sonja Shear.