- Remove the Emotional Barriers
- Give Them a Reason
- Make it Easy
1. Remove the Emotional Barriers
The Short Answer:
Your customers must first feel good about you and your company before they will refer anyone to you. They need to …
- Value Your Services
- Understand What You Do
- Feel Comfortable Referring to You
- Customers Don’t Know How to Value Your Services
- They Don’t Know What You Do
- They Are Uncomfortable
Does this customer or colleague value your products and services enough that he or she would recommend you to someone important in his or her life?
In many cases the people you do business with do not know how to value the services they receive. You, therefore, need to let them know the value before, immediately after and occasionally after you deliver your services.
While it is important for your customer and other potential referral sources to have a thorough understanding of the services you provide, don’t tell them everything. People can normally associate only 1-3 things about a company, product, person or service. The more you tell them, the less they will remember. So pick the most likely services that they might refer and focus just on those.
Say “Thank You”. Another part of feeling uncomfortable is if they referred someone in the past and you did not thank them. Don’t just thank them when they first give you the referral — Also thank them after you meet the referral. Your customers and other referral sources need to feel appreciated. Make it personal. Send a hand-written note, a fruit basket, a book (nothing so lavish as to be thought of as a bribe). Make yourself memorable.
2. Give Your Customers a Reason to Refer Business to You
The Short Answer:
If you have a personal relationship with your customers, use an emotional approach. If your relationship is transactional in nature, provide them an incentive:
- Know what you can afford
- Tie the incentive to the referral becoming a customer
- Make it a win-win for both your customer and the referred person
- Select an incentive that would motivate multiple referrals
- It makes them feel good (emotional) or
- They have an incentive to do so (logical).
The approach you take will depend upon the nature of your relationship with your customers. If you have a personal relationship, you should use the emotional approach. This has an added benefit of reinforcing in the customer’s mind that they like doing business with you. Professional services businesses are good examples of this.
Would you be more likely to refer your accountant because he offered you a discount on your tax return or because he always saves you money? (Note: This is different than the accountant providing you a surprise discount as a “thank you” after the referral.)
If your business is more transactional in nature, then an incentive would normally be more effective. Here is how to set up the incentive:
- Know what you can afford.
- Tie the incentive to the referral becoming a customer.
- Make it a win-win for both your customer and the referred person.
- Select an incentive that would motivate multiple referrals.
Calculate your Customer’s Lifetime Value so that you know how much you can spend to acquire a customer through referrals.
You don’t want to give something of value away to a random list of referrals that will never convert.
Consider also giving an incentive to the person being referred. This way both parties gain from the referral beyond doing business with a company they trust. For example, if your neighbor’s trash pick up service offered them one month’s free for referring you, you might think (a) the only reason they referred you was for the money and not because it was a good service and/or (b) you should be getting a similar discount.
Offering a free cookbook, for example, might be a great one-time incentive to Tupperware buyers, but unless it is a series, people will not want more than one. (A series would actually be a great incentive as it would motivate customers to make referrals to collect all the books).
A word of caution — if not done correctly, an incentive can actually backfire; the customer might be offended because you have made the referral a transaction instead of something the customer wanted to do to feel good.
3. Make It Easy for Them to Refer
The Short Answer:
Your customers must first feel good about you and your company before they will refer anyone to you. They need to …
- Let them know you are looking for new customers
- Show them how to make introductions
- Let them know whom to refer
- Remind them
- Let them know you are looking for new customers
- Show them how to make introductions
- Let them know whom to refer
- Remind them
Most of your customers have no idea that you are looking for new customers. You need to let them know that you are looking to grow your business by taking on new, quality customers. Make it a habit of asking when you see them and in all your communications.
Don’t assume your clients know how to make an introduction. 9 out of 10 times they would simply give your contact info to that person and assume they will call you. If you want them to send an introduction via email, give them sample verbiage to use and ask to be cc’d.
How can someone make a referral if they don’t know who would be a good client for you? Describe to them what an ideal customer looks like.
While getting new business is always on your mind, it is not on your clients’ mind. You need to continually communicate this information without being overbearing. The best time to ask, of course, is right after you have just delivered outstanding service.
Think about the companies you have done business with either on a personal or professional basis. Have you given them referrals? Why or why not?
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