Referrals - Want a 300% increase?

It’s getting even harder to market your business and break through the clutter. Business owners are getting more wary of accepting a ‘cold contact’ made through mail, phone or email. The best marketing concept that doesn't have this challenge is ‘word of mouth’ leads from satisfied customers and known contacts. These leads usually have greater credibility, the lead will be more receptive, the price will be less of an issue and the prospect will be quicker and easier to close.

Many businesses get up to 75% of their business through the referral process.

The problem with the word-of-mouth ‘strategy’ for most businesses is that they don’t have one! There is no structured plan to maximise referrals, so business owners experience unpredictable results. There is no control over how often your customers talk about you and your company, products and services.

Most businesses only receive about 20% of the referrals they should be getting…no matter how good their product or service is.

So it’s up to you! You need to remind them of your value…and how you can also help their network of business colleagues, clients, customers and friends. If businesses start using a proactive professional referral marketing system, they should expect to increase their referral leads by at least 300%.

Obtaining the maximum number of referrals for your business is based on the combination of four main elements:

1. Customer care program

A customer care program will greatly increase your referrals, customer satisfaction, loyalty, up-sells, profit margin and greatly reduce your marketing costs and long-term commitment. This program should include:

* a customer charter,
* a referral policy,
* a customer award and loyalty program,
* a complaints procedure,
* a customer satisfaction programme,
* a guarantee, etc…

You should never lose a customer to competitors if you run such a program. Don't be daunted by this, customer care programs are fairly straightforward to set up for any size or type of business - as always, you just need to know what to do.

2. Database management system - Customer Relationship Management (CRM)

This will keep all your prospects and customers’ details so you can manage all your sales, follow-ups, customer details, customer relationships etc.

It need not be expensive and you can use anything from a manual card system, spreadsheet, or professional CRM software such as Legrand or ACT.

3. Proactive referral strategy

If you want even more referrals, you need to implement some extra proven and successful referral systems. An example of this is endorsement mailing…where you ask your best clients to send testimonial letters to their own contact network, praising you and your company and encouraging their contacts to contact you (you can offer your endorsers a results related commission for doing this - if you want to!!).

If done properly an ‘endorsement mailing’ should result in a 20% to 50% response from warm prospects, with at least a 75% closure rate. Compare that with a typical ‘cold’ direct mail shot resulting in a 1% - 2% response, a very high cost and a much lower closure rate.

Other referral marketing systems can include; PR, advertising, joint venture, telesales, Internet, hospitality, competitions, surveys and many more, but all include some form of third party involvement or endorsement.

4. Customer award program

This will reward any person (including your staff) who brings you referrals. This is an essential policy to win the maximum number of referred customers. The awards must be in accordance with the policy of the referrer. If they cannot receive cash or gifts in any form, then offer to take something off their next invoice or donate it to a charity of their choice.

Awards can be from the simple ‘Thank You Letter’ (sometimes that is all that is needed) to cash commissions, gifts, vouchers, loyalty schemes etc. You will at least double your referrals if you openly promote and operate a referral award program as part of your referral policy.

So the question you must ask yourself is, "What do you plan to do now to maximise the impact of word-of-mouth in your business?"

by Lisa Weber, Director, SuperStar Consulting ©

If you would like some help setting up a Referral Program, contact Lisa Weber at SuperStar Consulting on T: 07 3314 1525 W: www.SuperStarConsulting.com.au