Of course, referrals matter. Happy customers = them telling their friends and family = future customers. It’s a basic premise of a sales process. And wouldn’t we love it if every single one of our happy customers gave us five referrals? Even 10? However, the reality is that we make it challenging for our customers to provide us with referrals.

What does the data say about referrals? Data researchers ThinkImpact found that a staggering 83% of customers are open to referring a business after conducting a successful purchase. That tells us that the vast majority of your customers actually want to refer you. Think about your current customer base. Do you have even just 20 customers? That means that those 20 can quickly turn into 36 with the right referral strategy. We’d take that business increase all day, every day. Knowing our customer acquisition cost is essential – referrals are one of the lowest-cost strategies to gain new clients. But getting referrals comes with a great customer experience, which is a lifelong mission that takes hard work.

RECIPROCITY & SOCIAL PROOF

Referrals are part of a marketing concept called Social Proof. The term was first coined in 1984 by Dr. Robert Cialdini in his book called Influence: The Psychology of Persuasion. Cialdini’s 6 Principles of Influence include Reciprocity, Commitment/Consistency, Social Proof, Authority, Liking, and Scarcity. For example, reciprocity describes the process by which people think that they “owe” another person who gave something good to them – it could mean a discount, a favor, or giving them the name of the person they trust for a particular person good or service.

Social Proof is the concept that people will automatically do what they see others doing. It’s comforting to the human brain. Things like referrals, reviews, testimonials, and “favorites” lists are all ways to up the Social Proof game. Have you ever seen two different restaurants close to each other, one is packed, and one deserted. Which one are you going to walk into to get a table? I’m almost sure that it is the packed one. It’s better, right? Social Proof says it is. Our Marketing Director & Coach, Julie, often says that you need to establish that “people like me” can buy your product. Social Proof, referrals being an important component, is the way to make sure that happens.

ASK FOR REFERRALS

Your customers may not even know that you want referrals or that you’re taking new business. Simply asking if your customer knows any friends or family members who may use your product or service might inspire them to act. Often, customers assume you’re too busy, not growing your business, or don’t have the infrastructure built for growth. Let them know that this isn’t true. You’ll be surprised at how many come out of the woodwork. When they give you a great referral, be sure to thank them. Thank them for their trust and for putting their trust in you to take care of their friend.

HAVE A SYSTEM

As coaches, one of the #1 things that we preach is to have a system for everything. For example, we have a large commercial HVAC distributor as a client, and their customer service folks are trained to identify the DISC profile of the caller within seconds, and they have a call script for each of those. Referral systems are no different. If you have a process for how a current customer can refer business to you, and it’s super easy to execute, then that 83% of customers are going to want to do it.

Your system needs to cover who you’re looking for as a potential, what the current customer needs to do to refer them, where they go to give the referral, how they do it, and when it’s appropriate. Make it fun! Have a contest, provide referral gifts, or have an annual party to celebrate all of the new clients, making sure that their referrer is invited with them.

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Making it easy for customers to give referrals makes them happen more often! Utilize that 83% of customers who want to refer you and ask. Give your future customers the Social Proof they need to feel comfortable about choosing you. Set your strategy for referral success, and watch your business grow.

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Need help putting together a rock-solid referral strategy? Do you need help acquiring more customers? We can help. Schedule your free, no-obligation business analysis today.

About the author,

Director of Marketing, ActionCOACH Columbus

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