The Profitable Art of Generating Referrals

Most people believe that their business that would be improved if they could only generate a few more prospects itching to buy. And the way they normally go about generating more prospects is to spend the bundles of money on advertisements and, regrettably, because they are not advertising geniuses the advertisements they spend so much time working on generally produce the very poor results.

Yet instead of spending money on advertising there's a better way of generating great prospects for your business. And what's that?

Well, its word of mouth referrals, endorsement or third party recommendations probably the most important source of new prospects available. The great part about referrals is that they cost very little to generate other than the investment of some time and thought to get the right processes in place.

The figures speak for themselves. If you are in business as a retailer, tradesperson, manufacturer or hospitality operator, around 80% of your business should be coming from referrals. On the other hand, if you are a professional then that figure should zoom up to an amazing 92%.

So there was a very simple question you must ask yourself and that's:

What systems do I have in place to generate referrals?

If you are like most people you rely purely on luck and only luck and, sure, that will generate you some referrals but nowhere near the numbers you can get if you're serious about the process. You have to put in some time to create reasons and rewards for people to talk about you generously to their friends and acquaintances and recommend you highly. There are some great ways to achieve this and they are worth knowing about.

• The first way is to ensure that you and your team get into the habit of asking every one of your customers for referrals. It's as simple as saying to them, “look I know you'll pretty happy with what we do to you so I wonder whether this somebody you know who may be interested in our products or services?" Now this won't produce a referral every time but it is amazing how often they will respond by saying, "I've been meaning to mention a friend of mine to you who..."

You'll find team members are reluctant to do this at first but providing you do some regular practice (and by that I mean role playing) at team meetings and reward them in front of their peers you'll be amazed at the results that they begin to achieve.

• The second way is by performing so sensationally that people talk about what you do. That means that you deliver fantastic service and have incredible backup. It means you do what you promise to do and you do it so well that they tell their colleagues, friends and even competitors. This is called “making them say wow!”

It would be useful to ask yourself what you are doing to make dealing with you memorable... what you do that is so sensational, so different, so amazing that it sticks in your customers mind and they just have to tell everyone about the experience.

You see people only tell others if you are so bad or so good that you stand out from the crowd; they never bother to tell others if you just do what everybody else does. If you stand out from the crowd negatively people will warn their friends never to deal with you. On the other hand you stand out from the crowd because you do such a terrific job they'll want to tell everybody about you.

• The third way is to put your referral system in place. That is means you regularly let clients know that you are looking for referrals and offer them a reward when they introduce someone to you.

The reason this approach works so well here's because all of us have been used to receiving rewards for little tasks ever since we were kids. Remember how mother always bribed you by saying, "Take the nasty medicine and mummy will give you a lolly." That childhood lesson is indelibly engraved deep in nearly everyone’s subconscious mind and therefore they are predisposed to more favourably respond when offered a reward.

Getting the level of the reward right is critical. If you offer too little it's an insight; if you offer too much it’s a bribe. It's worth talking to some of your customers and asking them what they would consider to be the right reward. Naturally the value of the reward you offer depends on the value of the new client to a large extent but more importantly it's the thoughtfulness behind the reward that really scores.

Then of course it's important to let all the people in your database know and you could do it with a letter like this: