Want to boost sales? Referrals are best

Normally, every customer who comes to you does so because of money and time that you spent. You ran an advertising campaign, and that caused a few people to come in. You went out to networking events, which resulted in some people who might become clients.

That’s pretty expensive.

It’s common, actually, for a business to lose money on that initial sale, if you include what it cost to bring the customer in the door.

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As any seasoned business owner will attest, there’s a better way to find customers: referrals. When you get most of your new customers through recommendations, you have a company which can grow exponentially because of the increased reach of your message.

But there’s a number of key elements that you need to put in place for this to become effective:

Customer satisfaction. Of course, it all starts with delivering something that pleases your customers. They’re not going to recommend you to their friends if they don’t trust that you’ll deliver a great experience again. You’re aiming for that ideal message: “I love doing business with this company, and I think you’ll love them as well. Check them out!”

Powerful message.  Next, you need to be delivering a clear and consistent message through everything you do. It doesn’t have to be about your specific products, unless they are truly unique and special. Instead, your message could convey examples of the high level of service you provide, or even the personality of your company and its employees.

Consider examples from companies in all industries: Apple, New Belgium, Jake Jabs with American Furniture Warehouse, and FedEx.  These messages have been clear, powerful, and compelling for many years.

Consistency. Your customers need to see congruence between your marketing and their experience with your company. If you position yourself as providing decent products at extraordinary value, people need to see that quality and value when they walk into your shop.  Your employees’ actions need to support the message, as do your newsletters, website, and even location of your business.

I’ve been talking to several companies recently to get bids for some expensive work on my house.  Each promises that it delivers great value, high quality materials, and attention to detail. Yet I’ve seen significant gaps in fulfilling these promises: One company delivers great value for money, yet has struggled to stay in contact with me. Another gave me some good ideas and advice, then delivered a very expensive quote three weeks late.

Would I want to give a referral to a business if I’m not confident that my friend will have the same great experience that I did?

Ask for referrals. I find it surprising that most businesses never make it apparent that they appreciate the work their customers are doing to bring in new prospects. You assume that everyone knows that you want more business, but this may not be the case. Your customers may think that you’re busy enough, because you optimistically told them that “business is just fine!” They might not know where to send people, because they don’t have your business card in hand at the right time. And most likely, they just don’t have you in mind during a key discussion they have three months from now, because you haven’t kept in touch.

You don’t have to give concrete incentives for referrals – that may not be practical or even legal in your industry. A subtle example is the little white board in my chiropractor’s office: “We appreciate the business that you’ve referred to us!” followed by a recognition for those who have helped out.  This is supported by a personal thank-you at the next appointment.

But be careful. The expectation of a “prize” for giving referrals can cheapen the experience. Suppose that the chiropractor would tell customers in advance that they would get a bottle of wine for each referral.  Some customers may not appreciate getting that particular gift, and it could even be an annoyance.  Others might think they’re in a contest to get as many bottles as possible, generating low quality referrals and expecting the prize even when it doesn’t turn into actual business. In general, it gives the message that referrals can be bought through bribery rather than a great customer experience.  If you’re considering prizes, keep them small, so they don’t become the primary focus.

Now get out there and create a powerful referral engine.

Carl Dierschow is a Small Fish Business Coach based in Fort Collins. His website is www.smallfish.us.