Let’s say you buy some clothes one afternoon and it’s a great experience. You find what you’re looking for, but you need to get the piece tailored. You ask the salesperson if they have a recommendation for a local tailor. Let’s say they give you an enthusiastic referral, “Oh yes, the best tailor in the area is just down the street. Tell them I’ve sent you and they’ll give you a small discount.” How likely are you to go to the tailor that the salesperson sent you to?
Chances are, extremely likely. You’re even more likely to try this new tailor than use one that you’ve been to in the past.
That’s right, referred customers are even more likely to convert than repeat customers. Think about that for a second. This referral, while it seemed like a friendly recommendation, was extremely powerful. Not only do you give your business to the referred tailor, but the person that made the referral is seen as trustworthy and helpful, so you’re probably more likely to return to the clothing store, especially if it is, indeed, a great tailor.
This same scenario plays out all the time, in different business and social contexts. An enthusiastic referral has shown itself to be one of the most powerful selling tools in a small business’ arsenal. So what are you doing to harness this powerful marketing strategy?
Why You Need a Referral Network
Developing a referral network is the first step toward using the power of referrals to aid your business. A referral network is a network of businesses that agree to mutually refer customers. These businesses are often in a related market (a real estate agent and a contractor, for instance) or are in the same local area (all the businesses on one street). But businesses can also make surprising alliances based on other criteria – like the lifestyle of their customers (for instance, think of a bike rental place recommending a coffee shop in the adjacent town, for a nice pit stop on a bike ride).
If you can develop a great referral network, then you’ll have leads coming without even trying. But this requires more care and work than it might at first appear. If your referral doesn’t end up being reliable or adding real value to your customer, then the whole thing backfires.
How to develop a great referral network
Take a moment to put yourself in your client’s shoes. What businesses or professionals would they be looking for as they are preparing to do business with you? Start with the obvious ones and work your way out, to business offerings that may be only distantly related.
For each business category, consider which business or professional you trust the most, who offers consistent service. It helps if this is a business with which you already have a friendly report but you probably need a long enough list that you won’t have a personal connection to everyone.
For business categories where you don’t have a trusted business, consider joining a referral marketing network like Alignable, Bebee, or ReferralKey. Or consider joining local meet-ups to meet friendly business owners.
Contact the businesses that you want to be in your referral network and let them know. Ask if you will be in their network as well. Discuss the arrangement so that everyone is happy with it and so it is clear and honest.
Now get referring! When clients ask for advice about related businesses, you can recommend certain ones without hesitation and you can include a personal touch. “Tell them I sent you.”
Laurie Macomber is owner of Fort Collins-based Blue Skies Marketing. Reach her at 970-689-3000.