A Simple Plan for Getting More Referrals
A substantial part of your business can come (and should come) from referrals. For many businesses referrals are their main source of new business. For you, the key to making referrals happen can be summed up in three simple steps:
- Give Referrals First
- Provide Great Service
- Ask for Referrals
As you provide extraordinary customer service, educate your clients and influencers to this fact. Actively seek out testimonials and share them. Contrary to what many believe, referrals don’t just happen, you must actively cultivate (ask for) referrals; otherwise you’re just leaving it to chance.
Referrals Start with Great Service
The foundation of referrals especially great referrals is great customer service. A large part of your business should be generated through referrals. Make an investment in your business and your client’s satisfaction by doing excellent work. Constantly ask for feedback and make necessary changes to become even better. As John’s (my son) Scout Leader, Frank Suski always says: “The biggest room in the world is room for improvement.”
Characteristics of a Referral Source
Understanding the characteristics of a strong referral source, allows you to spend your time with the most qualified prospects. Below are the conditions of the optimum referral source:
- Must have a relationship with your target client
- Must understand your target client profile – do you have one?
- Must be educated on what you do
- Must respect you and your company
- Must be respected by your target client
- Must be motivated to refer clients to you
Make a plan to regularly ask for referrals and if you don’t already have one, you should create a formal referral program with your existing client base. Try sending a letter or better yet a customized card o
ut on regular basis. Make sure you’re explaining to your clients that you would rather spend your money enhancing your services than marketing for new business. Let them know that you will be asking for referrals. Send coupons or vouchers that can be distributed, business cards, and newsletters that can be forwarded. The goal is to educate and inform, the goal is to not be pushy; it’s important to be up front and tell them that if they are satisfied with your services they should recommend us.
With some vendors you need to be more formal about your referral arrangement. The promise of mutual reciprocation rarely works. Immediate gratification does! Remember you’re paying for th referral not the client. You reward based on the behavior of getting a referral. If you’re clear about the lifetime value of the client. Once you’re clear on
the lifetime value, then be generous with your fellow vendors when they bring in a referral. If you’re going to make a profit of $10,000 over the life of the client, consider writing a check for $1,000 to the referral-source. When you know the (lifetime) value of a client, the check shouldn’t be painful.
You may have friendships with some of these vendors but they’re also business people and should be concerned that they spend time improving their bottom line. When you propose a solid cause and effect financial arrangement, you’ll get significantly better results.
Evaluate all the businesses that are non-competitive but end up doing business with your target client. Examples of this are:
- Cabling Companies
- Management consultants
- Phone Companies
- Software Companies
- Hardware Companies
Make it worth their while and put the offer in writing. It could be a major source of new prospects for you.
If you give seminars, webinars, etc., and you provide great value, this could (and should) lead to a lucrative referral pipeline. But like anything else, you must consciously cultivate the referrals. Include extra business cards or coupons in the seminar package and on your evaluation questionnaire, specifically ask if there is somebody the participant knows that could use your services or should receive a discount coupon for the next seminar. Ask and you shall receive. I read that somewhere!
Some of the best referral sources you have available are from those that provide your company professional services. You’re their client, so they’re naturally inclined to provide extra value. They also have a great deal of insight into the work you do and your success. Examples are:
- Leasing agents
- Commercial real estate broker
Secondary sources that could surprise you are:
- Regular delivery people
- Vendor contacts; office supplies, hardware, etc.
- Cleaning services; contact the managers or owners
Cultivate and groom these sources of referrals. Behave professionally in all of your interactions with them. Keep them informed on new clients, products and services, press and so on. Supply them with business cards and actively ask for referrals.
Other Referral Sources
There are other referrals sources that may have already generated business for you without having a formal referral system in place:
- Members of your church
- Prospects – If they don’t buy, ask for a referral
- Members of other organizations you’re associated with – school, political, etc.
When to Ask for Referrals
You should always be asking for referrals if you deliver a quality product or service. Consistency is important in asking. There are times when you’ll get better results than others. Here are some guidelines for when to ask for referrals:
- After signing a contract.
- Periodically with a letter, e.g., once a quarter
- When successfully completing a project and your client signs the final approval.
- When a prospect turns you down. Guilt is a beautiful thing!
- When you’re doing a client satisfaction survey.
- When you’re calling an inactive client.
- When you’re calling an active client.
If you’re unclear on how to ask for a referral, here are some variations to try:
“It was a real pleasure working with you and I look forward to our next project together. In the meantime, if you know somebody that needs quality software development services, I hope that you pass on what a good experience you had with our company and have them give us a call.”
“I’m glad things are going well for you. Do you have any acquaintances that might need my company’s services?”
Keep Them Informed
You should keep the referral source informed during the early part of the new relationship with the referral they gave you. You’ll get a sense of the frequency, but at least make a call and tell the source “Thank you” for the referral. Inform them that you’ve met, started a contract and then simply ask them if they want to stay informed on their referral.
You should make it part of the process to send a letter thanking the referral source. It’s polite and prudent. If it makes sense, you can send them a credit for your services, a dinner for two or tickets to a ball game. Show your appreciation!
Motivating Referral Sources
Motivating the referral source depends on the kind of relationship you have with them. If it’s an existing client, it may be as simple as just providing stellar service and actively requesting the referral. For vendors and professional relationships, setting up a formal commission that is attractive is more effective.
And don’t forget to give referrals yourself. This is where you begin, by giving first! If you can comfortably recommend a company, you’ll build reciprocation credits and it doesn’t take a lot of effort on your part. The key is to refer only businesses that can really deliver (they’re referral ready) and then make sure you follow-up with the person you passed the referral to, to see how the relationship is going.