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Fostering friend referrals

Posted 2/24/14

Most of us are far more likely to be swayed by a friend’s recommendation than an ad. A recent Nielsen report found that 92 percent of consumers trust recommendations from friends and family above all ads. And they are four times more likely to buy something recommended by a friend.

Here’s the takeaway for business owners, says Annie Tsai, chief marketing officer at Demandforce, an Internet marketing firm that works with small businesses: Referrals are a huge, shiny gift that every small business should leverage as much as possible.

Many small businesses are so focused on acquiring new customers that they neglect one of their most valuable resources: active referrers.

In fact, if your business is delivering value to customers (and I certainly hope it is), you probably have active referrers already – even if you aren’t aware of them. They are the ones posting positive reviews about your business on social media and telling their friends about you simply because they love what you offer and/or how well you treat them.

Here are ways to attract referrals and put them to work for your business:

• Tap the power of testimonials. “If you have a recent customer review that emphasizes how amazing your product or service is, turn that recommendation into a referral engine by pitching your offer as ‘customer approved’ and share their story,” said Tsai. A customer video testimonial, a before and after photo, or a snapshot of their post-visit review are all effective ways to draw new business from your current fans.

• Ask customers to bring a “plus one.” Create referrers using “you-and-a-friend” deals. This is a great approach for businesses for two reasons. First, it turns an existing customer into a returning customer. Second, it encourages existing customers to bring someone completely new to your business.

• Go for gift cards. Giving gift cards is a form of referral. Encouraging customers to give gift cards for your product or service can be a key driver of referral business. This is a great way to broaden the scope of your actively referring customer base.

• Keep it going. Don’t stop your encouragement after a first customer visit. Provide an incentive to get the referred customer back a second time as well. “It’s the same as when you’re designing deal site promotions or any other new customer acquisition program,” said Tsai. “Offering incentives for the customer to return a second time provides you with additional leeway and a captive audience. New customer acquisition through your referral channel is no exception to this rule.” •

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