Updated May 29 at 5:29pm

Spreading the good word

Customer referrals are one of the most powerful and lucrative ways of building business. While word-of-mouth gets you noticed, referrals are even better because the best ones bring purchase-ready customers or clients right to your doorstep (or website) complete with an existing customer’s endorsement. More

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Spreading the good word

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Customer referrals are one of the most powerful and lucrative ways of building business. While word-of-mouth gets you noticed, referrals are even better because the best ones bring purchase-ready customers or clients right to your doorstep (or website) complete with an existing customer’s endorsement.

Membership-type businesses, such as health clubs, constantly run referral programs by offering existing members discounts or freebies for bringing in others. But small-business owners of all types know the magic of referrals, which offer instant credibility for what you sell.

Finding and using referrals effectively, however, can be harder than it looks. Referrals come in several different flavors. If someone merely provides you a name or email address, that’s a low-grade referral. But if an existing client actively talks up your product or service, sets up a meeting or brings the prospect in, that’s a superstar referral.

Here are ways to get more and better referrals:

• Create a referral-generation plan and put it to work: Referrals aren’t automatic. Some business owners assume that a great product or terrific customer service will automatically generate referrals. Not so. You have to ask. Don’t be shy. Most loyal customers are open to providing referrals. Some even appreciate the opportunity to tell friends, family and associates about something good they’ve discovered.

• Ask at the right time: Timing is important, but many businesses ask for referrals at the wrong time. The worst time to ask is at the cash register or when you present a bill. Instead, look for opportunities earlier or later in the process when customers are more receptive.

• Provide some support: Don’t ask customers to recommend you to others without providing them some kind of backup or support. It can be as simple as a supply of business cards or a link to a special page on your website. It could also be a brochure or some other type of printed material that reinforces the referral and describes what you do.

• Offer appropriate incentives: The incentive you offer must fit with the kind of business you run. It could be a discount, service credits, an upgrade, a free item or some other trigger that will entice clients to provide referrals. Test different offers to find out what works best.

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