Have you ever gone to a restaurant because a friend recommended it? Or perhaps you’ve visited an osteopath after a colleague told you how they fixed their back? Chances are you’ve acted on a recommendation in the past, so you’ll understand the importance of a referral from someone you trust. But did you know just how powerful those referrals can be for your small business?
According to one global report, 92% of people trust recommendations from friends and family. Now, imagine what word-of-mouth could do for your sales…
Read on to find out:
- Why referrals matter in business
- Strategies to increase referrals and drive success
- The benefits of incentives and rewards
- Why valuable content matters
- Asking for referrals and customer feedback
- Making your own recommendations
- How LinkedIn may help
Why referrals are important
When someone tells us something is great, we are far more likely to try it or buy it than simply watching an advert on the TV. When potential customers hear positive things about your products or service it builds trust and increases the chance that they buy from you.
If you’re just starting a business, referrals are an effective yet budget-friendly way to build your customer base and your reputation. Many referrals happen organically and are a side product of good business practice as well as strong customer service. More often than not, it’s what makes a business successful and sets it apart from its competitors — if you consistently deliver a high level of service to your customers and exceed their expectations, the hope is that they’ll reward you by buying regularly from you and telling their family and friends.
You can build your referral rate quickly and effectively to attract new business by actively taking steps to attract more recommendations.
Business referral strategies
1. Offer a reward
Everyone loves a freebie. Consider setting up a reward programme where existing customers get a reward in return for referring a friend. It could be as simple as £10 off their next order or a special discount. Perhaps a month’s half price subscription or even a bottle of wine. Try tying the offer to the industry you’re in and remember to get creative. The more memorable your reward is, the more likely you’ll increase referrals.
2. Share valuable content
If you create unique content for your website, you can share it with your existing customer base via an email newsletter. Encourage them to share your content in their own networks. For this to work though, you must produce content which is genuinely useful to your customers and which they’ll find interesting. There’s no point producing content for content’s sake. It must have genuine value for your clients and any potential customers.
3. Just ask
Directly asking existing customers for a referral may feel awkward initially. However, if you’ve done a great job for someone and you know they have potential customers in their network who might be interested in what you offer, it can’t hurt. The worst that can happen is that they say no. If existing customers are pleased with your product or service they may swiftly put you in touch with others who would benefit too.
4. Build customer feedback requests in to your communications
Positive customer reviews can encourage new clients to buy from you. If you’re just starting your own business, getting reviews as quickly as possible can rapidly improve your position. Don’t wait for customers to review you though, you need to prompt them. This could be a ‘thank you for your order’ message asking to leave a review and making it easy by sending a link where they can write a few lines about their experience with your business.
5. Referral commission
Paying for referrals is another option. You could partner with another company and offer them a percentage of any orders that they refer to you that end in a sale. Or you could offer a flat fee for any referral, whether an order is placed or not. Ultimately, this depends on the type of business you’re in, the volume of referrals and the value of any order.
6. Be generous with your own referrals
One of the best ways to get referrals is to make them yourself. Be gracious with your referrals and people will remember your kindness. Whether they’re a customer or a supplier, they’re far more likely to refer to you in the future as a result.
7. Get referrals through LinkedIn
LinkedIn is a social network where referrals by other trusted professionals in your industry can be hugely influential. You could ask for direct recommendations through the LinkedIn tool to increase your credibility, use your network (and their connections) as a potential customer base, offer referrals of your own to elicit referrals back and engage regularly with your contacts. According to a study by Hubspot, LinkedIn offers the highest visitor to conversion rate amongst its users of all social media.
While you’re focusing on attracting more customers, make sure to keep on top of your business finances. Countingup is the business current account that automates bookkeeping and simplifies tax returns for business owners across the UK. Find out more here.