Having a strategy will give you a big advantage...
"98% of businesses rely on referrals to gain new business, but only 3% of businesses have a proactive referral strategy"
A large group of financial advisory clients were surveyed in 2011. Two questions were asked in the survey:
- "Would you refer your financial advisor to your friends if you were asked?“ 92% of respondents said, "Yes!"
- "How many times were you asked for a referral from your financial advisor in the last 12 months?“ 90% of respondents said, "Zero, none".
So 92% said they would refer their financial advisor if they were asked, but over 90% of advisors never asked for a referral.
Why are referrals so powerful?
Your 6-step referral plan
Every business must have a systematic referral programme to exploit this simple, low cost way to generate high quality customers.
Use this guide to develop and implement a successful referral plan.
- Make your business referable.
Earn the right to be referred. People are not going to refer their family, friends or colleagues to just another salesperson.
Instead they want to refer them to the best value, the best service, the best product and the expert in that field.
- Identify who you should target
Which of your customer segments, target groups and social media contacts could be most productive?
For example you might ask for two referrals from each of your fifty best customers.
- Stay top of mind
Use appropriate referral tools and techniques, such as:
- Help them to help you
What can you give them to help their contacts to find you? Try to be more creative than supplying a handful of business cards.
- Ask for referrals
If you don’t ask, you don’t get.
- Recognise and reward
Thank everyone who gives you a referral.
Ideally use a hand written thank you card (avoid just sending an email)
Be cautious about offering referral fees.
Consider developing a referral incentive scheme for your team.
Train your team on how and when to ask for referrals.
Establishing a referral program with your customers and other influential people is absolutely critical.
Many companies make the mistake of not institutionalizing a systematic program for referrals. They confuse word of mouth advertising with a referral system and consequently overlook the single most effective advertising for a small business.
"A whopping 50 per cent of your business success comes from getting existing customers to recommend and promote your business to their friends, associates and colleagues."
Ross Reck, author of 'Turn your customers into your sales force'