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5 Steps to Building Business With Referrals

2 minutes Read

By Rieva Lesonsky

2-men-making-dealHow do you find out about new businesses or service providers in your area, such as good restaurants, plumbers, dentists or contractors? You probably ask your friends (I know I do). Word of mouth, or referral-based marketing, is a natural way for small businesses to gain new customers. But is your business taking full advantage of the power of referral marketing? Here are five steps to help.


1. Develop a process for getting referrals. If your approach to getting referrals is haphazard, your results will be, too. Instead, set up a system for encouraging referral marketing. For example, if you use customer relationship management (CRM) or contact management software, you can set reminders to follow up with customers after their service or project is complete, such as after you’ve catered their daughter’s wedding reception. You could hand out business cards to customers and ask them to give them to friends who are seeking the same type of service. The key is to be consistent so that every satisfied customer is encouraged to give a referral.

2. Get them in a good mood. Notice I said you want satisfied customers to give you referrals. Don’t pester an unhappy customer for referrals or ask for referrals without taking the customer’s mood into account. That will lead to nothing but badmouthing your business—the opposite of what you want. In fact, one good approach is to conduct follow-up surveys shortly after a sale. Set up a system to check back with customers about a month post-project and do a satisfaction survey. At the end of the survey, if the customer is still happy with your work, that’s a great time to ask for referrals.

3. Give them an incentive. Let’s face it: People are lazy and making a referral takes effort. You can boost your odds by giving customers a reward in return for a referral. To ensure the referral is actually made, you can make the reward contingent on the referral actually contacting you, visiting your shop or becoming a customer. The reward can vary depending on your business, but should relate to the value of the referral: Someone who refers a client that ends up buying $10,000 worth of services from an HVAC company should get more of a reward than someone who refers a friend that comes in and buys a pair of shoes from a boutique.

4. Get your own referrals. Use all of your connections, both personal and professional, to generate referrals. Make sure that friends, family and acquaintances, such as at church, the gym or your kids’ schools, know what you do so that they think of you first when someone they know needs what you sell.

5. Give and get. Business connections will be more likely to refer you to others if you do the same for them. Keep tabs on your connections’ specializations so that when someone you know has a need, you’re able to suggest a contact that can fill it. Provide positive recommendations and reviews of your connections’ companies on social media and review sites, too.

It’s human nature to share our positive experiences with businesses. By taking the steps above, you can get your customers to spread the news about your company—and build your business.


(Photo courtesy: iStock/Thinkstock)

Small business influencer Rieva Lesonsky is a guest blogger for CAN Capital. She is a nationally known speaker and authority on entrepreneurship and has been covering America’s entrepreneurs for more than 30 years.