Grow Your Business With Referral Marketing

One advantage of referral marketing is that it creates steady streams of prospects and clients. Anyone who has been in sales for very long has learned to appreciate the value of getting referrals for at least four reasons:

• Referral-generated clients have low acquisition cost and are thus more profitable.
• Referral clients have fewer buyer-apprehensions since you came highly recommended.
• May be ready to buy quicker because you are recommended.
• Referral-generated clients may negotiate less, buy larger quantities, and refer more business to you.

What Can You Expect From Referral Marketing?

It is not uncommon for 10 to 60 percent of one's annual revenues to come from referrals. The amount is proportional to the effort.

Increasing business with referrals is a simple process, but it is amazing how few salespeople use it effectively.

According to Matt Hockin, President of Publicity Advisor, "Salespeople are often mistaken at first thinking that generating referrals means asking intrusive or awkward questions, like:

* "Do you have anyone to recommend to me?
* "Whom do you know that could use my services or product?"

"These kinds of questions will not refer much business your way," says Hockin. He suggests that it's wise to first answer some basic questions about your business and goals:

1. What is your niche or unique position in the industries that you serve?
2. What kinds of clients have seen the best results from your product?
3. Who are your ideal clients? Ideal prospects?
4. Who are your potential sources of referrals and what industries will they have contacts for?
5. What can you place in your client's hands that will help them present you in the best possible light to prospects? i.e. case studies, brochure, testimonials.

Once you've answered these questions you're ready to plan out your referral marketing strategies. You should be prepared to answer in a short sentence or two the question every prospect wants a convincing answer to, "How can you benefit my company?" (Elevator Speech Hook). Until you can answer that question in a compelling statement you're not ready to prospect successfully.

It is a good idea to involve your satisfied clients in deciding how to best approach their contacts. For example, ask your client if they prefer for you to contact the prospect directly, or they want to make the initial introduction.

Some clients will welcome a joint lunch date or a joint conference call as a way for you to get introduced. The key is to find the way that your client is most comfortable and excited about giving you access to their contacts.

Use these tips for your referral building strategies:

• Treat referral marketing as a separate but integral piece of your strategy. Get a separate binder or file cabinet to keep leads, copies of correspondence, research on prospects, etc.
• Schedule time each week. Make it a point to talk with satisfied clients about their contacts, or to follow up on active prospects on a regular basis.
• Make the request personally. Asking clients for referrals works better if it is made in person or by phone. A letter can appear too impersonal and of little priority if it's not followed with a phone call or a lunch date.
• Have a professional appeal. Be more creative than telling the client that you need to increase your sales next month. Try saying, "I'd like to expand our business in this area (or niche), do you know of others that might benefit from our services like you have?" Or, "You've been a great client, I'd like to have more just like you…"
• Keep your client in the loop. Make sure to keep your client advised of the progress you are making with one of their contacts. Copying them on correspondence is a courteous, professional gesture.

Perhaps it goes unsaid that we should genuinely thank the client for their help. Even if the lead does not pan out, they will like to know that you appreciated their willingness to place you in contact with a friend, associate, etc.

Referral marketing should be an integral part of your mix for increasing sales. A little time invested each week can pay huge dividends.

Now go open more doors and close more sales!