There is a fundamental sales principle that most business owners do not practice. Most of us have heard of it, but few of us actually practice it. I’m honestly not sure why, but it’s true…it’s costly and time consuming to earn new business, yet there’s a very powerful way to grow our business that’s free…that most of us will never use! It’s called asking for referrals.
Are you asking your existing customers to refer their friends, families, coworkers and colleagues to you? If not, you are not alone. Most business owners and sales people fail to do this or even consider it. But why wouldn’t you?
This principle is something I see applied rarely online. The masters do it, but few others even think about it. It’s one thing to make a sale. It’s a whole next level thing to tap into that customer’s entire base of friends as well. Your paying customers should not be on the same list as your prospects (the people who have yet to buy from you). They should be treated differently, because they ARE different!
Prospects and Customers are Not the Same, and They Should Not be Treated the Same!
If someone has purchased from you, they have entered the fold. They are on a new level with you and your business, and they should be treated as such. They are easier to sell to in the future, because they are already warmed up to you, and it is also reasonable for you to ask them to refer you to their friends and coworkers. If they’ve found real value in working with you, many people will gladly tell their friends about you.
Here are two important things to consider:
- Deliberately seeking referrals is one of the most cost effective ways of significantly building your business online, and few people even try to do it.
- If you have a customer list of even just a few hundred people, you REALLY have a customer list of many thousands…if you know how to work referrals.
Why Referrals Are So Valuable
A contact is a contact, correct? I’d argue no. Not all contacts are created equal. People that come into your database as a result of a referral are much more valuable for a few significant reasons. Consider these:
- With a referral customer, there is more trust right from the start, because they have contacted you through a friend. This usually means they are a very qualified potential customer. It usually means they are very close to buying as well.
- The cost of getting a referral is zero, which means your net earnings are almost always higher with a referral lead.
- A referral provides an opportunity to improve your relationship with your existing customer. It’s valuable when someone buys from you. When someone buys from you, they are deciding to trust you. But consider what it means when someone trusts you enough to refer their friends to you. A referral is MORE valuable than a sale when it comes to the relationship you have with your customer!
- Referral leads, when treated like the gold they are, are often more likely to bring you referrals of their own, continuing the cycle of growth.
When your existing customers send their friends and colleagues your way, it’s essential to treat them well, as you would all your customers, but it’s also essential to reward the customer for sending you the business. This will encourage them to send you more business in the future of course, but it will also strengthen the relationship you already have, making it that much more likely you can continue to help that customer in the future.
Here are some steps you can implement to ensure you’re taking advantage of this fundamental principle:
- Deliberately ask your existing customers for referrals. “Who do you know that can also benefit from …(whatever it is you’re selling)?”
- Make sharing your content easy, and encourage your prospects and customers to spread your emails, ebooks, blog posts, etc around to their peers.
- When you get a new prospect, make it a matter of course to find out how they found you. Did they find your site and subscribe through search, through a link, or were they recommended by a friend? It’s good to know where your subscribers and customers came from!
- If someone came to you through a friend, make a reasonable attempt to find out who it was that referred you. Send a thank you note or even a special gift to someone who sends you referrals. Of course this just isn’t ever going to be something you can successfully accomplish 100% of the time, but it’s important to do whenever you can. People who send you business should be acknowledged!
- Don’t just ask for referrals once. Ask repeatedly, when the time is appropriate. When someone buys something from you. When you answer someone’s question, when you follow up after a consultation, etc…there are a lot of appropriate opportunities to ask your customers for referrals.
It’s not news that everyone in the world is separated by only a few levels of contact. Referrals are your quickest, most effective, most powerful and most personal way of growing your business. Do right by just one person, and you have done right by that person’s entire network. Tactfully tap into that network over time, and you have a shot at doing right by the whole world.
Trust me, there’s more business out there than you could possibly ever handle! It’s just a matter of reaching out and grabbing it. Should you hammer all your prospects and customers everyday? Of course not. But as you know, I’m focused on the human element of marketing online. Keeping a personal dialog going with your customers, as you should, naturally leads to you getting referral business from them over time.
Here’s the thing, if you’re good at what you do, you’re going to get referral business whether you’re aware of it or not. As with all things in business, I’m a big fan of intentionally harnessing these things and deliberately addressing them. Instead of just hoping your business works out and grows simply because you’re so good, be aware of the fact that referral business is a huge factor in the success of most any business. And with that in mind, take steps to deliberately encourage it! Don’t just leave it up to chance