How important are referrals?

As a Solo Entrepreneur, referrals are our lifeblood.

It's important to understand that the business of getting referrals isn't about asking for them, prying them out of someone's clenched fingers. It's about building a relationship over time, providing excellent customer service, getting your clients to sing your praises naturally so they can't wait to tell others about you!

Here are a couple of techniques I've used that work:

• After the sale, get customer feedback. Ask them how they liked your product/service, and what you could improve. (If they say nothing, ask for a testimonial!) Ask them what specific benefit they received from their purchase. This is important for two reasons: 1) you learn more about your market and why they buy from you, and 2) the customer has now put into words why they love you -- and now that they've articulated that idea once, it will be easier and more natural for them to say it to someone else.
• If you do ongoing business with someone, at the bottom of every invoice, add this line: "The biggest compliment you can pay me the referral of a friend or colleague" (use your own words). If you have a physical location (store, office), put this phrase on a placard on your desk or frame it on your wall. It is a subtle reminder, instead of a tank.

Peace,
Terri Z

Great post Terri. I especially like your suggestion about "The biggest compliment you can pay me..."

Originally Posted by terriz It's important to understand that the business of getting referrals isn't about asking for them, prying them out of someone's clenched fingers. It's about building a relationship over time, providing excellent customer service, getting your clients to sing your praises naturally so they can't wait to tell others about you!

It has never been about asking for them. So I never have. Great post, Terri.

Your approach will depend on the type of product or service you sell. As a sole practitioner I ask for referrals from time to time. My approach is to ask my client to introduce me to another key decision-maker rather than ask for a referral per se. I have found that if I consistently exceed my customers' expectations they will automatically refer me to others.

However, when I conduct workshops for some of my clients, I suggest to their sales staff that asking for referrals can be a great way to increase their qualified leads.

Kelley

I've read about some companies that require their salespeople to bring back at least three referrals from each sales or appointment.

Originally Posted by Bandit I've read about some companies that require their salespeople to bring back at least three referrals from each sales or appointment.

The management of those companies don't understand how referrals happen. When you institutionalize a natural process, you often lose the benefit.

Originally Posted by Gary Boye The When you institutionalize a natural process, you often lose the benefit.

I agree. Those companies must be run by Natural Born Salesmen.

There are statistics, which I can't recall, about how much it costs to acquire a new customer (a lot) vs keeping one you have (not much).

Along those lines, I think referrals rank up there close to keeping an existing customer in terms of value.

Kathleen

Originally Posted by KSA-Mktg There are statistics, which I can't recall, about how much it costs to acquire a new customer (a lot) vs keeping one you have (not much).

If I recall correctly, it costs 5 times as much to get a new client as to keep a current one.

Originally Posted by Gary Boye The management of those companies don't understand how referrals happen. When you institutionalize a natural process, you often lose the benefit.

Does this mean that you wouldn't suggest asking for referrals?

Originally Posted by bridger480 Does this mean that you wouldn't suggest asking for referrals?

In the past and in the present, I have never suggested asking for referrals.

I have mentioned that I get an inordinate amount of referrals. I also mentioned that I never ask for referrals. So why would I suggest that somebody do something that I don't do? That wouldn't make any sense.

Forgive me if I'm wrong, but I don't think that the question you asked is the real question that prompted you to insert the little blue confused gargoyle.

So what are you really confused about?