The following post is a contribution by Misty Young, President and Chief Marketing Officer of the Squeeze In.
We all know the easiest customer to sell to is an existing customer, but what about the second easiest? Wouldn’t it be incredibly helpful to know who that customer is?
Wait for it…. It’s a referral! With just one qualified referral from every single one of your existing customers, you could double your business! We’re all referral sources, we all help each other out and we want to be helpful, it’s just human nature. That’s not enough though, to just “want to be helpful.” We can and should have our existing customers become like customer attraction magnets for us. We should use a three-letter-word: ASK.
I recently had the good fortune to participate in a discussion with marketing legend Bill Glazer on this topic. Here are the highlights of the conversation:
The Top 3 Reasons Why People Refer
1. Personal Gain: There is something in it for them
2. Benefit to Others: They are helping out a friend, relative, or co-worker
3. Benefit to your or your company: They like you so much or had such a great experience doing business with you that they want to refer others
Referred Customers Are Better Customers
They cost less to acquire. This is very important. Anything you can do to get your cost for new customer acquisition down is very valuable to your business. Asking your existing customer base to make referrals for you is actually free.
Referral customers are the second easiest customers to sell, second only to your existing customers. They are less price resistant. And, because they were referred by someone they trust, they rarely question your pricing. They are more likely to also refer someone else.
Referral customers are less likely to complain and are easier to please. Even if something does go wrong, referred clients are more understanding.
The 4 Reasons You’re Missing Out on Referrals
1. You have a belief that satisfaction leads to more referrals. It doesn’t, plain and simple. Ask your customers for referrals. It’s that three-letter-word again.
2. You take referral for granted and don’t really know precisely how many referrals you are getting. Put a tracking system in place. You could literally ask each customer, “How did you hear about us?” Wouldn’t it be helpful if you knew what was working so you could do more of it?
3. Your customers believe that you don’t need referrals. They see your busy restaurant or dental practice or auto care center and think you’ve got as many customers as you could possibly handle.
4. Your business is out-of-sight-out-of-mind. Once your customer leaves your business, they’re not thinking about you.
7 Factors That Will Multiply Your Referrals
1. Provide quality products & services. A no-brainer, right? You’ve got to put out the best product you can at the best value to your customers to stay in business.
2. Create a referral culture in your business. You’ve got to ASK your customers to be brand ambassadors on your behalf. Word of mouth is the best possible source, third party validation, one person to another saying, “I get a great experience and product at (your business) every time, you really ought to try them!” is a far better endorsement than you can get from a newspaper ad.
3. Demonstration of referrals in your monthly newsletter (are you doing this?). Do you have a monthly newsletter? If not, what strategies are you using to be in touch with your existing customer base? A monthly newsletter is a great tool for this and for referral recognition. Could you publicly thank your customers who have made referrals for you? Of course you could!
4. Determine the right time (and place) to ask for referrals. In my breakfast and lunch restaurants, we determined the cash register is the wrong time: our guests are eager to pay and go once they’ve eaten. When you’ve said thank you to the customer and they’ve responded with their appreciation for your service, ask a simple question, “May I ask a favor of you?” Then, wait. Be quiet. Allow the customer to respond with a yes, and then say, “Would you be kind to give us a referral to your friends, colleagues, someone we could serve as well as we have served you?” They will say yes..
5. Conduct a referral event inside or outside of your business. Invite your existing customers to a special event with food and beverages (food is a “secret weapon” of strategic marketing). Ask them to bring a friend or guest to the event, someone who is not already your customer.
6. Send personal, hand-written thank you letters in the mail. I do this regularly in my business. Unbelievably, sometimes I get thank you letters to MY thank you letters, and guests have posted on our Facebook pages, “I got a handwritten thank you letter from Misty Young.”
7. Referral rewards, could you offer a benefit, a bonus, a special thank you gift?
Your existing customers are your best resource for new customers. They are a happy and eager source for you, but, unlike you, they’re not thinking about your business all hours of the day and night. Turn your existing customers into magnets for you, go ask them for referrals!
Everything you do for your business should lead to bringing in more customers. I’ve been invited to be part of a panel on how to attract new customers next week in New York City with senior executives from Pitney Bowes, Google, a New York Times columnist, and me, as a small business representative. The event will be live streamed, and totally free, for business or anyone to attend. Think about joining us online.