Referral marketing can be an important way to grow your business. You can work with companies in complementary businesses by referring customers to them and asking them to refer their customers to you. You can also ask satisfied customers to share their views on your product or service, or recommend your business to a colleague or friend. In some cases, people may recommend or refer your business at no cost, but an incentive may produce better results.
Work with other businesses – Mutual referrals between businesses can help both parties. An accountant and lawyer might recommend clients to each other; plumbers and electricians can share customers; restaurants and bars offer referred customers complementary services. The arrangement works when both companies trust each other to provide their customers with a quality service.
Build trust - Referral marketing works on trust. Research indicates that customers acquired through referrals are more loyal. They trust the opinion of the person or company that referred them. That makes it easier to build a relationship and make a sale than a pressured selling situation.
Asking satisfied customers to make a referral – Satisfied customers make great advocates for your business. Ask them if they will recommend you to colleagues or friends. If they are hesitant, you can ask them to provide you with a testimonial that you can use on your website or share their experience on social media.
Prompt customers after a purchase – If you sell products online, you can take the opportunity to build referrals after a purchase. When customers have completed the sale, prompt them to share the event with others or refer another customer. The point of purchase provides the strongest opportunity, but you can also request a referral when you send a confirmation email.
Offer incentives for referrals – You can drive improved results by offering incentives for referrals. A common example on a website is “Recommend a friend and receive $x of store vouchers”. This may not build the same level of trust as a genuine personal referral, but it may help you acquire new customers.
Provide quality service to the referred customer – It’s essential that you provide a quality service to the new customer. If you don’t, you may damage your relationship with the person who made the referral. It’s also useful to update the other person on the outcome of their referral. This lets them know that it was worth making the effort and may encourage them to make future referrals.