Referrals: who’s blowing your trumpet?
I recently conducted a telephone-based survey for a client during which I asked a selection of their customers the question “would you recommend (my client) to others?”
They all answered “yes”: 100% of those surveyed were happy with the services being received and would be happy to refer the business to their associates, colleagues and friends. And yet, my client had never asked them to.
How much business are they missing out on by not asking one simple question and then following this up? What makes this situation more acute is that, in my client’s industry, many buyers actively seek word of mouth recommendations before making their purchasing decisions!
A recent study[1] found that referred customers were both more profitable and loyal, had a higher contribution margin, a higher retention rate and were more valuable in both the short and long run.
Needless to say, we are now developing a strategy for my client, which will capture and act on potential referrals from existing and future customers.
Referrals strategy
However, there are a few things to consider when developing a referrals strategy and you may adopt different tactics for different markets e.g. domestic and business customers:
- Be worth referring – first and foremost, is your service or product as good as it can be? What do your customers really think about? Find out and if it’s not the best it can be, improve it!
- Timing - you have to ask for referrals at the right time: if you’ve just made the sale, your customer may not be in a position to judge how good your service or product is. Let them experience it first and then when you contact them you can find out if there any snags that you can sort out for them – as well as seeking referrals! For example, Disney contacts their visitors 3 months after they have visited any of the theme parks to seek feedback.
- Teamwork – anyone who has contact with customers has the opportunity to seek referrals – how can you capture this information and make sure it’s followed up?
Note: training may be required to clarify the fine line between a polite enquiry and harassment!
- Incentives – will these help or hinder your strategy? If you do plan to offer incentives these have to be appropriate to your customer group and offer value without seeming to be a bribe! Perhaps a small ‘gift’ or discount on bills may be suitable.
(In the case quoted above, the customers were happy to make referrals without incentives.)
- Reward - it is imperative that you always thank your customers for referrals – whether or not these result in sales! This might mean sending a little gift or taking them to lunch or simply a handwritten card.
Conclusion
Obtaining new business through referrals might be the easiest and smartest marketing you can do.
Come and talk to us if you’d like some help in exploring how you can integrate this with your marketing strategy.
After all, listening to someone else blowing your trumpet must surely be the sweetest music!
[1] “Referral Programs and Customer Value” published January 2011 in American Marketing Association’s Journal of Marketing), by Goethe University, Frankfurt, Germany.
Photo credit: Kabil
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