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4 Ways your small business can benefit from referrals



Referral marketing, also known as word-of-mouth marketing, is one of the oldest (and still most effective) marketing strategies out there. It’s basically about people buying your products and services because somebody they trust recommends it to them.


As a small business, word of mouth marketing is a reliable and cost-effective way to grow your business. Whether it be a face-to-face conversation, text or social media message, word of mouth has a way of circulating quickly thanks to modern technology. Among small businesses polled by Verizon and Small Business Trends in a 2015 survey, 85% said word of mouth is the most common way customers learn about their businesses. (Online search engines were a distant second at 59 %.)


Referrals are generally sent when existing customers feel good about what you’re doing or what you’re providing. If you take the time to develop a good relationship with your customers, it will show because your business will expand naturally. A referral is one of the best compliments a customer can give. Here are some reasons and ways your business can get referrals.



1. Provide excellent customer service.


Customer loyalty is the prerequisite for any referral, and happy customers are more likely to remain loyal to your business and share their positive experiences with others. Providing great customer service should be a top priority for every small business owner. This means going above and beyond to satisfy your customers’ needs and making it standard practice. It’s important to have every staff in your company to be on the same page with regards to good customer service. Reinforce to your employees the importance of viewing each interaction with the existing customer or prospect as an opportunity to turn them into a raving fan of your products or services.



2. Directly ask for referrals!


The key to success for any strategy to grow referrals is to ask for them. Research by Texas Tech indicates that 83% of satisfied customers are willing to refer others. However, only 29% actually do, primarily because they were never asked. Most people feel good about helping businesses they believe in, so let customers know you welcome their referrals, and offer simple options for them to do so. Think Facebook Recommendations or Google reviews.

You can also focus on your "best best" clients. Instead of targeting all of your clients or customers, focus on the ones that you already have a relationship with, those that offer complementary products and services, or those in your community. They’ll be more likely to refer your goods or services to others since they trust you, can vouch for your work or products, and have a chance to work with your side-by-side.



3. Make it easy to share on social media.


When customers let you know they have had a great experience, encourage them to share on social media. Statistics show that 68% of customers put their trust in customer reviews when they make a purchase, and online opinions are the third most trusted source of product information.

Create easy ways for customers to spread the word by having prominent links to your social media pages on your website, in your e-newsletter, and in any emails you send out. Take advantage of tools like Facebook Recommendations, which allows people to find businesses based on their friends’ referrals. If someone recommends one of the millions of businesses, service providers, or venues with a Facebook page, the system will automatically include a link to that page in the comment section.

Social media channels such as Facebook, Google+ and LinkedIn allow you to see and contribute to the conversations surrounding your brand. They also let you build and nurture relationships by interacting with potential customers and sharing valuable content. When done well, content marketing helps keep the lines of communication open with existing customers, even when you’re not actively engaged in a transaction. It keeps you top of mind, helps build your online reputation and improves the perception of your brand. Best of all, the interesting content you share with your followers gets passed along to their followers and so forth, exponentially expanding your reach. This in itself is another kind of customer referral. If a customer trusts you, then you’re instantly more credible to their social circle.

The best way to encourage social sharing is to be present on these platforms. Your customers look to you as an expert on all things relevant to your industry, but they don’t want a hard sell. Regularly share content they’ll want to engage with to remain top of mind when they’re looking for a person who provides the type of services you offer.



4. Run a referral program


Referral programs have helped leading online businesses Like Dropbox and Airbnb grow by engaging and leveraging their brand’s biggest assets: their customers. What started as great ideas for growing their business became well-executed programs that catapulted their customer growth. Running a well-executed referral program doesn’t just make it easy for the customers to share. It provides the business an easy way to ask customers to refer – and determining how to ask for referrals can be the trickiest part of getting referrals. One of the many ways is to incentivise the customers to refer. It could be in a form of rebate or discount code for the next purchase. Airbnb offers a 2-way incentive program to users. The recipient and referrer are eligible for a twenty-five dollars credit once the recipient completes his or her first trip. The referrer is also entitled to a hundred dollars once the recipient hosts somebody. When you set out to plan your referral marketing strategy, the single most important thing to remember is to make it easy for people to share your content and easy for people to refer your product and/or services.


Like all marketing programs, referral marketing is most effective when managed efficiently and optimized to attract the right customers. Building an attractive referral marketing program is only half the battle; ensuring that your marketing actively encourages the referrals - is the real challenge .



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