Earlier this month we talked about why referrals are the best way for most businesses to grow. Today we’ll dive in a little deeper in order to help you generate more referrals for your business.

There are two main ingredients present in every referral – understanding, and awareness.

Understanding. In order to make a referral, the referral source needs to know what you do and who you help. That’s why it’s so important that you can communicate these thoughts effectively. If someone doesn’t understand what you do, or doesn’t know who you can help, there’s no way that they can recognize an opportunity for a referral. Check out this blog entry if you need more help sharpening your message.

Top-of-mind Awareness. Referral opportunities generally have a short window. If the referral doesn’t happen within that window, the potential customer will find somebody else and the opportunity will be lost. So it’s vital that your referral sources recognize the opportunity and connect the dots immediately. That’s why top-of-mind awareness matters. You need to carve out valuable real estate in the minds of your referral network so that they think of you when the opportunity presents itself.

Most business owners think that they’re doing a good job in this area. But that’s because they underestimate just how difficult it is to maintain this awareness. People are incredibly busy. We’re all over-stimulated. Social media, text messaging, breaking news, constant notifications from our smartphones – we’re all busy and distracted, daily. Psychologists estimate that the average human brain processes somewhere between 10,000 – and 50,000 distinct thoughts every single day. So, unfortunately, it’s very easy for potential referral sources to forget that you exist.  

It’s simply not good enough to make a great first impression on somebody. Give them enough time, and I can guarantee that they’re going to forget about you. The good news is that there are strategies and tools that you can use to overcome this challenge.

Educate, Re-Educate, and Remind

In a nutshell, that’s your challenge. That’s how you create reliable, consistent referral sources. Educate, re-educate, and remind.

Educate them. Explain to them what you do, how you make people’s lives better, and who you serve. And you let them know what a good referral opportunity looks like. For example, a good referral for a generic real estate agent is someone who is looking to buy or sell their home. But if you’re building a brand as a high-end agent, or if you focus on a specific part of town, then a good referral is somebody looking to buy or sell a million-dollar home, or a home in that specific neighborhood.

You re-educate them. People are busy. They’re distracted. They’re forgetful. So it’s up to you to proactively continue to explain what you do and who you help. They will forget if you let them!

You remind them. In addition to educating and re-educating, an important part of your referral system is simply reminding your referral network that you exist, that you’re still out there doing great work, and that they should continue to send referrals your way. You can’t depend on people to remember you. You have to continually remind them that you exist.

If this sounds like overkill, consider Coca-Cola. Coke is among the most recognizable brands in the world. In the United States, they have near-perfect market saturation. There are very few adults in the country that haven’t heard of Coca-Cola.

And yet… Coke spends over $500 million per year on advertising in the United States.

Why? Because they understand that maintaining top-of-mind awareness is a constant battle. They’re not introducing consumers to Coke when they advertise – they’re reminding them how much they love it. In hopes that, the next time the consumer visits the grocery store, a little voice in his head will prompt him to visit the soda aisle and grab a 12-pack.

If Coca-Cola, a brand that is literally recognized by 94% of the world’s population, spends billions per year in advertising to maintain top-of-mind awareness… don’t you think there’s a lesson for you and your business?

Now, you don’t have the advertising budget that Coca-Cola has. But you don’t need a huge budget to create awareness and drive referrals. Stay tuned for a handful of practical strategies to make this happen. 

Or, better yet, click here to sign-up for our exclusive Weekly Marketing Hotsheet. It’s packed with tips and ideas to help you generate more referrals and take your marketing to the next level.

Referrals and word-of-mouth marketing may not be the sexiest way to grow your business, but it’s often the best way. Referrals are generally superior to clients and customers that come through other channels, for the following reasons:

Referred clients are cheaper to generate. It costs little or nothing to generate referrals. Instead of investing resources into expensive ad campaigns, you can create referrals by investing into the relationship you have with each customer and by delivering a product or service that exceeds expectations. In my business, we occasionally offer referral incentives or prizes, but even when that cost is factored in to the equation, our cost-per-lead for referrals is dramatically lower than any other form of lead-generation.

Referrals convert into clients and customers at a higher rate. When somebody is referred to your business, they are significantly more likely to become a paying client or customer. I know several lawyers who convert referrals into clients at about a 70% rate, while leads generated through other channels convert at about 30%. In my business, we convert referrals into clients at about twice the rate as other lead channels.

Referrals are pre-conditioned to trust you. The hardest part of creating a new customer or client is persuading them to take the “leap of faith” and pull out their wallet. This is true in person, over the phone, and online. And the more expensive your product or service is, the harder it is to overcome this “trust deficit.” People are skeptical, and understandably so. We’ve all been burned in the past and we don’t want to repeat the experience. But when someone is referred to you, they are pre-conditioned to trust you – because someone they know has already vouched for you. So that person transfers their credibility to you. You may still have to do some work to close the sale, but you’re starting from a much stronger position.

Referred customers and clients are easier to work with. We’ve all dealt with nightmare customers and clients. Not only are these people unpleasant and discouraging to work with, they also take a very tangible toll on your operation. They generally demand more time and effort than other customers. They create negativity for your staff, and sometimes they spread their negativity to other customers and clients. You don’t want to deal with these types of people. Fortunately, referrals are much less likely to go this route. They start the relationship in a better place because they have a personal connection to you. And if nothing else, they’re generally going to behave better because they don’t want to make the friend, colleague, or family member who referred to you look bad. Think about your three favorite customers or clients to work with. How many of them came to you through referral? Now think about your three worst customers or clients. How many of them were referrals? Every business is different, but most entrepreneurs that I talk to report a similar trend: referred customers are the best customers to work with.

Create an endless cycle of referrals. Statistically, a client or customer who comes to you through a referral is more likely to make referrals of their own, creating a cycle. I’ve heard this referred to as a “referral chain” and it’s the holy grail of marketing. If you can get to a place where every customer creates a new customer you can grow your business dramatically without any other lead-gen tactics. For the first several years at Spotlight Branding, nearly 100% of our growth was through referral. It allowed us to go from $0 to $1 Million in just five years!

It’s Time to Get Serious About Referrals

Referrals are cheaper to generate, convert better, make better customers, and are more likely to make referrals themselves.

It sounds like a no-brainer, right? There’s no better way to grow your business than through referrals and word-of-mouth recommendations.

But for whatever reason, most entrepreneurs and marketers look right past it. It may be because referrals seem “basic” or boring. It some cases, business owners may not realize that they can actually control referrals – they view referral marketing as a passive strategy.

That couldn’t be farther from the truth. There are a number of strategies and tactics that you can use to create and systematize referrals. It’s not complicated, but it’s effective. I’ve personally built a million-dollar business on the back of these strategies.

Referrals are the best way to grow your business.  What’s your referral strategy?  

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