Technology has changed almost every aspect of business, from attracting new customers to managing employees. But some basic principles still apply. Today’s businesses simply must learn how to use these tech tools to put those classic business principles to use; including how to get referrals.
Customer referrals are as important to 21st-century businesses as they were long before the advent of the Internet. In fact, word-of-mouth advertising dates back to before the first radio or television set. Neighbors telling neighbors about a great business has long been among the most powerful ways to find new customers. Studies repeatedly emphasize the value of referred customers. According to the Wharton School of Business, the average value of a referred customer is at least 16 percent higher than that of a non-referred customer with similar demographics. Referred customers stay around longer, buy more initially, and are generally more valuable, both short- and long-term.
But 21st-century customers are more likely to be interacting with friends on mobile devices than talking to neighbors during an evening walk. This means for businesses today, it’s important to find a way to reach those customers where they are today.
“The typical direct sales type tactics for asking for referrals were developed over 70 years ago,” says Sage One product marketing manager Lawton Ursrey. “And since you’re doing business now, and not with your grandpa, you need to do something different.”
While directly asking customers to tell people about your business can help, chances are you’ll have to give your customers a reason to refer you. Sure, some customers will enthusiastically tell everyone they know how great you are, but some well-meaning consumers simply forget to mention it. To sweeten the pot, so to speak, it’s important to give those customers a helping hand in providing referrals for your business.
Use a Service
Directly asking your customers for a referral can be awkward. Referlia handles the work for businesses, automatically sending an e-mail to let them know you appreciate their business and asking them to introduce you to others who would fit your idea of an “ideal” customer. It also encourages customers to share on their social media sites.
One of the best things about Referlia is that it tracks what happens after that referral request is sent. How many times was it shared on social media? Which customers referred your business? If a customer doesn’t open the e-mail, Referlia follows up with the customer with no action required from you. The monthly subscription fee of $79 could be a little high for some small businesses, though.
Ursrey recommends hosting a special event that encourages customers to bring friends. The invitation can be sent out through your social media channels, with the request that customers forward the invite on to any local residents they think might want to attend. As word spreads about your event, you may find you have more potential customers than you ever expected.
“Think of something fun – like a wine tasting or a guided bike tour,” Ursrey says. “It needs to be something that your clients, and their friends, would want to attend. It’s really a win-win because your guests have a great experience, and you get to break the ice with potential new clients.”
Social media has given businesses a wide range of opportunities for incentive programs, encouraging sharing in exchange for a reward. “Like us for 10 percent off your next purchase,” for instance. One like on Facebook shares the name of your brand to that Facebook member’s network. It also allows you to market to that customer. You can also give those customers a word to share with friends that will earn them a reward. “Use the code FACEBOOK to get 10 percent off,” for instance. This will help word about your product spread quickly, potentially bringing in multiple referrals from each customer.
Sponsor a Contest
Ursrey has found contests are a great way to engage social media users. Instead of providing a discount to everyone who provides or receives a referral, consider hosting a contest with one winner. Each share or retweet equals one entry and, at the end of the contest, you’ll have a list of potential customers to whom you can offer a special discount. The publicity your site will receive will be priceless and your customers will have fun with it.
“This may seem a little gimmicky – but it works,” says Ursrey. “Everybody likes free things.”
As Ursrey points out, referrals have always been a great way to get new customers. Your brand champions are the best resources you have to reach out to the community, with their enthusiasm making others want to try the product. Using the technology available to businesses today, they can find creative new ways to reach out to those happy customers and encourage them to spread the word.