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Are you putting word of mouth to work?

In the beginning there is no money. On the fourth day, you create a few happy customers. On the sixth day your customers become ambassadors for your business. And on the seventh day you rest. At least that should be the plan.

Word of mouth has proved a powerful tool. Statistically, customers conduct at least half of their business from the recommendations of others and significantly, these customers are seen to be more profitable because they spend more and remain loyal.

Yet surprisingly few companies ask for referrals. A recent survey indicated that some 80 per cent of one company’s customers would be willing to refer customers, yet only 20 per cent were asked. Advertising and direct mail tend to be the priority. People feel uncomfortable asking for referrals and feel as if they are asking for a favour. It should be about creating an environment where other people speak well of your business, not for your benefit, but for the benefit of the recipient of the service.

Referrals are effective because they tend to come from a trusted source that has benefited from doing business with the referred company and has no vested interest in the business. The best referral is one solely interested in helping the potential customer. All things being equal, people will do business with, and refer business to, those people they know, like, and trust.

Referrals also provide a low-risk way to get first-hand knowledge of a product or service. The single greatest facto holding back a product from greater and faster acceptance is usually lack of positive experience. Word of mouth can dramatically accelerate the speed of product acceptance and adoption, and this is why ‘viral marketing’ works so well.

Different companies may use different tactics to secure referrals. Most referral friendly companies share a common approach based on two key principles: Customer service and ‘giving to get’.

Customer service excellence is the bedrock of referrals. Satisfied customers are both loyal and profitable, and frequently offer referrals to potential customers, referrals that on average take a shorter time to convert to sales.

The principle of ‘giving to get’ generates trust in customers, who are encouraged to refer suppliers to other businesses they respect.

Asking for referrals is one of the most powerful and low-cost ways of building a business. It is a deceptively simple approach that feeds on its own success. Every time a customer refers a business it helps cement their own loyalty to that business, thus generating more referrals. Having you customer working as salespeople for your business is invaluable and the more you build a tightly knit customer base, the better your customer and business may become.

7 Key moments to ask for referrals

When a customer comes back to place a second order
When you solve a problem for a customer
When a customer has thanked you
When a customer has been through a hard time
When a customer needs a favour from you
When you see your customer in public
When your customer brings in a referral

28 Ways to ask for a referral are available as a FREE Download from the contacts page on this website.

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