Customer Referrals — Where Sales Power Lies!

The business world continues to expand, reaching a point where there may be enough businesses for every customer. Yet, they continue to fight for insufficient space.

There are indeed 582 million entrepreneurs and 333 million companies in the world. On the flip side, there are 8 billion people on earth! That is a large audience. Yet I dare say this does not give a single business the free ride to as many customers as they want. The reason is simple, Competition! Interesting fact: a business has an average of 29 competitors. Large enterprises have it tough, and small businesses find it choking.

So how do you win the battle for customers as a small business owner? While investing in marketing to entice customers is not bad, you might need to re-strategize. Have you heard of referrals? Now do not go thinking about the sophisticated referral programs for now. After reading this article, you will understand how to improve your sales. After all, we build upwards and not downwards!

What is a referral?

Have you ever needed a business service and a friend/colleague recommended one for you? That is a referral right there. On the one hand, you might have overlooked the importance of customer referrals. Or, you might have been taking a less effective approach. Either way, referrals have several advantages over other forms of business marketing.

You might have read many articles on using referrals to increase your customer base. Yet you are seeing little to no results. You might want to adjust your lenses. Winning is not in complexity but in simplicity.

Benefits of referrals

Positive reviews are irreplaceable. I am a writer and editor. I provide content writing, academic writing, business writing, technical writing and editing services. In the last two years, over 89.2% of my clients have come through referrals, and upon a detailed assessment of the growth of my business, I came up with these top 3 benefits of customer referrals.

1. Movement

I like to call it movement, while many others call it brand awareness (probably what you also know it as). In just about two years, I have watched my writing services travel within Nigeria, from one state to another, and from Nigeria to the United States (Washington DC), the UK (London, Portsmouth, Aberdeen, Exeter, Sheffield, Edinburgh, Coventry), Germany, and Canada, as well as from small clients to big clients. The single factor responsible for this is customer referrals. The movement and expansion of your business hang to a great extent on customer referrals.

When your customers take the message about your business to other people, they are fortifying your reputation. You do not want to mess with your customers if you desire this. When you make it possible for existing customers to tell your story, you are treading the path of widespread trust in your business. Just like a snowball continues to gather more snow as it rolls downhill, referred customers will also tell others about your business if they had a satisfactory experience. With customer referrals, just like me, you are set to see exponential growth, an effect that you want to have on your business sales. You are enjoying the services of unofficial brand ambassadors and salespersons for free.

Referrals account for up to 65% of new business opportunities.

Up to 82% of small businesses claim referrals as their primary source of new business.

2. Precise and quality leads

While your other marketing activities continue to cast the wide net into the ocean, hoping to catch the type of fish you want, customer referrals dive straight into fish shelters to bring out only the ones you desire. You can be sure that the leads you get with customer referrals are the most qualified because the referring customers will refer only relevant people who can benefit from your offering.

Hence, referred prospects move through the purchase process faster and offer a higher conversion rate. Sales referral statistics indicate that people are four times more likely to buy your offering when referred by someone they know and trust. Without a referral, you may be a stranger to that prospect and spend a lot of time and money convincing them with uncertain results.

92% of consumers trust referrals from people they know. If they trust words about your business from your customer, your convincing work is about 95% done.

Referred customers convert at 30% higher than leads generated from other marketing channels.

3. Helps to measure customer satisfaction and retention

When you get your customers talking about your business and recommending it to others, you have set your business up to keep customers happy and intact. A customer who recommends your business to people and a referred customer will likely continue as a customer.

Referred customers have a 37% higher retention rate.

Referred customers’ lifetime value is 16% higher than non-referred customers

When customers recommend your business, it shows that they are satisfied with your business. A happy customer is one of the most vital assets of your business. If you struggle to satisfy and retain customers, your businesses may be as good as dead- your business will not move.

Referred customers can increase your profit margin by 25%. Referred customers come in through happy and satisfied customers. The absence of satisfied customers means that movement, sales, and profit margins are in shambles.

So, how do you set your business up to take advantage of referrals?

Running a referral program is always a good choice. I have never had to run any referral program, yet, my writing business has seen up to 90% increase in sales, approximately 96.5% increase in customer intake, up to 90% conversion rate, and over 70% increase in profit margin in the last two years. No referral program for your business yet? No problems. Here is what you should do to see results.

1. Turn your customers on with unexpected customer service.

Your customers are humans with emotions. You want to be very careful to trigger the happy ones always. Customers approach your business with either a preconceived thought or an open mind. You have to always take them to where they never expect.

Relying on your reputation too much can be a trap leading you to become ordinary to your existing and prospective customers. At every single point, you should ensure your customers leave happier than they came. Customers want to talk and want you to listen. They want you to treat them with respect. They want to communicate with someone that can conceptualize their request and respond with something that will give them peace. Leave your reputation, meet them at the point of their needs and take them from that point to satisfaction.

Now, to achieve all these, you have to be responsive. Businesses with excellent responsiveness always stand out. Customers make enquiries all the time, they give feedback, and they want to patronize. With all these, the only businesses that win are those that respond and respond well.

In the last two years, I have never left a customer’s message hanging, with no response, for more than 10 minutes, except in instances where such come while I am asleep or in situations where I had initially communicated my unavailability at that moment. Doing this puts the minds of my customers at rest and brings them to a level of comfort in working with me. Lack of communication as a business owner makes your customers feel very uncomfortable. Furthermore, making your customers comfortable does not end with being available to respond. Your responses should light up their minds or keep them relaxed until you can give a most assuring reply.

Do your customers give feedback? Respond to such feedback with warmness. A cold response to negative feedback sends the wrong message to your customers. It tells the customer that you are not confident and that continuing with you or recommending your services to others is a risk they do not want to take. On the flip side, a harsh response to negative feedback is the signature of an arrogant business owner. What this means to the customer is that you are unable to take corrections and are unable to meet their needs. Your responses to feedback should be in such a way that shows you as confident and interested in working with the customer to meet their needs. Strive to turn what you receive from customers into an excellent delivery for the customer as it shows you know how to listen. Hidden in every feedback is a message communicated from your customer to you. If you can hear/read those hidden messages, you can confidently sweep the customers off their feet.

Of course, you should engage with your customers.

2. Do a good job/exceed expectations!

Your customer service is your packaging and is just one side of the coin. If you have excellent customer service but a questionable service/product, you are probably in more danger. Poor service will lead to negative reviews instead of positive ones. You can expect to experience the same intensity as that seen from the positive effect of referrals and recommendations. However, negative in this case.

Nothing sells your business through people more than your excellent job. If you decide to spend millions on marketing campaigns while delivering poor services, you will only be wasting money with no results to show. If you want to take advantage of referrals, the importance of doing a good job has no rival.

To stand out and motivate your customers to recommend your business requires you should exceed expectations. Here is where it gets more interesting. Understanding and exceeding your customers’ expectations go beyond just doing what the job requires. You have to communicate and be responsive to find out.

3. Ask for referrals!

Do you feel like asking? Then go ahead. However, you can only do this if you are confident about the quality of the service you have provided and the experience you have given such a customer. Asking is easy when you have confidence in what you have done. Your confidence comes from being sure that you have satisfied a customer. Asking might not be necessary if you have given a customer an experience they cannot but tell. In the last two years, the number of times I have had to ask for referrals is less than 5% when compared to the number of customers who have come through referrals and recommendations.

4. Offer incentives

Incentives can be a great way to encourage your customers to recommend your business to their friends and family. Customers will be more motivated to recommend your services if they have something they are getting in return. Humans behave in a way they believe will result in a reward. So, when you offer incentives to your customers to recommend your business, there is a higher chance they will.

An incentive will motivate over 50% of people to recommend your business.

However, your best incentives are the experiences you give your customers and the quality of service/product you sell to them. I have never had to offer any incentive to my customers other than the experience I give and the quality of service I provide them.

Boost Your Sales With Referrals!