If you could save both time and money in acquiring clients, would you be interested? And if this marketing strategy resulted in a higher retention rate of clients would you implement it?
It’s known as ‘Referral Marketing’ or word of mouth marketing. Most businesses have not developed a formal referral system. An ad hoc approach is most frequently used and then abandoned because of lack luster results.
According to Advisor Impact, 83% of satisfied customers are willing to refer their friends yet only 29% of them actually do. Why the difference?
IT’S BECAUSE THEY’RE NOT BEING ASKED!
AMA Journal of Marketing reports that referred customers are more loyal and bring higher profits margins by as much as 25%.
Statistics tell us that 92% of consumers trust recommendations from people they know, and that 95% of those referred are sold before you even contact them.
Translation: You should act promptly to contact referrals. Call warm leads immediately before they become cold.
McKinsey reports that referrals generate more than twice the sales of paid for advertising. Search engine marketing is very time consuming and costly.
You could be losing potential revenue if you don’t let your customers know you’re still growing your business!
How would you feel if you learned your customer referred their friend to someone else because they were unaware you were still accepting new clients? That happened to me. Are you convinced now?
Referral Marketing is a deliberate marketing strategy. How do you go about formulating a Referral Marketing Strategy and where do you position it in your marketing program?
Referral marketing must form a systematic part of the ‘sales process’. It can be a powerful component of your marketing mix when used consistently.
The first step in the referral process is to make sure you’re referable. If you want your customers to refer you, then you must ensure you provide an exceptional customer experience. Be sure your entire organization practices this same philosophy.
Do you have systems in place now to measure customer satisfaction? Are you receiving referrals now?
If the answer is no then you must start by first creating an exceptional customer experience. You may need to survey your existing and potential customers to see what their definition of exceptional customer satisfaction is. Depending on their responses, this may require you make organizational or product changes. Along the way you will need to implement processes to gauge how you’re doing.
You may wonder “When is the best time to ask for a referral?”
Answer: When the customer is the happiest. This is usually upon the close of a ‘new sale’ and/or when they are gushing about the exceptional service or value you recently provided.
These two instances should act as trigger points for you to ask who else he/she can think of who could also benefit from …the product or service you delivered.
You may need to steer your customer toward your ‘ideal client’, i.e. people like them (not everyone with a heartbeat is a prospect). Have you identified what your ideal client looks like? Once you’ve done that, then you need to communicate this profile to your client.
I have found one of the best and most subtle ways of doing this is through the use of story telling. Telling stories paints a clear picture. Everyone loves to hear stories. They relax and don’t feel they are being ‘pitched to’. You’ll need to write your own story/narrative of how you helped solve a customer problem. And, you need to provide a compelling reason why you are the preferred choice to do business with. How you describe this customer in your story will provide an insight into the type of referral you’re looking for. You’ll need to write multiple stories for multiple products.
Keep your customers ecstatic. Ecstatic customers share more often. You’ll notice I didn’t say ‘happy customers’. Happy customers don’t gush. Ecstatic customers shout from the rooftops.
Humans by nature are social creatures; we like to share a good experience with others. We are wired to relate good as well as bad experiences. When you do a good job in taking care of your customers/clients, they will want their network to enjoy the same experience.
When you are given a referral, be sure to get the contacts name, phone number and e-mail address. Where possible ask for an in-person introduction. Note: the success rate is higher of turning a prospect into a client where a formal introduction is made.
Think of settings where your client can make introductions. In my financial planning practice I held ladies’ luncheons, golf tournaments, and educational seminars and asked my clients to bring a friend. Today you could host Zoom cooking classes with a renowned chef or enroll a golf professional to provide online golfing tips. Your educational seminar could become an interactive seminar with chat opportunities.
Other than your clients, an additional source of referrals is through collaboration (Relationship Marketing). Can you share resources? As a Financial Planner, I established reciprocal relationships with a family and divorce lawyer, accountant and realtor. I gave referrals and I received referrals. What mutually beneficial partnerships could you forge? Become a connecter of people and make introductions to others.
Since Covid-19, foot traffic has shut down and many businesses have moved to an on-line presence. Many of your customers are working from home and feeling isolated. Reaching out and connecting is even more important than ever.
Due to financial and physical restraints you may have shelved many marketing initiatives. Relationship Marketing is also one of the cheapest and most effective forms of marketing. Now is the time to nurture relationships.
Even in this economic uncertainty, we are still in a ‘relationship economy’. You may have pivoted from face to face asks to virtual asks.
As mentioned, receiving direct referrals for you to contact is the optimal goal but are there ways your clients can reach out indirectly for you? Do you have influencers in your database? People who have a following and who can promote your product or service? Do you send written communication to your customers, i.e. e-mails, newsletters, flyers? Could they share a link or a post on Facebook? For those of your customers who blog, could they endorse your product to their audience?
And finally, should you formally promote your ‘referral process’? Could you provide a reference on your website or include it as part of your automatic signature on all e-mails sent.
Overtime, a successful referral marketing strategy can become your sole form of marketing. This should be a goal your business ultimately strives for.
And the most important thing to remember is ‘always say thank you’ for the referral. There are many ways to do this depending on your line of business. In some cases you may want to develop a formal incentive program to reward your clients. Show your appreciation and they will be more likely to provide future referrals.
If you would like assistance in developing a formal Referral Marketing program, help in writing your referral narrative or for specific tips on reaching your target audience, ASE is here for you. – Jan Wallace, ASE