Mar
30

3 Keys to Building a Referral Based Business

Most business owners when asked as to how they generate leads for their business, the answer is often “word of mouth”.  What they really mean is that they don’t have a systematic plan for generating leads. They are passive in their approach to marketing. They are mostly order takers and wait for their phones to ring.

The term “word of mouth” really means generating leads through referrals, which, executed properly, can be a very effective strategy that yields very high dividend. Here are some keys to building a referral based business.

  • Service – It all starts with service… not just good service or pretty good service but off the charts kind of service that has the customers talk about the business behind the owners back.  The kind of service that builds Raving Fans. So business owners, if your service is not awesome, fix that to-day before you embark on a plan to drive more referrals.
  • Referral Source – Many business owners solicit all of their customers for referrals. They reality is that one should be soliciting referrals only from A & B customers. People associate with people like them. That being the case, why should a business owner be asking their C&D customers to give them referrals of prospects just like them. So business owners, limit the number of people you put on your referral program to get the kinds of new customers you love to have.
  • Reward – When someone gives a referral they should be rewarded. Lots of business owners lack the common courtesy. Some give out a gift card or just a referral check (like some kind of a kick-back) – WRONG. Business owners, you know your “A” customers well enough to reward them in the form of something that is personal (U2 tickets, Knicks ticket, a weekend at Cape Cod etc.). It serves two purposes – shows appreciation and builds relationship.