Three Secrets to Customer Referrals

There is no doubt that the easiest way to win new business is from customer referrals. A referral from a happy customer gives you an ‘in’ with someone new and this means you likely gain a new customer at little to no expense. A study by Nielsen shows that you’re actually four times more likely to win that new customer if someone sends them your way.

It is clear that customer referrals are the most effective way to grow your business. Here is three tips to make sure you make the most of them:

1.      Wow them

This may seem obvious, but to get a customer referral, you first need a happy customer. Provide a great product or an excellent service experience that will solidify your relationship with your customer. A happy customer will tell their friends and those friends are more profitable and more loyal. On average, a referred customer is 25% more profitable and nearly 20% less likely to churn.

2.      Ask them

According to one study, 83% of satisfied customers are willing to refer a product or service but only 29% actually do. That is like leaving money on the table. If you have a happy customer, first ask them about their experience, and then ask them for a referral. Happy customers will be willing to tell you about their experience, and you may be able to learn something. If you ask them for their opinion, they might reveal ways in which your product or service could be even better. It is important to never open the experience discussion with the ‘referral ask’ – saying “I’m glad you’re happy, do you know anyone looking for the same type of service” makes the experience feel transactional for the customer. When asking for a referral, you want to continue the relationship and show a genuine interest in the customer’s feedback.

3.      Thank them

Your customer is being generous with their time and feedback in giving you a referral, so make sure to thank them for it. The referral itself is deserving of your appreciation – do not make your ‘thank you’ conditional on a sale. A hand written thank you note is a very nice gesture, or at the very least, an email or phone call is needed to personally acknowledge your customer’s referral.

Always make sure to appreciate and value your referrals and never fail to follow-up. Letting a referral slip away is not only a lost opportunity, but is also disrespectful to the customer who put in the effort to send new business your way. Have a plan in place for when you receive a referral and never forget to express your appreciation to the referring customer. Continuing the positive relationship and staying connected will encourage more referrals and more business success.