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Why Referral Business Is So Valuable

Guest post by: James Yuille

Article Overview: Here are three reasons why referrals are so valuable…

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Why Referral Business Is So Valuable

Here are three reasons why referrals are so valuable…

1. Customers[1] who refer are more likely to stay with you and as a result, spend more, adding to their lifetime value
2. Referrals are more likely to become customers. Why? Because they have been recommended to you by someone they trust and who in turn, trusts you.
3. Referrals who become clients are likely in turn to generate referrals because they understand the process.

What’s the best way to generate referrals?

You have to earn them! You have to treat your customers as friends. The result is that they will want to introduce you to people they know who in turn can do business with you.

It’s back to that Trust thing again isn’t it? By showing you care about them and about their lives, your level of trusts increase. Remember the three things Warren Buffet is reputed to think about before he does business with someone?

1. Do I like the?
2. Do I respect them?
3. Can I trust them?

By taking the time to develop relationships, trust increases, as does the likelihood of referrals.

By delivering a high standard of service in an appropriate professional environment or fashion, you are demonstrating your professional competence. The combination of this and your capacity to develop relationship will in turn earn you the right to ask for referrals.

I guarantee that if you did nothing else but began asking your customers for referrals on a regular basis you would instantly see an increase in referrals coming into your business.

The best time to ask for a referral is when a customer gives you a compliment or expresses any kind of gratitude towards you or your business. Tell them that your purpose in asking is to build your business. There is absolutely nothing wrong with that.

In fact, a client who really likes you will actually feel honoured that you have asked for their help.

Don't be afraid to tell your clients whom they should be thinking of as referrals (i.e. people under a lot of stress, people who are health conscious, people in pain) – be specific. You get what you ask for!

OK, so now you’ve gained sufficient trust and respect to ask for referrals, what do you do when you start getting them?

Simple. Make a fuss of them by means of reward and recognition. Just as with children and dogs, rewarding good behaviour makes certain that the behaviour is rewarded!

Do it publicly, too. Create a Referral Recognition wall in your reception area. Put the names of people you’ve rewarded up there. Run a referral incentive program that rewards more for more referrals.

Remember we’re talking about the cost of client acquisition and retention here. Far better to pay for the client after they’ve spent than to gamble on attracting them!

With a Reward for Referral program, your costs are a fixed item for every new client, too, making budgeting far easier.

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About the Author: James Yuille
RSS for James's articles - Visit James's website

James Yuille is best known for taking a straightforward approach to customer generation and retention. His sales career started when he sent a direct sales letter to a potential employer who hired him without even interviewing him. For 33 years he has generated new business in a variety of markets; representing multinationals and small business with both products and services. He has sold the 'unsellable' and has taught hundreds of salespeople how to improve their results. He provides practical, sensible cosultancy services to small and medium sized businesses and has been responsible for many successful on and offline marketing campaigns. More than a marketing consultant, yet not a business coach, James partners with his clients to see things from their side of the desk. He is a trainer, consultant and copywriter who is interested in two things; helping you identify what works and keeping you in focus. Find out more about James Yuille at http://www.JamesYuille.com

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