5 Tips to Grow Your Customer-base Through Referrals

Referral, Customers

If you are truly giving quality services to your customers, then be bold to ask them for referrals.

This is because there are no better salespeople than a satisfied customer.

Little wonder that 90% of customers are influenced by positive reviews when buying a product.

Research from Mckinsey revealed that the sales that come through referrals exceeded the sales from paid advertising.

In addition, word-of-mouth also known as referral marketing is the primary factor that influences up to 50% of all purchasing decisions.

You know that feeling of fulfilment that comes from a purchase experience.

It starts the moment the transaction occurred. You most likely got very comfortable with the smiles and the courteous interaction with the contact person.

Or…

Maybe it was the seamless process of making the purchase online without a single glitch.  

You would always walk away with the confidence that the product would deliver what was promised.

Everyone is someone else’s customer. Being mindful on how you would want to be treated will go a long way in helping you deliver a great experience at all times –  to your customers.

I have referred a number of parents to the Pre-school my children attended because of the excellent care and attention my wife and I received from the school management.

It did not take long to notice the passionate commitment by the team. They were all out ensuring every child got the required training and by implication, every parent got value for their money. It was therefore easy for us to become an advocate for the school.

It is more compelling when your customers inform their friends about your product. They have done the heavy lifting for you. It is an effective marketing strategy.

 

Who Is a Satisfied Customer?

Remember my example of the Pre-school?

That was satisfaction.

It was easy to share our experience with friends – likely customers. It was an indirect way of endorsing the school. This was very helpful in the decision-making process. It gave them the confidence to proceed with our recommendation. 

Keeping your brand promise is the beginning of customer satisfaction.  Customers need to be happy with the expected solution from your product.

When your customers do the “talking”- about your product, it fast-track the sales conversion process. Achieving consistent customer satisfaction brings a lot of merit to your service offerings.

The 21st-century customer is not only impressed with the look and feel of your product but they are keen on receiving high-level satisfaction. It’s a top priority in their scale of preference.

Gartner had predicted  that 89% of businesses are expected to compete mainly on customer experience

Customer satisfaction helps improve customer retention and according to smallbiztrends.com 82% of companies agree that retention is cheaper to execute than acquisition.

Every business desires to grow its customer base consistently and leveraging on referrals from existing customers makes this possible.

By the way…

 

What Is Referral Marketing?

You have a right to ask for referrals if you have genuinely added value to your customers.

If your product offering stays true to your brand promise then your ‘bragging rights’ are fully approved.

It is true that human nature reciprocates the gesture of value addition but most times customers would remain passive until you deliberately request for referrals.  

Therefore, referral marketing takes place when a business leverages it’s existing customers to create awareness about its offerings with the intent of growing its customer base. This can be an incentive induced   It is also known as word-of-mouth marketing.

 

Do we have organisations that have successfully leveraged on referral marketing? Absolutely!

Smart organisations have continued to leverage on referral marketing to grow their customer base. Here are two popular examples: 

 

1. DropBox

referral, sales, customers

 

Dropbox needs no introduction. 

It is a cloud-based file storage system where you keep and share documents.

Founded in 2007 by  Drew Houston and Arash Ferdowsi with a mission to design a more enlightened way of working.

 Dropbox referral programme was inspired by Paypal’s refer-a-friend programme. It was incentive induced, designed to give out 500MB per referral and can earn up to 16GB when users refer their friends to signup. 

The account type users sign up for determines the size of the space allocated. This particular referral strategy is a clear way of engaging customers and requesting to leverage on their network while compensating them for the effort.

 

referral, sales, customers

Dropbox did not start out using a referral programme, their initial strategies were affiliate marketing and SEM, needless to say, that their objectives were unmet.

A new game-plan had to emerge… for the business to scale.

They introduced a 2-sided referral programme, which allows you and your friend receive bonus Dropbox spaces!

What was the outcome?

They had a phenomenal growth between September 2008 and  January 2010, they went from 100,000 users to 4,000,000 users!

 

2. Airbnb

referral, sales, customers

 

Founded in 2008 by Brian Chesky and Joe Gebbia as an online market place. Airbnb has successfully disrupted the hospitality industry.

What started out as an accommodation for just three guests has now grown to become a platform that has checked in half a billion guests worldwide.

referral, sales, customers

 

Their referral programme was quite clear, they encouraged users to refer new participants via an email invitation. 

The user then gets rewarded with $25 travel credit when the new members referred completes the first trip and an additional $75 when they get they get to host a guest for the first time.

Their approach was quite different, they give out the promised incentive only after payment has been made by the person being referred.

The referral programme contributed to steady and sustainable growth in the company.

Let's take a look at some tips that can help with generating referrals

 

 

1. Initiate The Request

It is true that customers love to share their experiences with friends about products that gave them great value, but most times they don’t.

So, you need to be intentional about engaging them because leverage on your customer for referrals is highly cost-effective.

It may never cross their minds until you initiate it or they may think you have your strategy all set and you know how to get by with growing your customer base.

The fact is that you can not leave it to chance.

So, it’s fine to just go ahead and directly ask them either through an email or in-person.  

To generate new leads on a consistent basis, sales referrals is a viable option.

Customers are less apprehensive when a product is referred to them by a friend or colleague.

 

2. Connect With Your Customers

Don’t see your customers as just sales figures, see them as a real human being that is looking for value.

When you have this perspective about them, it becomes easy to connect and it will also be obvious to them.

How will you do this?

Always ask for feedback about their experiences and request for suggestions.  It will be easy for them to give you referral that will listen to them.

This is further validated by research conducted by Nielson company where they found out that 92% of people rely on the opinion of family and friends to make a buying decision.

On a personal level, I am more comfortable doing business with someone that was referred to me than someone that I met out of the blues.

It’s the same with so many people

The interaction process is faster when the introduction comes through a known contact.

 

3. Turn Them Into Advocates

It is true that all your customers cannot be your advocate but you can identify the set of customers that have the potential of being one.

On a periodic basis, you can create a survey such as the Net Promoter Score to find out how likely it is for them to refer your business to others. 

When a customer refers others to your brand, they are enhancing the rate at which the Know, Like and Trust (KLT) factors will be communicated.

They become an advocate for others to understand your value proposition.

 

4. Set  Referrals Generation Target

Make it part of your business goals.

How many referrals do you intend to generate in the new week or month?

Identify the Promoters from your customer-base, these are the most enthusiastic loyal customers that you have. You identify them from your Net Promoter Score

Then leverage on them to grow your referrals.

Also, decide on the incentives and promotions you intend to give out vis-a-vis the number of referral it can create.

Your goals should be S.M.A.R.T

Measure them periodically and evaluate your progress.

 

5. Create Shareable Links For Referrals

In your online engagements, make it easy and obvious for customers to easily share your content with others.

As you build your mailing list include a link that can be forwarded to others and remind them to forward it to those that might be interested in your value proposition.

Be creative based on your business model but by all means leverage on your existing customers.

 

Conclusion

Referral marketing is still a very potent strategy for growing your customer base, so don’t overlook it or leave it to chance.

Infuse this strategy in the culture of your organisation. Every team member should also be aware of the benefits. 

Apply the strategies I highlighted in this article on an ongoing basis.

Don’t be shy….just ask!


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