Your existing customer base is your most valuable resource for finding new business. Compared to any other lead type, referrals are the most likely to convert and the least expensive to acquire. In an industry that relies primarily on word-of-mouth to drive new business, having a referral strategy is imperative. The key to bringing in a steady stream of referrals is to operationalize your referral process and make it a consistent, repeatable part of your overall sales strategy.
To make your referral strategy worthwhile, focus your efforts on customers that are most likely to refer you — aka, your advocates. How do you pinpoint them? Start by analyzing your data. There are a variety of ways to measure customer loyalty, but one of the most effective and accurate metrics is a Net Promoter Score (NPS).
NPS asks the question: “How likely is it that you would recommend me to a friend or colleague?” Based on a scale of 1-10 (10 being the highest), it categorizes customers as promoters (9-10), passives (7-8), and detractors (0-6). Your promoters are the customers you want to target. Hopefully you’re already collecting NPS data via customer satisfaction surveys after each transaction. If not, start implementing that practice now. In the meantime, you’ll have to use your best judgment to identify your advocates. Go through the list of clients who worked with you in the past year or two. Highlight the customers with whom you have a good relationship or who left you a positive review. These are the customers you’ll target for referrals.
Asking for a referral out of the blue can feel awkward, but it shouldn’t if you’re keeping in regular contact with your clients. Sending consistent, relevant communications to your customers is essential to maintaining the relationship after a sale. If you’re continuously providing value, it won’t feel like too big of a request when you do ask your clients for a favor.
There are plenty of ways to make a referral request, but the quickest, most direct way is through a personalized email. Resist the urge to send a mass email. While it may take longer to send individual requests, adding that personal touch will reap better results. To streamline your referral requests, use a pre-written email template, and plug in a few customer details to personalize it.
Pro tip: Don’t rely on email alone. If you don’t hear back in a day or two, follow up with a phone call. Besides, a phone call is more personal and provides yet another opportunity to deepen relationships with your most loyal customers.
Your customers are busy, just like you. To increase your chances of getting a referral, give them a sample template that they can use to quickly introduce you to friends and family.
Thank your clients for referring you with a phone call or a handwritten note. You’ll want to show your appreciation, so they’ll be more likely to refer you again in the future. You should thank your clients immediately after receiving the referral and again after the sale if the referral turns into a customer. If your client doesn’t have anyone in mind or doesn’t want to refer you right now, say thanks, and leave it at that.
As your business grows, the number of customers you can reach out to for referrals will grow too. But that can be a lot to manage, especially when you have more pressing responsibilities to deal with on a daily basis. Rather than making it a one-and-done activity that you tackle once or twice a year, integrate it into your ongoing sales strategy. Remember, the goal is to operationalize your referral process so it functions like a well-oiled machine. Set aside at least one hour a week (or if you’re really committed, one hour a day) to ask for referral business.
Chances are, the list you created in step one is too big to get through in one week. That’s ok! Choose 5 or 10 customers that you’ll reach out to each week and continue until you get through your current list. Once you’re done, create a new list, and repeat the process. Just be sure you’re not asking the same clients for referrals more than two to three times a year to avoid burning them out.