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Getting the most out of referrals

Cape Town - Referrals are an excellent and cost-effective way of marketing and growing a business, but they can’t be ad hoc if a business owner wants to leverage them to their best advantage.

As with other marketing strategies, it requires forethought, preparation and good execution to deliver results.

If referrals are to be a potential marketing strategy, companies need to begin finding specific referral strategies that will work for them and their customers. Once they have decided on a strategy, it needs to be incorporated into core business activities, not as an optional extra to be executed when convenient.

Three effective and easy-to-implement referral strategies that can boost a business’ sales are:

1. Stay in touch

I’d recommend making contact with customers at least every three months. Many businesses spend five times more money on trying to attract new clients than they do on keeping their existing clients coming back.

I believe that focusing on existing clients first makes better business sense – after all, they’ve already experienced the product or service (which should be excellent, it goes without saying), so it should be easier and less time consuming to persuade them to keep doing business than to bring in a first-time customer.

Happy existing customers are also excellent for giving referrals. Keeping in touch doesn’t have to be expensive or time consuming and can be as simple as sending out a newsletter.

2. Mutual benefits

To encourage customers to refer them, business owners can apply the ‘What’s In It For Me?’ principle. Customers want to know what the benefit is to them for referring others.

Companies can explain to customers how referrals will help them, and how they will help the customers in return. There are many rewards that can be offered for referrals, but what’s important is to explain to customers the mutually beneficial nature.

For example, “By referring new clients, you’ll help my business to save on marketing, which allows me to pass on greater savings to customers like you. In return for a successful referral, I will offer you XXX.”

3. A little thanks goes a long way

The easiest way to make customers feel special and to get them to refer friends is to thank them. Few businesses do this, which makes it a golden opportunity. A hand-written thank you note goes a long way.

If there is budget available, sending customers a small, tasteful gift with a company logo on it can serve as a long-term reminder of the value they experienced when interacting with a business. Gifts can also be related to the business they’ve done with a company, such as a car wash voucher from a dealership where they bought their car.

Sending a thank you a few days after the customer has made their purchase has a bigger impact than an on-the-spot thank you. Customers are excited to take their purchase home after buying it, but that feeling wears off after a few days. Receiving a thank you a week or so after the purchase can reignite that excitement and keep a business top of mind.

Referrals from existing customers have a lasting impact when their contacts are looking for a business to meet their needs. Having a strong strategy in place can help business owners optimise the potential of this effective marketing avenue.

* Harry Welby-Cooke is a leading business and executive coach and South Africa’s master licensee for global franchise company ActionCOACH.

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