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Create a referral machine

September 19, 2010
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One of the quickest ways to double your business and get a better-quality clientele is to have systems that put your clients to work for you: Systems that generate referrals.

If you are not actively encouraging referrals, then you are choosing to ignore the most cost-effective and results-creating new business generating strategy available.

Having no referral-generating devices in place for your company means you are choosing to “need” more work.

If you currently don’t have a referral system up and running, the information in this article will help you create your own system.

If you’re already getting a majority of your business from referrals, you’ll find tips that will allow you to provide a further boost to your referral business.

First, though, you have to ask yourself this simple question:

‘Am I worth it?’
There are many tools and techniques you can use to generate referrals:

  • Referral tracking forms
  • Telephone scripts
  • Referral-request letters
  • “Thank You” cards or gifts
  • Promotional items
  • A referral contest
  • Or a combination of any of these.

But, before committing resources to generating referrals, you need to ask yourself, “Do I have a business that is worthy of receiving referrals?”

'' If the answer is no, then you need to fix your business. You can learn strategies, receive expert suggestions, be shown all kinds of marketing tools that other companies are doing to get clients to refer them, but if your business isn’t worthy of receiving referrals, no amount of marketing expertise is going to help.

Ask yourself, “Just how good is my service or product? Do I constantly ‘wow’ my clients or is my service ‘just ok’?”

If you want to have people refer you, you’ve got to really wow them.

There are three types of clients you can create in your company:

  • Unhappy customers who got less than they expected.
  • Satisfied customers who got exactly what they expected.
  • Happy clients who got more than they expected. (Hint: These are the clients you want!)

If you want clients that refer you, you’ve got to make sure you do everything possible to have every client go from just a satisfied customer to a loyal, happy client.

If they are not impressed enough with your service to where they’d want to use you again, then they certainly aren’t going to want to refer you to other people.

Dan Sullivan, founder of The Strategic Coach Inc., Toronto, has identified four habits he calls the “Refer-ability Habits.”

He says that in order for you to have a business that generates referrals and for you to be the type of person a client would want to refer, you need to follow these four simple but oft-neglected habits:

  1. Show up on time.
  2. Finish what you start.
  3. Do what you say you’re going to do.
  4. Say “please” and “thank you.”

No matter how good your product or service is, no matter how great your team members are, no matter how honest you are, no matter how highly skilled and trained you are, if you break just one of these refer-ability habits, you have dropped the ball.

When you break one, you’re saying to your clients and to your employees and to everyone you associate with that you don’t respect them and that you’re not dependable.

The bottom line is this: If you don’t show people respect and exhibit dependability, they’re not going to refer you.

The referral process
Implement a number of simple but effective processes into your daily routine.

For example:

  • For service businesses, send clients pre-confirmation letters before the job via mail or e-mail.
  • Educate clients with a complimentary consumer awareness guide or other literature.
  • Do an inspection or evaluation presentation for clients that discovers their needs and conveys the value you will be delivering to address those needs.
  • Be attentive and “present” when communicating with a client (i.e., turn your cell phone off).
  • Share testimonials and other “evidence of success” to help build trust.

At the end of the job or sale, after you’ve educated your clients, you’ve provided a great service/product and they’re happy, this is the perfect time to ask for a referral.

Educate clients as to why they should give you referrals. If you don’t ask them and let them know the way you build your business is through referrals, don’t expect them to really think about it for you.

You’ve got to plant a seed in their minds.

This can be done through something as easy as a referral tracking form that gives them an opportunity to list friends or family who may be in need of your company’s services or products.

This could also be sent as an e-mail message that can be easily forwarded to others (nothing is easier than hitting the “send to all” button on their address books to forward your information).

Follow up with all newly referred prospects promptly.

Anytime you are given the name and contact information of someone who may be interested in your service or product, it’s your responsibility to turn that referral into a sale.

Offer a referral reward
You need to thank and reward those who refer you.

If you are receiving referrals and you’re not doing anything at this point to get referrals, they’re just telling people about you because they’re happy with your company.

Imagine what would happen if you not only started going out of your way to thank them for sending you business, but you also started rewarding them with gifts or perks.

Reward systems work very well with your employees too, so don’t forget to thank them when they come back with a completed customer referral tracking form.

One gift to consider is rewarding clients with cash. Cash works. It does not have to be a large amount.

Hundreds of service providers all over the world use small cash rewards as a token of appreciation and to entice people to give them referrals.

It’s much more cost-effective to give small cash rewards for a referral than to pay for expensive advertising or other forms of promotions.

One benefit to rewarding cash versus a “10 percent off your next purchase” coupon is that it is non-conditional. It’s instant gratification. The client doesn’t have to buy something from you again in the future.

As an alternative to cash, you could also give a bonus such as a free additional service, small free gift, or gift certificates to a local restaurant or movie theater.

You are trying to get it in the client’s mind to remember you as a spectacular company to tell others about.

People have busy lives, so if you don’t actively thank them and let them know you appreciate their referrals (and reward them), they’re not going to be thinking about your company for long after the sale is completed.

Give clients a reason to remember you.

Client champions = business goldmine
Go out of your way to identify the people in your database that refer you most often, and then treat those people like gold.

They are your unpaid sales force, and often can outperform your paid sales force.

You can maximize the enthusiasm of your happiest referring “champions” through special recognition and events.

You can give public thanks to your champions in your newsletter, or posted in your lobby.

You can have client appreciation dinners and invite your champions for a free meal. You can have a referral contest, with each referral leading to a ticket in a drawing for some big prize, such as a dinner for two at an upscale restaurant, a weekend get-away or a cruise.

Some champions will have a network of people to share your praises to because they may own their own company and have clients to refer you to. (See “Create a client council” above.)

Other business owners are ideal partners to create endorsement relationships.

Paying to mail letters of endorsement from happy clients to their own lists of clients can lead to numerous referrals, especially if you extend them an offer because your clients referred you.

This allows the business owner to give his/her clients a special offer, and with you paying for the mailing, they get to do something nice for their list that does not cost them a dime.

You may also offer them a referral percentage for any sales that occur from the mailing.

Joe Polish, a past “CM/Cleanfax® magazine Person of the Year,” is president of Piranha Marketing in Tempe, AZ. He has helped more than 4,000 carpet cleaners take their business to the next level through his Marketing Tools and Systems. For a copy of his free report, “How to Get into High-End Homes and Double Your Income,” visit or call his 24-hour free recorded message at (800) 587-1953.
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