Business Owners Toolbox Blog Discussions and articles to help the small business owner solve the challenges they face as they grow their business.

November 5, 2012

How to Generate Referral Business

Asked on LinkedIn by Shaun Caldwell

Referrals and introductions from clients are still our #1 source of new clients. Introductions from referral sources are much more likely to become clients than, say, cold calls. Here’s the approach we use. Just a few steps:

1. Provide excellent service to your clients so they will talk you up.

2. Ask them for referrals. Tell them who you want: “I want someone as good as you are, who has . . . . (list the desired qualities).” And ask for an introduction, not just a name and number, so that the prospect will expect your call.

3. Follow up! Don’t drop out these referrals and introductions. Sounds obvious, but this happens so often.

4. Let your client know the outcome. What happened with the person they introduced you to? New client? Not interested? Could never reach them? Doesn’t matter–just tell them.

5. Thank them. Doesn’t have to be monetary. I have tried both the reward and no-reward approaches. Most of my clients do not care about getting a money reward. But some do, and I give them a discount off their next month’s services with me. All of them get my profuse thanks!

6. GIVE referrals. The best reward for an excellent referral is giving one back. I notice that when people offer me money for a referral, I’m not interested. But I will drum up business for them if they give me good referrals in return!

So take the lead in giving referrals to those you’d like to get referrals from.

On the other hand, I have taken people off my list who are always asking for referrals but never give any back.

7. After a suitable time, ask for another referral.

8. All referral sources are not the same. Keep track of what quality referrals you get from different sources, and take particularly good care of your take referral sources. I’m talking dinner for two at the best local restaurant.

If someone makes a so-so referral to you, pass them along to a more appropriate person. Then thank your source and tell them what kind of referrals you can really help the most. You can convert a so-so source into an excellent source in this way.

Other kinds of referrals. What else do you want referrals to? I’m always looking for informal speaking gigs, so I ask people what small business organizations they know of that bring in speakers. All the above rules apply.

Marketing funnel for developing referral sources who aren’t already clients is shown in the diagram. Look for professionals who offer complementary services, are not competitors, and who work with the kind of people you want as clients. In my case, this includes CPAs and bookkeepers, IT consultants, web designers. Also people who work for small business support organizations.

Get testimonials. By the way, when asking for a referral, also ask for a testimonial statement, and be ready to record it right then when it is given. The first words out of their mouth will be the best. If you say, “Let me get some paper and write that down. Now, can you say that again?” They won’t be able to recreate it. Testimonials and referrals go together, since the person referred will first check your blog, website, and LinkedIn profile.


Powered by WordPress