‘65% of new business comes from referrals’ – New York Times
‘Offering a reward increases referral likelihood, but the size of the reward does not matter’ – American Marketing Association
‘The Lifetime value of a new referral customer is 16% higher’ – Wharton School of Business
Study after study has found that referral marketing is one of the best kinds of marketing when it comes to conversions and customer retention. Referrals from people who know and love your business can be a very powerful thing and an inexpensive way to build trust and attract new customers. In general, satisfied customers are more than happy to provide referrals. To put it simply, referral marketing is just people purchasing products based on someone else’s opinion or influence.
One of the most repeated referral marketing facts is that ‘92% of respondents trusted referrals from people they knew’ – Nielson.
You only have to stop for a moment and think about how often you make a buying decision based on a trusted family member, friend or colleague’s recommendation. If you ask a friend about a new restaurant, the response will go a long way towards determining whether or not you choose to dine there. That same sentiment translates to business decisions as well.
Referrals are almost always the best prospects because a recommendation from one customer to another provides credibility, a positive impression and reduces doubt in the mind of the prospect.
Ask for Referral
You’ll never get referrals unless you ask. Asking for referrals can be a natural part of the sales process. Often the best time to ask is right after you’ve delivered your product, and your customer has experienced the value they were expecting and more.
Your relationship with your customers should be mutually beneficial; that’s why the best time to ask for a referral is after you’ve exceeded their expectations.
Consider a Referral Incentive
If you want your business to be top of mind with your customers, give them a reason to think and speak about you often, the best way to do this is to reward those who take the time to refer business your way. Referral incentives you may consider:
- A percentage–off discount
- A free gift or service to customers that bring in multiple referrals
Even if you don’t provide a referral incentive, be sure to thank customers who do recommend you and make it known.
Capitalize on Influencers
Influencers within your niche can be a goldmine of referral traffic and sales. The key is to find influencers whose following is close to your target market. A trusted influencer in your industry referring your product can have significant impact.
Referral marketing is a powerful and important component for every business. It is still incredibly underrated as a customer acquisition channel. Implementing basic tactics can help encourage and facilitate the referral process which can be a major source of new sales.
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