The New Year is upon us, and hopefully you’ve been working on your game plan for 2012! (See our post Set a Small Business Game Plan for the New Year). Part of your game plan should be setting goals, and at least one (or many) of these priorities is most likely related to business growth. It is quite common that when we conduct our first strategy session with our client and discuss what they perceive to be their greatest need, it is almost inevitable that we hear from business owners that they “need to generate more new clients”. Yes, generating new customers to ultimately increase revenue is a pressing issue these days. And, if you’re like many small business owners, you probably have a limited marketing budget, so a key aspect of your marketing plan should be to leverage your existing relationships. Yes, we are talking about referrals! Referrals are still one of the most effective and least expensive ways of getting new customers. According to Tom Hopkins, in “Sales Prospecting for Dummies”, the closing ratio for non-qualified leads is 10 percent versus a 60 percent close ratio with referred leads. WOW! This means it is six times more productive to work with referrals than a new marketing lead. That is a great opportunity!
With this in mind, we suggest 2012 be a year to capitalize on the excellent products and services you have provided and set a game plan for increasing referral business:
- Give and you will receive. There are many ways to give; one of them is to give referrals generously for business associates that you know who have great products and customer service. We suggest you personally provide the referral and contact your source directly to let them know who you have just referred to their business. The point is to develop relationships and show that you are someone who cares about fellow small business owners and their success. Chances are the referrals will come back to you twofold!
- Look for networking opportunities. Join your local business associations, industry associations, and attend local events. Sometimes small business owners are so busy they don’t take the time to socialize and “get out there”. We suggest that you set a minimum of two business development meetings per month and we guarantee, the more your business will be known, the greater the chance of referrals.
- Partner with other local small businesses. Co-marketing with local businesses that share your same prospect audience is an excellent way to leverage the return on your marketing investment. Most small business owners enjoy working with other local small business owners to help them succeed, and benefit themselves by creating that working relationship, in the form of return referrals.
- Offer a rewards or incentive program. Giving your customers an incentive for offering referrals is a terrific way to generate more referrals than you can imagine! Offering someone a special discount or credit is one of the best ways to motivate your customers to refer your small business. Let your customers know that your business is built on referrals and you recognize the value of a referral, thus are offering and incentive in return.
- Ask! It may sound obvious, but we have found a lot of small business owners feel uncomfortable asking for referrals, or simply don’t take the time to ask for referrals. If you have established the superior customer service and product quality that we talked about earlier, we absolutely recommend asking for referrals. Family, friends, trusted business associates, and even customers are great people to ask for referrals. Also, we suggest building the referral request into your sales process and once you have a satisfied customer you request them to share your service (or product) with a friend.
Now you should be all set to go out and conquer the New Year, starting with generating referrals for your small business! Do you have other tips that have helped you generate referrals? We would love to hear about them; please share in the comments section!