Saturday, April 12, 2008

Customer referrals: Viral marketing goes old school

Getting referral business and new customers, through recommendations by satisfied customers and clients, is a dream of most business owners and managers. Of course, it’s often more likely thought about as an abstract concept, than really put into practice. Many business owners dream of referral business, but not every entrepreneur takes advantage of this powerful marketing tool.

Referral business is often called word of mouth advertising. More recently, the term viral marketing has been applied to the age old concept. In the end, it’s getting a happy customer to help you sell your products or services. In fact, it’s the cheapest sales force that a business can ever cultivate.

Surprisingly, referrals are one of the least used sales and marketing techniques around. Sure, you’ll hear many business owners ask their customers if any other people would be interested in the offered products and services. You might even have said the same tired old line yourself.

Usually, the customer smiles, nods, and then forgets the entire conversation ever took place. After all, your business, products, and services are not the most important thing on their minds. Instead of creating a customer evangelist for your business, another golden marketing opportunity was lost. Developing a customer referral system could be the most profitable marketing step ever taken by a business. It’s time to get one started for your business.

The satisfied customer as target marketer

Most business people, when asking for customer referrals, are much too vague in their request. After all, if a business targets their marketing to specific customers, it only makes sense to apply the same principle to seeking referrals. Make the request specific, and aim for the proper target market.

All too often, a business person will simply ask if they know of some friend, relative, or business associate who requires a similar service. Little response is the usual result. Instead of being general, be specific. Provide specific examples of a type of product or service offered. Let the satisfied client discover the person who needs it.

For example, a men’s tailor would not simply ask if a customer knew who needed a new suit. Instead, the approach would be if the client knew of a friend or relative who was getting married in the near future. The tailor would remind the customer that the new groom would be made look like a movie star in just the right fitting suit.

The client is not only now thinking of who is getting married, but who might also be attending a wedding. The same approach could be used to specifically target graduations or prom clothing. The goal is to zero in on a specific target person for referral. Aiming too widely will capture fewer referrals. Being specific is the key.

Help the referrer to get the new prospect

If the business service or product is fairly complex or a large investment, a few sales props are helpful to the referring customer. Provide them with a sample or a brochure to give to the prospect. Giving the customer evangelist something to work with helps her to demonstrate the opportunity your business offers. The information you provide will answer many of her prospect’s questions.

Make certain that not only your sales staff ask for business referrals, but have every member of your organization working on the referral system. Treat the entire staff as a sales referral team, and provide them with the sales tools to add their social and family networks to the business client base. Many potential customers are lost because not all members of the firm were aware of the company’s products and services line. Don’t miss that built in company referral system.

Rewarding the helpful

Most people want to be helpful. They want to share good experiences with their friends and family. Referrals are usually treated as part of a business transaction, and most people will be open to the idea. People want to help. You just need to help them a bit too.

Offering a small referral gift or reward often works very well. The possibility of getting a free product or service is appealing. More importantly, it keeps the referral in the satisfied customer’s mind. They think of the gift and remember to market your product or service wherever possible. The key is deciding what sort of reward to offer as an incentive.

Don’t offer anything too extravagant. It makes the business appear too profitable, and can even make the satisfied customer think she paid too much. After all, the cost of an expensive referral gift has to be covered somewhere. A potential customer might believe that the incentive reward forms a large portion of the purchase price.

A better idea is to offer some additional service or accessory as the referral gift. Our tailor could offer free alterations, or a minor clothing accessory, for every successful referral. The point is to have the customer make a referral to a new prospect; and to make it somehow related to the product or service on offer. Keeping the concept of referrals in the customer's mind is what counts. A product or service, that works with the referral item, is an ideal referral reward.


By putting customer and staff referral systems in place, your business can grow by word of mouth. Treat your customers well, and reward them fairly, and they will happily do your target marketing on your behalf.Old school know how will enhance a business’s modern viral marketing program.

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