What’s your elevator pitch?
Just kidding. Don’t tell me. You could be selling a panacea to solve the world’s problems. The ultimate product or service that makes everyone who makes eye contact with you as happy as a little kid on Christmas morning. But if no one knows about it, how successful do you think you’ll be?
While investing in a good marketing strategy is always a good idea — and inbound marketing can open a lot of doors wide open for you — referrals are still the most powerful way to get new clients and to keep your business’ momentum.
What Are Customer Referrals?
Customer referrals occur when someone who has already done business with you recommends you to other people in their network: friends, family, business associates, and anyone else who may benefit from what you have to offer. In a nutshell, it’s word of mouth marketing.
Once upon a time, this mostly happened organically. Sally told Susan about your great gluten free, plant-based blueberry muffins, and Susan would place a wholesale order for her cousin’s engagement brunch in Martha’s Vineyard.
While today, that kind of referral is still highly effective, modern referral marketing also includes targeted efforts to cast a wider net to obtain even more customers that way.
There are two things to notice about this process:
To Get Referral Business, You Need to Be On Someone’s Mind.
If you have an established business relationship with a person or an organization, odds are good they won’t totally forget about you.
However, they have to go one step further and remember you at the exact moment you’re needed – and that’s a little bit more challenging.
Most Referral Business Comes from Simple Goodwill.
For the most part, people drive referral business because they believe they are making the best recommendation for the job at hand.
That doesn’t mean, however, that you can’t drum up some creative ways to spark more frequent referrals so that everyone will benefit.
Benefits of Customer Referrals For Your Business
Customer referrals are a wonderful way to scale your business. The most noteworthy benefits for this type of way of getting business include:
Keep a Healthy Pipeline.
Most people trust a recommendation from a friend a lot more than any other form of marketing. So having people speaking positively about your business will keep their qualified friends and family coming your way.
Lower Your Marketing Costs.
Acquiring new customers costs money. In fact, it costs a lot more to acquire new ones than keeping existing ones. You need to invest in advertising, inbound marketing, and technical costs. While these are always a good idea and have a good ROI, word of mouth is free.
Plus, when your customers are acting as your advocates, your marketing and sales teams can focus their time and energy into pulling in more qualified leads.
Sales teams spend less time on cold calls and more on guiding prospects down their pipelines. Marketing teams can focus on developing more targeted strategies and allocate more resources into those projects.
What's more, your business can focus more efforts on your customers and reaching their circle of influence.
Build Brand Trust.
When someone recommends a business, it’s because they believe in the product or service. It has worked for them in the past, and they would use it again. And when a person hears about the recommendation, they are more likely to trust it than a paid ad.
That transfer of trust is important since it's easier to convert a lead that has even a tiny margin of faith in you than it is to convert someone with no opinion at all.
What's even more important is that you're able to deliver on that referral. When a friend offers you something and it's actually good, you establish a sense of trust and loyalty in the brand.
Increase Your Revenue.
A whopping 92 percent of B2B buyers are more likely to make a purchase after reading a trusted review. That’s a statistic no one would dare dismiss.
Referred leads are coming to your business with the intention of purchasing from you. It’s almost a guaranteed sale once someone they trust tells them they should do business with you.
Reward Your Existing Customers.
Most referral programs operate by rewarding a customer for an online referral in the form of a discount or credit. This isn't a mandatory element, but it's certainly a great way to incentivize recommendations.
Showing your appreciation to your existing customers keeps them coming back to you and maintains your reputation of being an engaging and valuable business.
How to Ask for Referrals: 10 Things to Do
There are several things you can do to set the stage to ask for referrals.
1. Prioritize Customer Satisfaction.
Happy customers will gladly recommend you. This encompasses everything about their relationship with your business.
In addition to a great product or service, you want to make sure they feel comfortable with every single interaction — listening to their pain points, showing them how to use all features of what you're selling them, exceeding their expectations with your customer service.
2. Identify Who Is More Likely To Recommend You.
There are several ways of knowing who would be happy to refer you to their network. It could be people who regularly engage with your business page on social media, or someone who personally just told you about the wonderful experience they had with your business.
Then there are those whom you identify through customer satisfaction surveys that measure net promoter score (NPS). Keep track of all these individuals and ask them for referrals. They’ve already shown you how happy they are with your product.
3. Create a Referral Culture.
Make sure everyone on your team thoroughly understands who’s your ideal client. The more specific you are, the easier it will be for them to identify them.
Then make it a practice to have everyone straight out ask for referrals whenever they are presented with a good opportunity to do so. Make this part of your onboarding/training process of new employees and recognize top referrers at monthly meetings. A thank you — and a commission — can go a long way.
4. Be Mindful of Timing.
Some products or services show immediate results. If you want to buy a car, you either have a good or a bad experience. If you’re signing up for a gym, you can feel welcome and guided or intimidated.
Yet, in other instances, it takes a while to see the benefit of the purchase, such as when doing digital marketing, hiring a business coach, or starting a personal training program.
Ask for referrals once customers can actually see the value of doing business with you — when they have more lead conversions, when a business is scaling, when they can see muscles when they flex their biceps. That’s when they really start getting excited about your product and will happily tell others.
5. Create a Referral Program.
Having a referral program makes things easier for you and for your customers, since you get to avoid any awkwardness that may come from straight out asking them to send you more business. Also, who doesn’t love a freebie?
Your program can include offering a free product, a discount on their next purchase, or being entered into a raffle to win a sweet prize once one of their referrals makes a purchase from you.
6. Make It Easy For Your Customers.
Feature bold Refer a Friend buttons on thank you emails, after a customer satisfaction survey submittal, and/or a purchase confirmation page (if what you’re selling provides value immediately).
Install a referral tracking tool on your website, so that you're aware of which types of clients are your best advocates, as well as to determine whether your current referral program is effective.
7. Write Thank You Notes.
This can be a handwritten note or an automated email, depending on your business’ capacity. Sending a personalized thank you message to your customers after doing business with them shows your gratitude (which is always appreciated) and makes you stand out from the competition.
Also, asking to be kept in mind when friends or family need their services humanizes your company — especially if you’re a small business.
8. Be Active on Social Media.
Regularly share content on social media that’s helpful to prospects as well as existing clients. Make it easy to digest, like short videos or infographics, especially if it’s relevant to current events (e.g., How To Budget For the Holiday Season) and ask followers to like and share.
Schedule posts in advance so that you don’t have to keep being distracted from your business.
9. Stay in Touch With Clients.
You already have their information on your company’s database. Send them birthday cards and/or discounts. Engage with them on social media. Refer clients to them if they have a business.
By continuing to have a relationship with former customers, you will stay top of mind when they come across someone who may need your services.
10. Ask for Reviews or Testimonials.
Not everyone is going to feel comfortable speaking with others about your business. Instead of making it awkward for them, ask them to leave you a review on Google, Yelp, or your social media pages, or ask them if they would be ok writing a short testimonial you could share on your website.
15 Ways to Increase Your Customer Referral Business Fast
Look at it the right way and referral business can be treated as a business development pipeline like any other. To grow it, you need to work on one of these two levers: brand awareness and offer awareness.
Let’s highlight some of the top ways you can do it:
1. Celebrate Milestones With Your Customers.
If you want people to remember you fondly, be there when they’re in their moments of triumph. When you first contact a prospect, you might scan for “trigger events” – like a new product, service, or location opening – to find common ground with them.
After you make the sale, keep scanning for these events and call to check in, even if it’s only to congratulate your customers on the great work.
2. Offer Recurring Incentives for Referrals.
When it comes to referral business, enterprises of all sizes can learn a lesson from smaller ecommerce entrepreneurs.
Smaller sites often offer customers a fraction of the revenue those they refer generate for the business – for six months, a year, or even a lifetime. These kinds of agreements can make a big difference in how certain clients think, so contemplate how it may fit into your business.
3. Follow Up After Customer Service Events.
Try as we might, nobody is perfect.
When things go wrong, however, it presents you with a fresh opportunity to strengthen the relationship by admitting to the blunder and making it right fast.
Keep an eye on your customers and follow up vigorously whenever something doesn’t quite meet their expectations. Exceptional service will make them much more likely to recommend you.
4. Cross-Pollinate Your Business Relationships at Industry Events.
Everyone’s heard of being a social butterfly, right? When you’re at an industry event your customers also attend, you have a chance to become a social bee.
Use every opportunity you can to extend your business network by getting introductions from your customers to decision makers at other companies. It’s not quite a direct referral, but close.
5. Collaborate in More Visible Ways.
If you want to bring a strong business relationship to the next level, seek out areas where you and your partners speak to the same audience.
In some cases, you can provide great value to those people without infringing on your partner’s goals. Consider sharing each other’s content on social media and engaging in long-term content partnerships to mutually raise visibility.
6. Do Your Research Before Asking.
When it comes to asking your peers for endorsements, it's always best to know who you're approaching first.
Before reaching out to a customer or company for a referral, use LinkedIn's Advanced People Search feature to identify if any of that individual's connections are even qualified for a referral.
You'll be able to find your ideal referral candidate to ask your customer about and make it that much easier for them to endorse you.
7. Refer Other Companies That You Believe In.
Tapping into reciprocity, it's seeking out the mentality of "take a penny, leave a penny."
Naturally, if you request a referral from a company, they'll ask for one in return. And the same applies vice versa. It works more in your favor, though, to beat them to the punch and refer them first before approaching them.
The hope is that they'll appreciate the recommendation and pay you back in kind.
8. Offer Multiple Ways to Advocate for Your Business.
There are other means of receiving endorsements other than referrals. Not everyone is comfortable with the act of referring a product or company to another person.
Instead of pushing referrals on them and damaging your relationship, pull back a bit and offer other means of generating word of mouth.
Reviews, testimonials, and serving as case studies are all excellent ways of promoting your brand without asking the customer to do a lot of leg work themselves.
9. Inspire Confidence In Your Referrers.
Speaking of comfort in referrals, it's a great next step to institute motivation and remove any hesitations your customers may feel in recommending you.
If you have a strong referral program in place already, let them know that it isn't a foreign concept. Companies leverage referrals all the time and a great deal of business comes from repeat customers anyway.
They'll feel better knowing that they're not the first to give it a shot or bothering their social circle.
10. Keep Your LinkedIn Page Updated on a Regular Basis.
This is important for when referees come to see what the hype is about.
Your LinkedIn profile needs to be current and up to date, reflecting your business' actual standing, values, and services.
If anyone comes searching to learn more on your company and what you offer, the referral becomes null and void if there isn't any information to back it up.
11. Generate Quality Content to Get Your Name Out There.
Provide value-based content that your referral sources can share within their networks. Well written blogs, case studies, or recorded webinars act as an excellent resource for them when justifying their recommendation.
By creating a wide library of topics and content formats, you can provide them with a great piece for every context.
12. Encourage Your Employees to Participate.
Your team members can be your greatest advocates and it's important to recognize that. Who can speak on your brand's value better than them?
Offer opportunities and incentives to get them speaking on the behalf of your business with their friends and family. They already know everything there is to know about your business, so they'll be great in leading the conversation.
13. Look Into Leveraging User-Generated Content.
User-generated content is a great way for customers to refer their social circles to their favorite brands in an organic way.
Encourage your consumers to participate in your growth by promoting social media campaigns that will highlight their photos and social posts.
People trust other people. An unofficial ad from a fellow consumer has a much stronger influence than any ad you'd come up with yourself.
14. Work With Influencers to Reach Larger Audiences.
Influencers have gained a great deal of power when it comes to marketing in recent years. Their followers trust their opinions whole-heartedly and often without question.
Look into collaborating with influencers of varying followings to reach different audiences who haven't been exposed to your brand before.
Make sure that your partnerships make sense though. Find influencers with brands and themes that align with your own.
15. Be the Best at What You Do.
This is honestly the best way to get quality referrals. No one can deny or ignore excellent service and amazing quality.
When you're delivering quality products or services to your consumers, it really isn't that hard to ask for a referral, review, or endorsement.
Always be on the lookout for new ways to improve your business and continually delight your customers.
Customer Referral Letter Templates
No matter what you’re doing within your business, you should always make things as easy and seamless as possible for your customers — and for your team as well. Check out these templates for various situations to help you and your team generate more word of mouth business.
Customer Referral Letter Template: Referral Program Offer
This is a great template for your team to use to educate customers about your referral program. Use this to encourage people who love your products or services to refer their friends and enjoy a nice incentive.
Subject Line: Refer a Friend, Get a Discount
Hi, [customer's first name]!
Thank you so much for doing business with [your company]. As a small business owner, I really appreciate when customers put their trust in me. I’m glad we were able to solve [describe pain points you solve] and I’m confident things will be [easier/more effective/smoother] for you moving forward.
I also want to let you know about our referral program. For every customer you refer to us who makes a purchase, they get [describe dollar amount saved or discount percentage] off their order and you also receive the same discount on your next purchase.
So please keep us in mind if you know someone who would be a good fit!
Customer Referral Letter Template: Positive Customer Satisfaction Survey Response
As you conduct customer surveys, make sure you're following up with those who participate. This template helps you express your appreciate for a positive survey response, then makes a simple request to customers to make a referral.
Subject Line: Your Feedback Made Our Day :)
Dear [customer's first name],
Thank you so much for filling out our customer satisfaction survey. It really made us glad to see that you are so happy with our services. If you happen to know someone else who would benefit from them, please send them our way.
They can check out more about how we can tailor our services to their needs by visiting our website at [your company's URL], and just as you did when you first reached out to us, they’d get a free initial consultation.
Customer Referral Letter Template: Referral Program Incentives for Services
If you're providing services and you see customers hitting their goals, this template helps you celebrate those successes, before describing an incentive that encourages them to spread the word.
Subject Line: Save Money By Helping Us
Hello [customer's first name],
It was a pleasure doing business with you. We are so glad your results were [describe results] after we [describe services you provided to help them].
Now that you have experienced firsthand how effective our services are, we are kindly asking you to please refer us to friends, family, or anyone in your network who may benefit from our services. As a token of appreciation, if one of your referred contacts hires us, we will upgrade your account to [identify next tier] for [describe terms of incentive] months at no additional charge to you.
Improve Referral Marketing for Sustainable Revenue Growth
Many people feel like referral business is just the luck of the draw. If you have it, great, but it’s not something you can control.
It’s true that getting a referral is the end product of a lot of small interactions. But still, you don’t have to sit back and wait for the stars to align.
By being proactive in how you manage the customer relationship, you can motivate a fraction of your customers to consistently notice and take action when your solutions are the order of the day.
That will give you a stream of leads who may be predisposed to like what you have to offer, providing you with a much shorter sales cycle.
It’s like they say – you can’t direct the wind, but you can adjust your sails.