Recent Studies Reveal Why People Make ReferralsUse Referral Marketing to Grow Your Business by Victoria Munro
New studies demonstrate the benefits of referral marketing. In his book, “The New Art and
Science of Referral Marketing,” Scott Degraffenreid explains how the science of social
network analysis has been used to help companies effectively utilize referral marketing.
Recent advances in mathematics, made possible by new computer technology, now enable
experts to precisely quantify the impact of referrals. In his book, Degraffenreid describes a
research study on physicians’ referral patterns for a pharmaceutical company. In this
example, millions of dollars had been spent marketing certain drugs, with very slow market
penetration due to few peer endorsements, while others with minimal marketing exposure
sold well because of high referral incidence, making them far more profitable. By testing
behaviors in several different ways, results showed that the primary reason we make
referrals is to enhance our standing with the people we refer. We want to look good!
He explains that because we’re bombarded daily with so many marketing messages, our
brains have developed methods to filter these out. This, combined with rising costs, make
‘traditional media’ a less effective way to communicate your message. People are the new
media! Referral marketing is a viable, cost effective alternative.
The Benefits of Referral Marketing
Consumers today have developed cynicism and distrust of advertising messages.
When considering a
purchase, we’re now much more likely to ask a
trusted friend or acquaintance for a recommendation.
We listen to those we know and trust. When a friend of theirs has referred a
potential client to you, a level
of credibility and trust has already been
established. They are more open to hear what you have to say.
Most likely, the person referring someone has already described your service or
product and you need to
spend less time and energy educating them on the value you
offer. These leads generally turn into sales
much more quickly.
Referral marketing is more profitable – to generate a steady stream of
referrals will take effort, but may
cost little or nothing at all.
Steps to Create Your Referral Marketing Plan
A Key Component
Your services or products must be top notch. In today’s competitive marketplace,
simply meeting your clients’ expectations isn’t enough. Aim to exceed
expectations – under promise and over deliver.
Remember: the person referring you is putting his or her reputation is on the
line. They must have confidence in you!
Who will refer you?
Happy satisfied clients who already know, understand and appreciate what you
offer.
Businesses that sell to the same target market.
Friends and family are often eager to help. If someone asks what he or she can do
to help your business, don’t waste the opportunity. Be ready to tell them how.
Ask for referrals. If you don’t ask, people may assume that you have all the clients you can
handle.
Make a list of those you can ask for referrals, and keep in touch with them regularly to
maintain top of the mind awareness.
Make it Easy to Refer Your Services or Products
Educate and equip potential referrers with the tools they need. Keep it clear and simple. If
telling someone about your services seems complicated, and there is a possibility they might
appear foolish, they probably won’t refer you.
Be crystal clear about:
• Who your “ideal client” is
• The benefits and value of your product or service
• How to contact you
You may also want to leave business cards, brochures or other sales materials with them.
Follow up on referrals promptly, expressing your sincere thanks. If appropriate, include a
gift as a token of appreciation. Always keep your referrer in the loop. Let him or her know
what’s happening, even if it’s nothing and you’re still playing phone tag.
Create a form, or use ours*, to track referral leads and measure the results and
corresponding costs.
It takes time and thought to actively seek out and educate potential referrers, to help them
look good by referring you, but the results can prove well worth the effort.
Put your plan in
place now, follow it faithfully and take advantage of this profitable marketing method!
About the Author
Victoria Munro is co-founder of Make-it-Fly® LLC. She has started and run nine different
businesses and has a wealth of experience as a successful business owner. Together with her
husband, Dave Block, she facilitates programs for small business owners which provide the
tools, support and encouragement they need to create successful results. To receive FREE
business success articles, tips and sign up for her ezine, “In-Flight Refueling,” visit:
www.Make-it-Fly.com.
|
