I always find it funny when I talk to an offline business and I ask them how they generate most of their business and they say “referrals” or “word of mouth”. Some of them are actually telling the truth too, but for most people in business that just isn’t the case.
The truth about word of mouth marketing, is that you have to do something in order to drive the word of mouth in the first place. You can’t get referrals unless you already have customers, right?
That’s not necessarily true.
The Truth About Generating Referrals
I’ve generated a lot of referrals from customers in the past, which is always a great thing because they have a higher conversion rate than any other method out there. It’s much easier to close a sale from a referral than closing sales from cold calling.
A lot of people starting off in business, think that you can’t possibly generate referrals without having customers, but you know what the funny thing is? I’ve generated more referrals from people that AREN’T customers, than those that are customers.
You just can’t depend on referrals as the only source of leads you will generate. That’s bad business, that’s a bad outlook and if you’re waiting around for leads to come in, you will never have a predictable income. It’s hard to have a predictable income as it is when you’re running a business but even more so when you’re waiting around for things to happen.
It’s kind of like inbound marketing, the only problem I have with it, is relying on inbound marketing to bring in leads, because you’re sitting around waiting instead of taking action to improve your situation, grow your business and simply “making things happen”.
You have to encourage word of mouth marketing, you have to encourage referrals. You can’t just stand by waiting for them to happen.
Generating Referrals From People Other Than Your Customers
I’ve generated a lot of referrals from people I’ve never even done any work for. I’ve also given referrals to other people who I never did business with but have networked with.
You know what the secret is? Talk about it. Tell people what you do. Take an interest in other people, no matter what social setting you’re in, family, friends, networking meetings, gas stations, bars, and restaurants, tell people what you do, what your goals are and what you want to accomplish.
There’s been countless times where someone will call me and say so and so told them about me… more times than not, I didn’t even know who the person was. I sold a $5,500 e-commerce site a couple years ago and remembered they said so and so spoke very highly of me. I had no idea who so and so was, but I wasn’t going to pry and ask for more details.
Now simply talking to people can generate interest, but there’s an even better way to generate referrals. I call this Strategic Cross Promotion, some will call it joint ventures, partnerships, etc.
This method basically consists of reaching out and networking with business owners that deal with the same clientele. So, if you sell web design to business owners, what is another business that deals with business owners? CPA’s, attorneys, commercial cleaning companies, merchant processing companies?
Basically it comes down to this:
Step 1.) Identify businesses that have the same target market as you do. Think about complimenting services or products.
Step 2.) Reach out to those businesses, network with the owners of those companies and see if you guys can work out a cross promotion strategy. Incfile does this with a bookkeeping company, offering a free consultation when someone uses their service. It’s a selling point for one company, and a lead generation method for an additional company.
Step 3.) Nurture the relationships of those you have a strategic partnership with.
It’s an easy way to generate additional referrals, while boosting your status in the local business community.
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Of Course, Don’t Neglect Your Existing Network
Your existing network plays a large role in generating new leads and referrals. Sometimes, all you have to do is ask.
If you have existing clients or customers, call them and ask if everything is good and see if they have anyone in mind they can refer to you. Ask your friends, or family members for new leads. Sometimes, it really is as easy as asking. Don’t just do it once either, try asking around every 3-4 months.
Megan from Ghergich & Co emailed me an infographic and asked if I would be interested in using it as part of one of my posts here on this blog. It actually was a perfectly timed email, as I have been planning on this topic for about a week now, and it compliments the topic very nicely. It was created for a guest blog post for SalesForce, about finding hidden sales opportunities within your network.
Referrals are a great way to generate business, due to their high conversion rates. Word of mouth marketing and referrals are the best, but it isn’t a stand alone solution, you can’t sit and wait for them to happen, you have to actively nurture the possibility of referrals and word of mouth.
What do you do in your business to increase referrals? Let me know in the comments below!