Especially when starting out, word-of-mouth referrals are the most effective way to grow your business. Even in high-tech companies, having a couple hundred evangelists who can’t live without your product and will spread the word is incredibly important. A great product or service is clearly the number one thing you can have to spur word-of-mouth growth. Number two (and possibly just as important as the first) is incredible customer service. But beyond the obvious, what can you do? Here are a couple strategies I’ve found work well.
Bake word-of-mouth referrals into expectations. Many companies make the mistake of asking for referrals after the product or service has been delivered. You can take that route, but setting expectations upfront can be helpful as well. Send a quick note telling new customers that you intend to provide an incredible level of customer service and support, and that in return, you and your business really rely on word-of-mouth referrals.
Offer time-bound referral bonuses. Customers will often file your referral offer in the back of their minds in case they hear of someone who they think would work well. That doesn’t really work, as people get busy and forget. It’s often more effective to offer a bonus that’s time bound — say, a two-week window — with a specific discount or gift offer. That way, your customers can take a couple minutes to think through who could use your service and make introductions right away.
Make how you would like referrals clear. Simply asking for referrals leaves too much up to your customers’ imagination. Have a specific process in place. For example, have them fill out a referral form on your website.
Do something unexpected after the engagement. Even if your relationship with a customer has at some point hit a snag, the last impression you leave them with is often the longest lasting. Like a restaurant that gives you a free box of chocolates at the end of the meal, provide something unexpected and unpaid for after your time together. For a service business, this could be a free add-on 30 minute consultation on a related issue; for a product-based business, this could be an inexpensive accessory you find that many customers need.
Be incredibly thankful. This seems obvious, but so many businesses forget about it. Unless your price point is very low, having someone on your team place a call, send a handwritten note or send a gift for a referral is almost always worth it. (Yes, a handwritten note — when was the last time you got one of those?) It’s easy to send an auto-generated e-mail — the incredibly thankful part is taking that extra step.
Automate all reminders and referral processes. This seems counterintuitive, but it’s important. Personalized, tailored thank-yous, emails and reminders take time. While dealing with everyday crises, onboarding new customers and dealing with a thousand other things, it can be easy to lose track of referral processes. Make sure that your CRM or calendar generates reminders to get everything you need out at the right time.
John Rood is founder and president of Next Step Test Preparation. Next Step provides one-on-one tutoring for graduate-level entrance exams nationwide.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
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