Secret No. 21: How Many New Business Referrals Do You Get From Your Existing Clients?

Creating and using a strong referral system is a very effective marketing strategy. Every business should take advantage of it.

In the post titled Meet Sandy, I mentioned that Gerry Weinburg spoke two words that changed the way i did business. The are “Jay Abraham” the master of referral system marketing. Jay brings to the table the ideas of asking your happy clients, trusted business advisors and suppliers to send an endorsement letter about your products and services.. we’ll expand on this concept in few minutes.

Your business probably has good “word-of-mouth” advertising. I’ll bet, though, that measuring it has been difficult.

Most likely, you have had people call or come in to your business because someone else recommended it, but you never knew (or cared) what caused them to come in or call.

You can’t take advantage of referrals when you don’t know about them

Unfortunately, many business owners go about getting referrals in the wrong way: they beg for them.

This isn’t necessary. Instead, you could write an irresistible letter to your current customers offering them a high perceived value, a low cost gift, or a reward for an introduction to a new prospect.

This reward could be anything that you select, but it must be of high perceived value. For example: the reward could be 25% off of their next purchase, gift cards for each referral, certificates for DVD rentals, etc.

Better yet, ask your clients what they would like to receive as a gift for giving you a referral. They probably will have some other great ideas.

“Profit in business comes from repeat customers,
customers that boast about your product and service
and that bring friends with them.”
W. Edwards Deming

If you have calculated the average lifetime value (LTV) of a customer (see secret number 14), you will know, on average, how much every new customer is worth to your business. You will also know how much you can spend comfortably on a reward for the referral.

Set up a formal “referral system” to let your customers know how they will be rewarded for their help. Contact your clients more than once-they have short memories and are busy with their daily lives .

You’ll be amazed at how this strategy will be a big help in growing your business. Finally, remember that each of your customers is likely to have many friends and acquaintances who fit your “target customer” profile.

What are you doing to help your regular customers bring new business referrals to you?

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