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Can Customer Referrals Boost Your Bottom Line? Yes!

Pop quiz: Which of the following two options will bring in more customers?

  1. A killer marketing campaign
  2. A current customer boasting to their friends and family about how awesome your small business is, how well they were treated and how much money they saved

If you said B, you passed with flying colors. Yes, customer referrals hold more weight than even the best marketing campaigns … but how do you get your customers to spread the good word?

A lot of businesses think the answer is simple: Bribe them. (OK, OK. In the marketing world, the polite term is “incentivize,” but it basically means the same thing.) And while that’s certainly a small part of it, there’s a lot of hard work that must happen before you start flinging cash and prizes around like a modern-day Bob Barker.

If you’re looking to use customer referrals to boost your bottom line, here’s what you need to do.

Be Worth Referring

This should go without saying, but all too many small businesses skip this step entirely.

Do you want referrals? Earn them! Do things that make your customers wantto share you with their friends and family. Offer surprise upgrades. Send a little something “extra” with their next package. Go above and beyond the call of duty to help them solve a problem — even if that means sending them to a competitor because you don’t have what they’re looking for.

“I’m sorry, Mr. Jacobs. Our whirligigs are currently out of stock, but since you said that’s all your wife wanted for her birthday next week, I’ll make a call to Whirligigs R Us and see if they can hook you up!”

Did you just give business to your arch-enemy? Yes. But you also gave your customer a great experience, and he’ll be telling his friends and family about it! That can help secure business down the road.

Turn Your Dissatisfied Customers Into Super-Fans

One bad review can have a bigger impact than 10 good ones. And when you’re relying on customer recommendations, it’s crucial that you turn every negative experience into a positive, quickly!

Did you mess up someone’s order at your restaurant? Give them a gift certificate for a few free meals, rather than just comping the inaccurate one.

Did you ship the incorrect item to a customer? Let them keep the item they received, overnight them the correct item and throw in a few freebies, too.

Did you accidentally run over someone’s prized tulips with a lawnmower? Clearly, the only possible remedy is to personally fly to Holland and replace their blue-ribbon-winning bulbs with the crème de la crème of tulips. (Kidding!)

The point is that the most dissatisfied customer can become your biggest supporter — if you take concrete, over-the-top steps to right your wrongs, perceived or otherwise!

Understand the Hierarchy of Referrals

In every business, there are fans, followers and detractors.

The fans are the ones who will sing your praises without prompting. The followers are the people who might be coerced (via corporate swag or other means) to spread the word to their friends and family. The detractors are the ones you need to convert — see the previous step — or ignore, if the conversion didn’t take hold.

Always start with the fans. Reach out to the people who have sent you glowing recommendations.

“Mr. Jacobs, the email you sent us about your wife’s delight with her birthday whirligig brought a smile to our faces! Do you or your wife have any friends who love whirligigs as much as she does? We’d love it if you sent them our way!”

Next, incentivize your followers. “Mrs. Brown, we know you’ve been a loyal patron of Whirligigs 4 Everyone for six years now. We’d like to reward your loyalty. Simply refer a friend to our store and we’ll give you both50% off your next whirligig purchase!”

As far as the detractors are concerned, if you’ve reached out to them and they’re still not receptive, it’s time to take them off your recommendation-soliciting list. You can’t please everyone, and the worst thing you can do is ask a dissatisfied customer to give a recommendation.

Referrals Boost Your Bottom Line!

According to this infographic, referred customers are 25% more profitable than other buyers, have 20% higher order values over the course of a year, and are far more loyal than customers who were not referred.

So, what are you waiting for?

Incentivizing is only a small part of a great referral system. In short, you need to make your customers want to refer you. Once you do that, all the rest will fall into place.

Mischa Communications wants to earn your referral! Let us know how we can help your small business marketing endeavors by clicking here.

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