Are Referrals Important? We Think So

Are Referrals Important? We Think So.  A lot of time, money and effort is invested in gaining new customers, through a wide range of methods: marketing campaigns, sales promotions and advertising across everything from Google advertising to the back of parking tickets. But possibly one of the most successful ways of gaining new customers is by referral or recommendation.

Why Do Referrals Work?

This is down to the old adage – people buy from people – which is often used to promote ‘the human touch’ in client relationships. And human nature being what it is, we prefer to do business with people we know the best and trust the most. A satisfied customer who recommends your company or service to friends and business acquaintances becomes, in effect, an extension of your sales team. They are perceived as being your trustworthy advocate, and if their referral results in your gaining a new lead, it is on the strength of their relationship with the prospect. This highlights the importance of going the extra mile in satisfying customer needs and exceeding their expectations. Satisfied customers will buy again, but delighted customers like to tell others about their great experience.

How Should We Handle Referrals?

Having been introduced to your company by ‘our mutual friend’, the new lead is also less likely to regard you as a stranger, and this early relationship-building is important.

• Identify the referee. Your new lead may start the conversation by telling us who recommended us or our product. If they don’t mention specific names, don’t be afraid to ask.
• Acknowledge the relationship. Even if you’re scratching your head to remember who that customer was, try to look as though you know! And if you do remember them, try to mention some positive interactions you had to reinforce the connection.
• Share the trust. If the new lead has chosen to buy from you on the basis of trust, show them that you trust them as equally as the referee.
• Thank the referee. A simple phone call, email or text message to say thank you may be enough to make them feel rewarded for their loyalty.

How Should We Encourage Referrals?

Many companies, particularly in retail, offer ‘refer a friend’ incentive schemes, but you are unlikely to win quality leads in this way. A customer doesn’t need to be delighted or even satisfied with you, as their only motivation for recommending you is to get that free gift or extra discount. Look out for opportunities when the customer is most likely to agree to refer you to others:

• They have contacted you to tell you how pleased they are with the goods they have just received.
• You have signed off a project and they mention how well it was managed.
• You have resolved a problem for them that wasn’t your fault.

Don’t be afraid to ask if they would be happy to recommend you. Do they know of friends, family, colleagues or other business acquaintances who might like to know about your company or products? Would they be happy to post an online review, submit a brief customer recommendation or participate in a case study? At Avena Group, we know that new leads gained via referrals are reflective of our excellent service, and we know these clients are more likely to develop into a lasting business relationships. The fact that they have been referred to us also suggests that they may already be networking with other businesses, so this increases the possibility that they too will become advocates for our company and in turn refer us to other contacts – a quality referral is ‘capital’ invested into a business network that will pave the way for them to draw on other knowledge that will benefit their organisation.