Career Testing
Career Testing
Career Testing
ENTREPRENEURSHIP / AUG. 27, 2014
version 2, draft 2

How to Increase Customer Referrals

Most small businesses get new customers predominantly through word-of-mouth marketing. It is not only cost-effective, but also a powerful way of attracting new customers. Getting word-of-mouth recommendation from others makes your business, products and services appear more credible. In return, this builds trust and subsequently enhances your sales.

The following are some tips for increasing customer referrals:

1. Simply ask

Though it might seem obvious, many businesses overlook this strategy for generating referrals. At times, all you need to do is simply ask your customers to refer you to their associates and friends. Besides customers, you could also ask industry influencers to refer you to their networks.

2. Do an excellent job

Whenever you do a job for a customer, make sure you go out of your way to deliver more than you had promised. When you establish a reputation for offering excellent services, it will be easier to get referrals. In some cases, customers will refer you to others even if you don’t ask.

3. Offer incentives

To encourage customer referrals, you could offer different kinds of incentive. For instance, you could give a discount coupon for every referral made. Alternatively, you could offer a complimentary product or service. However, avoid offering incentives which will cost too much and result in a loss for your business.

4. Create a questionnaire

Having a structured questionnaire will make it easier for industry leaders or customers to provide referrals for your business. Ask respondents to share their experience of using your product or service. This information can then be shared on your product pages, social media profiles or email newsletters. Don’t forget to thank your customers for completing the questionnaire.    

5. Make use of social media

Social media networks such as Google+, Twitter, LinkedIn and Facebook can be a very effective tool for generating referrals to your business. Any time industry influencers or satisfied customers ‘like’, ‘favorite’, +1, retweet or share your content, it projects your business in a positive light. As a result, more people are likely to be interested in what you have to offer.

6. Build links with other businesses

Establishing relationships with other businesses is another great strategy for generating referrals. Social media can come in very handy for establishing such relationships. For instance, if you have a Twitter profile for your business, you could take time to follow other entrepreneurs or businesses in niches similar to yours. You can then build a relationship by retweeting their posts, as well as sharing your own tips and advice. With time, such sources are likely to return the favor and offer valuable referrals for your business. However, establishing relationships on social media is not enough. You need to find opportunities for face-to-face networking. Attending business conferences, luncheons and trade shows is a very effective way of building relationships with other professionals in your industry.

Applying these principles for customer referral can significantly improve the bottom line of your business. However, remember that the best foundation for effective word-of-mouth marketing is great service. This way, recommendations will keep coming even if you don’t ask.

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