Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.
Needless to say I discuss the topic of referrals on a daily basis. I meet with individuals working in service industries mainly- those where close relationships with clients is common and referrals are important to growing their business. And just as I sink into the adjacent chair and initiate conversation I am met with this: “You’re right, I need to be better about asking for them.” At first I wanted to stop the agents, lawyers, advisors, realtors, doctors, (you name it) in their tracks and shout “you don’t need to ask!” But anymore I don’t even wince at this widely held misconception. I simply lean back in my chair and explain that, not only is there no need to ask for referrals - but doing so is remarkably ineffective, and there is research to back it up.
Without doubt this will turn the notion of referrals upside down for many people. But, the most effective referral strategies are proven to include tactics that do not include asking for referrals. A study by Advisor Impact, which focused on customer loyalty and referrals, surveyed over 1,000 clients and asked the reasons why they referred a service to others. An overwhelming 98% cited reasons that included helping their friends and family. Only 2% of the cases did clients say they referred because the business asked them for a name of a friend. This research proved that by not first identifying customers likely to refer, businesses were asking the wrong people to give a referral. Also, by asking for names, they were not effectively leveraging the reasons why people refer, and thus yielding scanty results.
Avoiding asking for referrals doesn’t mean you should let your referral strategy take care of itself. Doing nothing at all just as ineffective. Unfortunately, customer satisfaction alone doesn’t translate into referrals - it is merely a prerequisite. So, asking for referrals is a no-no, and sitting back relying on happy customers to speak up also doesn’t work. Here’s what you can do to increase referrals, and it doesn’t involve uncomfortably asking your clients for names.
Identify your most loyal & disgruntled clients
By finding your most loyal and engaged customers you are able to refine your communication - making your content more effective, personalized, and cost efficient. Also, by identifying your disgruntled clients will also not only increase customer retention, but converting frowns into smiles is a prime opportunity to capture referrals. For more info on how to gauge customer loyalty see the Net Promoter Score system.
Convey the importance of referrals
Let your clients know that you value referrals. Tell them that you would love to help their friends and family. This is accomplished by developing the referral mindset which I discuss in an earlier post. By doing so you will teach your clients that referring you is not only welcomed, but appreciated.
Coach your referral sources
Provide your most loyal customers with content that will encourage more referrals. In other words, enable your referral sources so that when they are motivated to refer you they know what to say, and to whom. Educate them on who your most ideal customers are. Inform them on the wide breadth of services you offer. Describe the triggers (life events) to look for that indicate a good person to refer. Make it easy to pass on your contact information. Tell stories that so that you are more easily introduced into conversation.
Touch your customers
I’m not asking that you invade their personal space here, just to make use of important touchpoints. Send loyalty cards, birthday cards, anniversary cards, National Pigs-In-A-Blanket Day cards (yes it’s real, and this month!). The goal is to keep you top-of-mind. The more personalized and special the better. I recommend sending handwritten cards. It is also a good idea to have an informative newsletter. Let your customers know that you are here for them and appreciate their loyalty! They will think more of you, and of you more often.
Now, I am glad we cleared up the subject of asking for referrals. Makes me feel warm and fuzzy knowing that perhaps less people will ask for names and start obtaining the referrals they deserve!