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Even your best customers may not be referring you

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

There is a prevailing theory among businesses that referrals are a natural byproduct of a superior product or service. That by exceeding expectations alone, referrals will make their way to their doorstep in the form of new business. It is true (as common sense would tell us) that positive word of mouth is abundant amid the best companies -- but research tells us that most of your best customers are not referring you. The problem unfortunately rests on the shoulders of the businesses themselves. The majority do not know the best way to turn their happy customers into referral sources. But thankfully there are a couple things you can do right away to start encouraging your best customers to refer you.

Understand the gap

Chances are, if you are a great company, then you are already gaining referrals via your best customers. But the gap between your referral sources and happy customers could be larger than you expected. A 2010 Economics of Loyalty study performed by Advisor Impact and Vanguard found that in the financial services industry 83% of satisfied customers reported a willingness to recommend services to others, but only 29% of customers actually do so. The best place to start in achieving more referrals is understanding that this gap exists, and that there are things you can do to convert the remaining 54% into active spokespeople.

Identify them

Fig1_NPSThe best way to get started is by identifying your best customers -- those that are willing to recommend you. When outlining a referral strategy, these are the people you will be reaching out to, so get to know them. We recommend performing the Net Promoter Score survey. It is easy to implement and from our experience, has a very high response rate. This quick metric is used by many of the nation's top companies including Southwest Airlines, Progressive, and Apple to name a few. It will give you an instant picture of who your promoters are and how you compare as a company to the rest of the industry in customer loyalty.

Make them feel good

Now that you know which customers are willing to recommend you, make an effort to communicate with them. Keep in touch with them in a way that makes them feel good. This can be accomplished as easily as making a phone call telling them you value their business. You could also write a personalized card telling them that you appreciate their loyalty and it has been a pleasure serving them over the years. The goal here is to keep your company in the front of their mind and synonymous with a good feeling, so that when the time comes to recommend you have given them every reason to do so.

Track them

Finally, it is important to stay on top of your referral sources and progress. Like any other area in a business, a referral strategy should be consistent and tracked over time. Keep a list of your customers that are willing to recommend and what efforts you have taken to communicate with them. You will be able to log the success of your strategy and adjust it over time. Most of all, make sure you are recording which customers are sending business your way. Thank your referral sources personally with a personalized card or phone call --they are much more likely to do so again! The best way to ascertain who is referring is by asking all new prospects “who referred you to us?” This alone will greatly enhance your long term strategy of gaining more referrals!

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