Dec 142011

A referral strategy can be a great way to advertise your business – because there is a personal connection

When you’re building a business, a referral strategy is a great way of building up customers and spreading the word about your company. If you’re just starting a small business it can also be a great way of getting your name out there in a cheap and effective fashion. A referral strategy is usually used in conjunction with other marketing ideas but can be used successfully on its own.

Here are the key steps to setting up a referral strategy.

Decide who your target market will be.

The last thing you want to do is end up attracting loads of people to your business only for none of them to buy anything. Equally you don’t want to attract people who will become problem customers (don’t pay their bills on time, always complaining etc). So, sit down and write out what your deal customer would look like and then cross check that you will be able to support that type of customer and give hem the service they will require.

Educate your present customers.

Your present customers are going to be going out there and referring you to their friends and colleagues. The trouble is they don’t really know how to do that so you will need to teach them. You will need to explain the type of new customer that you are looking for (‘just like them’ is a great compliment) and you will probably need to tell them how to go about it. Not only that but they will only be motivated to go out and spread the word if they feel there’s something in it for them. So, make sure you explain why it will be beneficial for them to promote your business.

Encourage customers to make referrals.

Even when they know what the benefits are, customers will still need encouragement to make the referral. Again, you can guide them in what to do and how to do it. Make out a list of different ways they can make referrals so that the customer has a choice of methods to use. For example:

  • Send an electronic flyer or email to your customers and ask them to forward it on to their contacts;
  • Offer a special price off their next purchase if they provide you with three suitable people to contact;
  • Have a private sale evening where they can only attend if they bring a friend.

The key thing to remember about referral strategies is that you also need to hold up your end of the bargain. You’re asking your customers to go out and advertise your business to their friends. The last thing either of you want is for them to refer you and for you to fail to deliver. So, the final part of building a referral strategy is to make sure that your business is ready, able and willing to impress the new customers that your present customers bring in.