Bay Area Virtual Business Incubator

Can you think of any business you've been to lately that asked you to give them some names of people you know who may be interested in their product or service? I'm talking about referrals, and most businesses miss out on what could prove to be their ultimate marketing tool… the personal recommendation.

The average business simply provides you with their products or services. In the case of a restaurant, they provide you with food. In 99% of restaurants, when you go to the register to pay for your meal, all they do is take your money and give you a receipt. They believe if you liked their food and their service you'll probably tell someone else about them eventually. That's called a "passive referral" and it typically brings them a few new customers, but not in any significant numbers. Basically, it's like throwing something against the wall and hoping it sticks.

It makes you wonder why more businesses don't realize the power of their customers influence when it comes to generating a massive number of referrals. It only requires them to ask for those referrals. People trust what others tell them about a business, both good or bad.

A business that "gets it" can leverage that trust and satisfaction with their products or services. If you're enthusiastic about a business, wouldn't you be happy to refer others to them so they can enjoy the food… or the excellent work performed by their painter or handy man?

Now what if we take this further and offer an incentive program to the customer providing the referrals? Can you imagine how something like this could motivate a consumer to give as many referrals as they can?

So what would be a good reason for a business not to employ this powerful prospect building model? This strategy is virtually no-cost, no risk and little to no effort.

In addition, the loyalty factor for a highly satisfied customer is off the charts. The referring customer feels a certain sense of responsibility for recommending the business since they want others they care about to know and experience the same excellence they were treated to. And when their referrals experience the same results they did, it enhances the reputation of the referee and grants them a measure of prestige that's so common in all human beings.

Using the Power of Referrals

Would a powerful referral system that increases your "bottom line" by 5% to 20% or more help improve your business? Making more money is always the goal of every business, yet most business owners leave tremendous sums of money on the table by not having dynamic referral systems in place that excite their customers enough to recommend their business to others?

Once you have such systems set up, all it takes is follow-up by yourself and your employees. Creating a referral system that rewards your employees and customers is not only possible, but simple once you have your system in place. Making sure your employees are on board with the plan and trained to use it is important if you truly desire to get referrals on a steady basis.

A Dynamic Referral Systems can produce a majority of your customers.

Your customers don't and won't waste their time conducting research to decide which business to buy from. Consider your own shopping habits. When was the last time you spent hours trying to find a new car repair mechanic, grocery store or restaurant?

Because most people just find it difficult to make choices about mundane things like shopping or restaurants, they would prefer that someone they know gives them a suggestion or referral. This process removes the stress from their decision about where they should shop.

Most folks love trying new places after receiving positive recommendations by friends or associates. They feel if "Sue" or "Joe" says the place is good, they'll have a positive experience as well.

People want instant gratification and direction on what business to try, especially when the product or service doesn't play a major role in their life.

Do you realize it's 500% to 1,000% more costly to use other advertising methods to bring customers to your door than to get just ONE referral? Many businesses spend 15% or more of their total revenue on their advertising budgets… yet their referral customer base is twice that of the clients who come to them through paid advertising!

With the hundreds of categories of referral programs available, we can put our attention on two that are proven and tested, have a successful track record, take very little time to implement, require little to no money or personal risk to put into action.

There are several types of Referral Systems:

1. The "Static" Referral System - your customers are informed of your referral program and understand the "perks" they will receive from sharing information about your business with family, friends, associates and anyone they meet who shows an interest in your service. This system involves a concerted effort and approach in which you ask your happy clients or customers for referrals and gladly reward them for their efforts, yet you won't be directly moving the process forward.
2. The "Proactive" Referral System - in this system you will be directing the entire process that gives you the power to reach potential customers who have been influenced by their friends or associates. They're prospects who, under normal circumstances would never have heard of you or your business.

You're motivating your customers to become "promoters" of your business or service by enticing them to share information about what you do with anyone and everyone they know.