A substantial part of your business can come from referrals. The key is to provide extraordinary customer service and educate your clients and influencers to this fact. You must actively cultivate referrals; otherwise you're just leaving it to chance.
Referrals Start with Great Service
The foundation of great referrals is great customer service. A large part of your business can be generated through referrals. Make an investment in your business and your client's satisfaction by doing excellent work.
Characteristics of a Referral Source
Understanding the characteristics of a strong referral source, allows you to spend your time with the most qualified prospects. Below are the conditions of the optimum referral source:
Must have a relationship with your target client
Must understand your target client profile
Must be educated on what you do
Must respect you and your company
Must be respected by your target client
Must be motivated to refer clients to you
You should regularly ask for referrals and you should have a formal referral program with your existing client base. We simply send a letter out regularly to our clients explaining that we would rather spend our money enhancing our services then marketing for business. We ask for referrals. We send coupons that can be distributed, business cards, and newsletters that can be forwarded. We're not pushy; we just are up front that if they are satisfied with our services they should recommend us.
With other vendors you need to be more formal about your referral arrangement. The promise of mutual reciprocation rarely works. Immediate gratification does. If you're clear about the value of the client calculated earlier in this section, then be generous with your fellow vendors when they bring in a client. If you're going to make a profit of $10,000 over the life of the client, writing a check for $1000 to the referral source shouldn't be painful.
You may have friendships with some of these vendors but they're also business people and should be concerned that they spend time improving their bottom line. When you propose a solid cause and effect financial arrangement, you'll get significantly better results.
Evaluate all the businesses that are non-competitive but end up doing business with your target client. Examples of this are:
Make it worth their while and put the offer in writing. It could be a major source of new leads for you.
Some of the best referral sources you have available are from those that provide your company professional services. You're their client, so they're naturally inclined to provide extra value. They also have a great deal of insight into the work you do and your success. Examples are:
Commercial real estate broker
Secondary sources that could surprise you are:
Regular delivery people
Vendor contacts; office supplies, hardware, etc.
Cleaning services; contact the managers or owners
Cultivate and groom these sources of referrals. Behave professionally in all of your interactions. Keep them informed on new clients, products and services, press and so on. Supply them with business cards and actively ask for referrals.
Other Referral Sources
There are other referrals sources that may have already generated business for you without having a formal referral system in place:
Members of your church
Prospects - If they don't buy, ask for a referral
Members of other organizations you're associated with - school, political, etc.
When to Ask for Referrals
You should always be asking for referrals if you deliver a quality product or service. There are times when you'll get better results than others. Here are some guidelines for when to ask for referrals:
After signing a contract.
Periodically with a letter, say once a quarter
When successfully completing a project and your client signs the final approval.
When a prospect turns you down. Guilt is a beautiful thing.
When you're doing a client satisfaction survey.
When you're calling an inactive client.
When you're calling an active client.
If you're unclear on how to ask for a referral, here are some variations to try:
"It was a real pleasure working with you and I look forward to our next project together. In the meantime, if you know somebody that needs quality software development services, I hope that you pass on what a good experience you had with our company and have them give us a call."
"I'm glad things are going well for you. Do you have any acquaintances that might need my company's services?"
Keep Them Informed
You should keep the referral source informed during the early part of the new relationship. You'll get a sense of how much but at least make a call and tell the source "Thank you" for the referral. Inform them that you've met, started a contract and then simply ask them if they want to stay informed on their referral.
You should almost always send a letter thanking the referral source. It's polite and prudent. If it makes sense, you can send them a credit for your services, a dinner for two or tickets to a ball game. Show your appreciation.
Motivating Referral Sources
Motivating the referral source depends on the kind of relationship you have with them. If it's an existing client, it may be as simple as just providing stellar service and actively requesting the referral. For vendors and professional relationships, setting up a formal commission that is attractive is more effective.
And don't forget to give referrals yourself. If you can comfortably recommend a company, you'll build reciprocation credits and it doesn't take a lot of effort on you're part. The key is to refer only businesses that can really deliver and then make sure you follow-up with the vendor to see how the relationship is going.
About The Author