A few statistics to shock you into reading further:
- According to the “New York Times” 65% of new business sales comes from some type of referral.
- “Nielson Surveys” suggest decision makers are 4 times more likely to buy if the business source is from a referral.
- “The Journal of Marketing” says a referred customer has 16% higher lifetime value.
After reviewing these facts I started thinking about the Opportunity Inc. client base and many of their histories of success. Although not statistically validated I would have to say – “it is all true!”
I teach a marketing seminar to entrepreneurs monthly. Although I pound the value of referrals in the presentation, I plan to modify if for more emphasis going forward. Since I like lists here are the 6 things everyone must consider to get the referral engine primed.
- WHO – Most entities begin their marketing planning with target segment identification. In the case of referral program development ask your team two questions: a) What other businesses sell to or have customers who are in the exact segment we are targeting? And b) Which of our customers love our product/service who would be willing to refer us?
- ASK – Every sales seminar reminds everyone to “ask for the business” the same premise applies to referrals. If you do not ask for referrals do not expect to get any!
- TOOLS – The Opportunity Inc. client base uses every marketing tactic conceivable: Web and SEO investment, Direct Mail, Telemarketing, Video, Sell Sheets/Brochures. Now consider what tools you can supply your referral sources to make it easier for them to refer you. In today’s digital world a forwarded link is magic and leads to a pot of gold. It is also important that your tool box has a methodology to track referrals.
- GIVE & GET – Don’t ask for referrals unless you are willing to give referrals. The best way to get the ball rolling is to offer a referral to your future source.
- REWARD – There is nothing wrong with rewarding referrals. It can be as simple as a thank you lunch or as formal a cross referral alliance agreement offering a percent of revenue. Match the reward to the person/entity. Different things motivate behavior.
- THANK YOU – In today’s fast paced world is sometimes important to remind ourselves of the obvious and the historic basics. When someone offers you a referral demonstrate diligence in following up professionally and with same diligence and urgency say THANK YOU!
If your 2015 marketing plan does not have a focused program on referral generation you may want to revisit the thinking!