Ignite the Referral Cycle

The best way to grow your business is through referrals. We’ve all heard this but few of us take the time to analyze what motivates one customer to refer another and how we can cause that to happen more often.

Regardless of what you sell or to whom you sell it, your happiest customers sometimes refer other customers. The referred customers cost nothing (or next to nothing) to get, have high initial feelings of loyalty toward the business and are in turn more likely to refer others. This is called the Referral Cycle. The cycle is difficult to get started but once initiated, no advertising campaign can come close to it in efficiency or longevity.

Starting a referral cycle begins with happy customers. Does your business give good service and/or a quality product for a fair price? I did not say low price because your price could be higher than a competitor’s yet be a better value if the quality is higher or the service is better. Is every customer greeted with a smile and made to feel welcome and appreciated? Are problems solved quickly and with the same smile? Do you follow up after the sale to ensure that the customer is fully satisfied? Do you reward customers with gifts that show appreciation for their business and support the referral process? In short, are you satisfying your customers or are you impressing them? It is the impressed customer who is most likely to become a referral machine.

When I need a reminder of how an impressed customer looks, I remember my days as a Domino’s Pizza Manager. The franchise I worked for had an aggressive policy for handling customers who were unhappy with their pizza. We would immediately send a driver with a replacement pizza and a full refund of the original order in cash — plus a gift certificate for another identical pizza to be ordered later. So the customer now has three pizzas (the bad one, a good one and a certificate for the next one) and all of their money still in their pocket. I happened to personally deliver one of these replacement pizzas and I’ll never forget the look on the woman’s face when I explained the deal — total shock, which quickly turned to outright giddiness. We wanted to guarantee that this formerly unhappy customer was turned into not just a happy customer but a referral machine. Our thinking (and our sales growth supported it) was that there is no more highly-motivated spokesperson for your product than one who has been taken from sorely disappointed to deeply impressed in less than thirty minutes. Thankfully, these occasions were relatively rare so the cost was negligible, but the impact was powerful.

Once you have impressed a customer, they need as many opportunities as possible to bring up your company’s name and talk about the great service they received. An effective catalyst for conversation is a small handy gift on the customer’s refrigerator or desk. Not only does the gift say, “Thank you” to the customer but whenever your industry’s product or service is mentioned anywhere in sight of the gift, then the recipient can easily point to it and say, “Call these guys, they’re great!”

A study by Georgia Southern University shows that recipients of promotional products had a significantly more positive image of a company than those who did not.

Ignite your own referral cyle. Give great service. Offer a quality product at a fair price. Treat mistakes as an opportunity! Give your happy customers every excuse and opportunity to refer their friends and associates. And watch your sales grow.

Photo: Providing excellent customer service can lead to referrals, which leads to more business.