Why Most Businesses Have No Real Referral System

I just asked the vice presidents of two big companies this week about their referral systems. Both said that referrals just happen! But that doesn’t mean you should wait around for it!

Referrals are what keep a good business going. There is no faster way to get more customers and make more money than to double or triple your referral rate, but you need an excellent system to make that happen! And the good news is you can grow your network without harassing friends or family in the process.

Let’s start by looking at the psychology of referrals.

The first thing you should know is that most people like to give referrals, despite what many people think. This is because of three things:

The first reason is Ego: When someone buys something new, he wants to show it off to his friends and neighbors. He wants them to know how much he’s worth.

The second reason is that most people like to feel important and like to be the center of attention or information.

The third reason is that people like to share and experience the same things with their friends and neighbors.

Even though I can assure you that most people do like to give referrals, you can make the process even easier by changing how you ask for a referral.

How you phrase your request can make the process a lot easier. So too can your timing. The very best time to ask for a referral is right after you have completed a sale. This is the time when excitement and anticipation are always at the highest level. Of course, getting the referral is only half the battle—you also need to ensure your referred prospects actually show up when the time comes.

Now, let’s talk about more advanced techniques! Once you have referrals coming in, you’ll also want a solid prospecting formula to convert your referrals into actual customers.

#1 Ask Ex-Customers for Referrals

Even if a customer has stopped buying from you, that doesn’t mean he or she can’t or won’t send you more business. Make it a point to keep in touch with your old clients. I often get referrals from former customers who have moved on to other things but still have friends or contacts that my industry can help.

#2 Ask Business Suppliers for Referrals

Don’t forget that you buy things and services from other people. That someone should be glad to give you referrals. Make sure your suppliers know that you’re always looking for new leads.

#3 Incentivize Clients to Send More Referrals

As a speaker, I actually ask my clients for referrals by putting a clause in my contract that says I will get them a certain discount if they can get me a couple of referrals. As a result, I have gotten a huge number of referrals.

#4 Use Thank-You Notes to Multiply Referrals

At the very least, you should send a “thank you” note to a customer who sends you a referral who buys from you. Every time you thank a customer for a referral, you have the chance to ask for another one.

At the end of every “thank you” message, always ask the customer if they know anyone else who could benefit from your business.

Build a Referral System That Generates Leads Consistently

Referrals are the lifeblood of any good business or service, but they work much more predictably and effectively when you create and stick to a system so that good leads don’t just fall through the cracks. Oh, and if you know someone who needs help with sales or marketing, refer them to me!