Referral Marketing: Best Practices For Referral Based Marketing

There once was a dentist in Sydney, Australia whose practice had dwindled so greatly he was in danger of losing it all.  He closed up shop, moved his practice across town, and hung a sign up outside his door that read: By Referral Only.  Within weeks he was getting more patients than he could handle.  Today, his is one of the most thriving practice in the area.

Then there is Susan, a real estate agent.  When she had her business cards made, she had the words "By Referral Only" printed right below her name.  She went on to be the top-selling agent in her office.

There is no doubt about the power of referral based marketing.  Not only does working a list of referrals eliminate the painstaking (and sometimes costly) chores of cold-calling and advertising, but it creates a constant flow fresh clients who know you, like you , and trust you.  Afterall, who would you rather do business with--someone your friend recommended or a complete stranger?

So how do you go about generating referrals?  One of the easiest way is simply to ask for them.  Ask yourself, "Who are the people I know right now that I can call and ask for a referral?"  You probably have regular customers, vendors, and collaborators who would jump at the chance to give you a few names and numbers.  In fact, statistics show that 25% of the people you ask will give you at least one suggestion.  If you can get them to call them for you, you will increase your credibility with your new contact  1000-fold.

One very effective way to ask for referrals is to use is the 3rd party approach.  All you do is call up your existing contact and say, "Hello, _____________, I was thinking about you the other day." Bring up some point of interest that you both share and talk about it briefly.  Then say, "Listen, I was wondering if you knew anyone who might be in the market for a ____________/ looking for a financial change/ needing to think about retirement, etc..."  If they cannot come up with anyone, ask, "Who sold you your house?"  "Who is your insurance person?" or "Who cuts your hair?" Close with a final comment about your shared interest and thank them again for the referral.  Doing this periodically with everyone on your list will result in a substantial increase of business.

You might also consider joining a networking group.  One such group is a breakfast club, where each of the members is required to have a different occupation/specialty.  Instead of seeing this as an opportunity to get referrals for yourself, think to yourself, "How can I help this person?"  Asking someone who their ideal prospect is and then delivering on it is a sure way to get referrals in return.

Whenever you meet someone and the conversation inevitably turns to what you do for a living, ask them if you can put them on your mailing list.  Get to know as much about the person as possible so that you can send them something of value and interest to them from time to time.  Then after 90 days, call and ask them for referrals.  They will be much more responsive to you.  I keep a file of everyone I come into contact with so that I can follow up with them at a later time.  Index cards work very well for this.

Last, one of my favorite and most effective things to do to get referrals is to send a thank you note.  Obviously, if you get a referral from someone, whether it results in new business for you or not, you will want to send a handwritten thank you note.  Beyond that, whenever you meet someone for the first time and you get their business card, write a very simple note in blue ink that says, "Dear _________, Thank you.  It was nice meeting you the other day in _______________.  If I can ever send business your way I certainly will. Sincerely, ____________."  If you do this and then call them a week later, not only will they remember you, they will most likely hold you in very high regard and fall over themselves to give you a referral or two.

Remember to keep in touch with everyone on your list on a regular basis with phone calls, mailings, and e-mails.  But don't always make your communication sales-y.  Send them an article from the newspaper about their favorite sports team.  Send them a recipe.  Keep yourself in front of them so that the next time someone says, "You know I've been thinking about changing my auto insurance/getting a new car/buying a new couch/saving more for retirement," they will know just whom to have them call.