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Are You Referring To Me?

Tuesday, August 03, 2010   By Mike Reddy


Getting other people, your customers, suppliers or other business associates you have dealings with, to recommend your business to others is one of the most economical ways to grow trade. A referral comes pre-qualified as a hot lead because of the positive recommendation they have received about how good your product or service is.

Encouraging referrals should be an active process. You can do nothing and just hope people will refer you - or you can work on making it happen. Here are some ideas on how to make it happen.

1.    Make it easy for people to refer you

Make referral a convenient and simple process. Instead of requiring referrer businesses to keep your details in mind or go to a directory to find them give them some materials such as a bunch of your business cards or a small brochure to display.

Now you don’t put your referrers on the spot over explaining what you do or why you do it or how to contact you – it’s all there in the brochure. Brochures and business cards out on display also keep you front of mind with the referrer.

In professional services firms one of the best strategies is to let potential referrers know exactly what sort of person you would like referred to you. The person being asked probably doesn't have a clear idea of what a great referral would look like for you and so don’t feel sure about who to mention you to. Think up a short clear statement describing the type of client you service best. For an architect it may revolve around the type of work they are best at - building dwellings or factories; doing sensitive restorations; creating energy saving homes.

2.    Reciprocate - prudently

When another business person refers someone to you a tacit understanding of reciprocity is set up. They will likely expect referrals from you in return.

Try and keep a balance between the number of people a business refers to you and how many you refer to them. Where one person is  getting all the referrals without reciprocating a ‘trade deficit’ occurs and can generate bad feeling or even dry up the flow as they swap their referrals to other businesses who do reciprocate.

On the other hand be sure you really do trust the quality of service of businesses you refer people to because if they happen to fail the customer your business will suffer by association.

3.    Reward your referrers

Because referring is a reciprocal obligation and sets up a social bond between the referrer and the referee it helps to cement the relationship by observing a few social niceties. When a customer tells you they have been referred to you by Business Y take the time to thank your contact at Business Y. Where your referrer sends a lot of business your way an occasional gift or even a referral fee might be in order. For major customer accounts it might mean sending them a birthday card or personal note about the birth of a child.

Don’t become complacent about your referral sources. Make the people who refer to you feel appreciated and they'll want to refer you again and again.

4.    Build your network of referrers

Everybody is a potential referrer for your business including family members, friends, business associates and current customers.

Think through who could be a possible referrer for you and how you can make it your name that comes to mind when they are thinking of advising someone about a business that could service their need.

For many small business owners a consistent flow of referrals has been the basis on which they have built their entire business. In professional services firms referrals can be the most productive source of clients. People want to do business with other people they know, like and trust and when that person refers them on to you, some of that trust automatically attaches to you.  That’s why referrals are so valuable - having someone’s trust is the very best starting point for making a sale.

Mike Reddy is a Chartered Accountant, business coach and advisor helping businesses in Sydney, Melbourne, Brisbane and Gold Coast to easily increase their profits and cash flow. He is currently President of the North Sydney Chamber of Commerce, a Regional Councillor for Sydney North East and a member of the Institute of Chartered Accountants Sydney leadership team. As well as advising businesses, Mike presents business development seminars and webinars and is regularly contacted by the media to comment on small business matters. You can connect with him on Facebook, Twitter and Google+.