Generate Referrals From Customers: 3 Effective Strategies For Businesses

generate referrals from customers

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generate referrals from customers

If you are thinking to grow your business, you need to focus on how to generate referrals from customers. But why? Why is it so important?

Getting customers or clients is one of the major challenges of any business, no matter whether it is product-based or service-based. Why is it so that people get frustrated in the process of client hunting? What brings down their motivation?

Well, probably the sole reason is the higher rejection rate. Reaching out to clients is not the problem; the problem lies in the trust factor. If customers do not trust you, they are not going to buy from you. 

This is where referral comes into the picture. When someone refers your product or services to someone else, the trust level becomes much higher.

In this guide, we’ll learn Sarthok Siingh’s strategies to get more organic referrals from your existing customers. The Growth Hacking Book 2 is a bestseller, and Sarthok is India’s first-ever referral marketing expert.

Besides assigning himself a fancy title, he finds happiness in informing business owners about how referral marketing may help them increase revenue organically. He assists business owners in implementing a referral system so that their existing customers begin to generate high-quality referrals and become voluntary sales agents.

Sarthok has discussed with us his secrets to referral marketing. So, without wasting any more words, let’s get the ball rolling.

 

Difference Between Referral, Referral Marketing, Referral System

 

generate referrals from customers

Before starting, it’s essential to understand these terms and know the difference between each of them. We must not use these terms synonymously.

Referral

A referral is a word-of-mouth lead or a sale that is not necessarily generated proactively and can be passive in nature. Hence simple, the act of referring someone to a person or authority who is qualified to deal with them is known as a referral.

Referral Marketing

Referral marketing is a word-of-mouth campaign that encourages existing customers to refer their family, friends, and connections to become new customers. In this technique, a business incentivises its existing customers to refer These incentives or rewards can be anything, such as:

  • Free products
  • Money or Cashback
  • Discount
  • Early access and so on.

Referral System

A referral system is a step-by-step procedure that incorporates referral marketing tactics (not always), which may be tested and used to produce referral leads.

 

The Exponential Effect of A Referral System

 

generate referrals from customers

Despite referral marketing necessitating promotional activities and incentives to motivate clients, it has numerous advantages, such as:

  • One of the most important marketing objectives is to increase brand trust. Personal recommendations help to create trust and are seen as more trustworthy than advertisements. Referred consumers are more trustworthy and loyal, which helps elevate them as customers.
  • In numerous ways, referral marketing improves conversion rates. Potential clients who have been suggested by a friend or family member are more likely to buy something when they visit your store or sales page since they already know and trust your brand. Referral program engagement on social media gives social evidence, which improves your reputation and motivates others to buy.
  • Existing customers become familiar with both your product and the potential customer, allowing them to recommend your product to people they know will benefit from it. As a consequence, you gain high-quality targeted consumers who require the benefits your product offers without having to spend money on an expensive advertising effort.
  • Through referral marketing, customers might learn about your brand’s history. Consumers are picky about which brands they use. Brands that are believed to be honest and real are preferred. It seems honest, improves your reputation, and connects strongly with customers when your customers promote your brand and tell your story.
  • By offering insight into their motivations and expectations, referral programs aid in the establishment and retention of long-term consumer relationships. Customers who participate in recommendation programs are more likely to stay with your firm as a result. Customer retention is one of the top benefits of referral marketing because it costs more to identify and engage with new customers than it does to keep existing ones.

 

Turn Your Best Customers Into 24*7 Sales Representatives

 

generate referrals from customers

Have you ever wished to clone your best customer or client? That is probably the best thing one can do for their business. Who doesn’t want a client who does not negotiate a lot, doesn’t hesitate to make payments, behaves nicely and is even ready to make an advance payment? Everyone, right?

But nothing comes automatically in life. You have to work for it. Just like that, if you also want to achieve just a clone of your best client, you have to take certain actions. 

Have you ever thought that premium clients hang out with people of their stature? Haven’t you? Then think. If you can penetrate their network, you can close someone like your existing client (whom you regard as your best customer).

That’s the idea. You have to convert your best clients into your sales reps. You need to systematically ask them to refer them to you. Once you become able to gain trust by delivering quality work within deadlines, your customers would love to refer you to their network. 

And probably you have heard the saying, “your network is your net worth”. Hence, acknowledge it and stop ignoring the power of referral marketing. You just simply need to ASK. That’s what you’re lacking if you are not getting new customers from your existing clients. Trust me.

So start asking for referrals. Thus, you can develop a great network. And there will come a day when you will no longer have to worry about attracting customers.

 

Referrals In Four Easy-To-Implement Steps

 

generate referrals from customers

Are you wondering how you should start getting referrals? How should you make a referral system? Well, worry not. I have got some ideas for this as well. You can follow the following four most straightforward steps for this:

  • Tell your best customers or clients that you enjoy doing business with them.
  • Tell them that they already know the exact people you prefer to work with.
  • Help the customer or client see a clear picture of who in their lives could benefit most effectively.
  • Then extend a completely risk-free, totally obligation-free sales offer. Willingly offer to confer with, review, advise, or at least talk with anyone important to that customer as a service to that customer.

 

3 Ways To Incentivise The Referral Generation

 

generate referrals from customers

Providing rewards in exchange for referrals is the most effective technique to motivate clients to refer your business to more and more people. This will lead them to bring more clients to you. And as you know, when potential clients come through referrals, the chance of conversion is extremely high.

But many people wonder how they should incentivize their existing customers. Many people believe that giving bad rewards is ineffective. 

This isn’t a major concern because there are a variety of ways to reward customers. You can use traditional ways as well as you can craft your own unique ideas. Every method works well. Here we’re providing some of the easiest and most effective ways that you can follow and implement in your business. 

  • Service: You can offer a free service or merchandise incentive to the customer.
  • Discount: You can promise a major discount on the customer’s next order if the customer refers a friend or relative.
  • Contest: You might even consider holding a referral-generating contest in which a substantial prize is awarded to the customer or client.

 

Step-By-Step Strategy To Ask For Referrals

 

generate referrals from customers

If you feel nervous about asking for referrals, worry not. Here’s a step-by-step guide for you: 

 

Strategy 1: Don’t Use The Word “Referral”

 

The word “referral” is a cliched word. It’s the same as saying “sales.” When communicating particular concepts, it is usually best to utilize complex terminology. For example, the terms “business” and “business growth” are held in higher regard than “sales.”

Instead of “refer” or “referral”, you can use the word “introduced”. 

An example of a word-by-word field-tested script:

“Do you know anyone that you can introduce to me who might need my help?”

 

Strategy 2: Put Referral As A Condition To Do Business

 

If your client wants to trade with you, you can make a referral condition. This is an example of a script that has been field-tested.

Example:

“Mr. Client, before we start working together, I would like to share that 80% of our business comes through referrals, and it is because I delight my clients to such an extent that they gladly introduce me to at least 2 people. In your case too, I want to help you and delight you with my service, and only when you are happy with my work, I will expect you to introduce me to at least 2 people. Is that okay with you?”

Therefore, thus, you can set a condition for your client and inform them ahead of time that you’ll be asking for referrals.

 

Strategy 3: Respond To “No” To Improvements

 

You can handle the problem if your client says they don’t recall anyone, can’t really think of anyone, or declines your offer by stating something like this:

An example of a word-by-word field-tested script:

“Mr. Client, we only introduce people with whom we are comfortable and confident that they will do a great job. I want to be the person to whom you are absolutely confident and comfortable introducing your friends. Can I ask you a question? 

What do you recommend we do that will make you feel comfortable introducing us to your network?”

 

One Template Letter To Ask For Referrals

 

By now, you must have been thinking that it would have been wonderful if someone came to you and said, “Hey, you can use this template as your request for referrals to your client.” Well, I’ve got you. Hence, here’s a template for you:

Dear Mr. Business Owner,

I’m writing as a courtesy to inform you that my consulting practice is approaching capacity, and I’ll only be able to take on a dozen or so more clients.

But before I accept new people from the outside. I’m letting you know because if you suggest any of your colleagues or friends to me, I’ll give you first priority.

Please call and register their names so that I can determine how many spaces I should set aside for you. I value your patronage.

 

Various Referral Systems To Implement

 

generate referrals from customers

Referral System 1: Offering Two Prices

 

In this case, let’s say you have a product of 5000 Rs.

You offer your customers two prices, for example, you say that your service/product can be availed at two prices one is 3500 Rs. and another is 5000 Rs.

In both cases, the customer will receive the same level of service regardless of the price. But if he chooses to pay 3500/- then he/she has to enrol one more customer.

 

Referral System 2: 100% Moneyback Guarantee

 

One of the amazing ways to get your customers to take action is to offer their full money back.

And this system lets say your customer bought your product or service for 30000 Rs. You offer them full money back if they bring 2 more customers with them.

You can be creative in respect of no. of customers they bring. It’s entirely your call and depends on your business nature.

 

Referral System 3: Retail Referral System

 

If you have retail products this is what you can do. When a customer enters your store and purchases the product and if the product is repeatable by nature your offer a major discount on your customer’s next order if the customer refers a friend or relative.

A major discount should be a good percentage which excites the customer to take action. For example, you may offer a 50% discount on groceries on customers’ next order so that they take action to refer you to new customers.

 

Conclusion

 

To conclude, it is beyond any doubt that referral marketing is one of the best strategies to attract new customers. New customers are the lifeline of any business. If you fail to bring in new customers, you will fail to make sales, thereby failing the whole business.

So, never underestimate the power of referral marketing to bring in sales. Sarthok’s strategies are all tried and tested. Hence, I can say with confidence that if you apply these tips and tricks, you will certainly succeed in attracting new customers.

Do let us know in the comments whether you have found this article helpful and informative or not. Meanwhile, you can also join our Internet Moguls Of The World School, where we help you to set yourself up for success, learn the key digital business concepts to thrive, and build an online business so that you can have more time for your family, more peace, and more financial freedom.

 

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