Growing your referral business isn’t a comfortable process. While you can play the build-it-and-they-will-come game, we all know that getting referral business requires active planning and execution.
85 percent of small businesses say word-of-mouth referrals are the number one way that new prospects find out about their businesses. A 2014 eMarketer report found that the most successful marketing tool for small businesses (by far) was friend referrals (52.2 percent). It’s clear that you have to have a referral process in place to keep your business growing.
Building a referral process sounds simple in theory, but there are three things standing in the way for most businesses.
The first issue is personality. It takes a lot of self-motivation and confidence to ask someone who just did business with you to fork over the information of their friends and family.
The second issue is a tactical one, dealing with your approach and process. This is more of an active/trial-and-error hurdle to overcome, but a hurdle nonetheless.
The third issue comes into play when you’ve got someone ready and willing to help, but they lack direction in what is expected of them.
These three issues, when properly addressed, are the three best-kept secrets to help you launch your referral business. Let me show you how to get past them.
1) Overcome Your Fears and Get Started
Long before “the ask,” you need to do some introspection and overcome your fear of asking for referrals. Whether it’s difficulty in asking for referrals or stalling when trying to launch a formalized process, the longer you wait to get started, the more you’re missing out on referral business.
Hubspot put out a pretty awesome blog post a few years back on the best ways to ask for referrals. One of the guys writing it focused on helping small business owners get into the “referral mindset” to help them overcome their fears of asking for referral business.
To do this, he gave two role-playing examples. The first was an interaction between the client and the salesperson, prior to closing the deal. The second was the conversation you’d have after closing the deal with a prospect after a period of time following the transaction.
There are three takeaways from these examples:
- Introduce the idea of referrals to clients even before they become clients.
- Be active in asking for leads after they’ve become clients.
- Practice your approach with someone before going live.
Overcoming your fear of asking for referrals is the first step in building your referral process. Just remember that happy customers are happy to help you grow your business; don’t be afraid to ask for their help.
2) The Right Time (and Way) to Ask for Referrals
The best answer I found on this topic said the best time to ask for referral business “should be when the relationship you have established is a strong enough relationship to ensure their trust and belief in you.”
While a good answer, it’s dependent on how well you can assess the relationship you have with your client, making it tough to give a universal timeframe recommendation. That’s why the best answer is, “It depends.” Businesses need to find their own best time to make a referral ask.
LifeHealthPro tells businesses to consider two things to determine when to ask for referrals:
- Has value been provided to the client and been recognized by the client?
- What is the personality of the referral-giving client?
Obviously, if the client has yet to receive value from the service provided, the timing isn’t right. You don’t see real estate agents asking for referrals prior to closing on a new home — that’s something that can wait until after the papers have been signed.
On a similar note, you need to make sure the client is aware of the value, too. Asking for referrals immediately after papers have been signed still might not be the best time, as sticker shock and buyers remorse could easily overpower the client’s desire to help. That’s why this is such a case-by-case answer.
You also have to take into consideration the personality of the client. If the person you just did business with is really Type-A and assertive (LifeHealthPro calls these “open clients”), then a direct ask to them would be well received. These are the clients you can ask early on in your relationship with them.
However, if your client is passive and more introverted (a “guarded client”), a direct ask might turn them off. You need to approach that ask with more finesse since these personality types need more time to fully trust you and want to be in control of the process.
Regardless of your client’s personality, your best bet is to prep them throughout the sales process to be ready to be asked. And when you’ve assessed that your client has received value from your services, that’s when you ask. Just be conscious of your audience as you make your approach. Open clients will do fine with in-person and over the phone asks while guarded clients would do better via email or in an informal setting.
3) Teach Them How to Refer
You’ve summoned the courage to ask for a referral and found the optimal time to ask for it. You’re now faced with the third challenge: teaching them what to do and making sure they do it.
You might not realize it, but there are three types of referrals you can ask for from your clients, and you’ve got to decide which type you want from them.
1) Traditional Referrals
These are pretty straightforward. This is when you thank your clients for their continued support of you and ask if they have any friends that could benefit from your services. Depending on your industry, you might be able to incentivize these requests, too (we can help with that).
Even after being referred to you by a friend, people will still take the time to check you out online. 68 percent of consumers trust opinions posted online. That’s why testimonials on your site help convert referral leads even when you’re not part of the process.
3) Online Recommendations and Reviews
While this doesn’t directly put a new lead in your hands, reviews and recommendations on your site (and third party sites) are a huge boon for your business. 88 percent of consumers trust online reviews as much as personal recommendations.
So when you’re asking your clients for referral business, you need to ask them for a specific action (write a review on this site, let me interview you, etc.) and be specific about what you’re asking them for (contact information, review on Yelp, feedback about my service). This is the biggest improvement you can make in your referral process.
Referrals are the lifeblood of most small and medium sized businesses. Whether you’re a realtor, loan officer or salon owner, the three secrets to getting new referral business are the same:
- Happy customers are happy to help you (so get over your fear of asking).
- The best time to ask for referrals is after your client has received value from you (and let you know that they have).
- When someone is ready to help you out, you need to be ready to guide them.