How Your Customers
Can Build Your Small Business


by Tom Egelhoff

Author Tom Egelhoff In past articles I've discussed how powerful word-of-mouth advertising can be. There's another powerful tool, widely used in the business world and that tool is the referral.


With word-of-mouth people mention or talk about your business but with the referral they actually recommend your business to their friends and neighbors.

And they usually do it with some enthusiasm. Also See: "How To Make Word-of-Mouth Advertising Work For You."

I'm sure this tool is no secret to you and you may have even tried to use it a time or two. But, unfortunately, many business owners find that asking customers for a referral is somehow rude or insensitive.

It often makes them feel uncomfortable. If this is true of you then the only thing I can say is that you are doing it wrong. Let's look at the right way to do it And how to build your business by doing it efficiently.


Where To Start

Have you ever recommended a book or movie to a friend? Most of us have. Why do we do that?

Simple. We feel comfortable with our friends or family and they are the most likely persons to receive our recommendations.

We know them and are familiar with what they like. If we think they will like a book or movie that we like we let them know about it.

What we don't do is run up to strangers on the street and try to tell them about this great movie we just saw.

The point here is that before we can ask for a referral from anyone there must be a comfort zone established between us and this hypothetical customer.

Over time you'll establish a track record of performance that will make your customer comfortable enough with your product or service that they can recommend it enthusiastically to their friend and family.

Let new customers know that you hope they will become loyal customers who return again and again.

Usually this will not happen overnight. Some exceptions might be one time sales or sales that are few and far between.

You might recommend a house painter, for example, who only painted your house once but did a good enough job that you would feel comfortable giving them a good recommendation.

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How Powerful Is The Referral?

How powerful? Consider this. Studies show that the average number of people who attend a wedding or a funeral is approximately 250.

Each one of us knows or comes in contact with 250 people who would feel comfortable enough with us to attend our wedding or funeral.

Two hundred fifty people who are more than just casual acquaintances. Each person has that power. How many customers do you have? Multiplied by 250.

The other powerful part of this scenario is that we tend to make friends with people like ourselves.

People who make $100,000 per year rarely pal around with those making $20,000 per year.

Customers who can afford your product or service are usually friends with others who can afford your product or service. They will rarely send you unqualified prospects.

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Tell It Like It Is

I'm sure that during the course of your life you've had a business or service that you really liked go out of business.

They were so good how could they possibly not survive? If you're providing a worthwhile product or service your customers want you to stick around for a long time.

Many will probably ask you what they can do to help your business.

Let them know that word-of-mouth is the best way to grow your business.

"Come back and bring your friends." Reward those who bring in new blood.

Don't forget your employees. They want to continue working ask them to bring in their friends and family if possible.

Reward them for the new customers they bring in. This doesn't have to be expensive. Recognition with an award at a company meeting is often enough.

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How And When To Ask For Referrals

The biggest mistake most people make in asking for referrals is that they treat is like a favor. "Could I ask a favor of you?" "Would you be willing to give me the names of people you know who might need my services?"

This is the wrong way to ask for referrals.

Look at it this way instead. Think of the referral as just another product in your line. What do all products have?

Right....features and benefits.

So what is the benefit to the customer to give you a referral? The customer has a natural fear of loss in giving a referral.

A friend may ask, "Hey, why did you have this salesman call me?"

Let your customer know that you want to build your business by referrals. The best way to do that is to provide a consistent level of service that the customer will feel comfortable giving you those referrals.

If you're unable to get a referral ask for a testimonial letter instead that you can show to other prospects.

In a small town this is almost as good as a referral because so many people know each other. Sooner or later they're going to know one of your testimonials.

The best time to ask for referrals is when the customer has been satisfied. If they are complimenting you on your work they are a fan of yours and will want to share their happiness with others.

Tell them that you will not let them down if they refer you to others.

Rather than just asking them for names it's better to ask them if you can do a little brainstorming together.

They probably aren't going to be able to think of anyone off the top of their heads but you can help them focus.

For example: You might know that they are a member of Kiwanis or Rotary or some other service club. You might ask, "Who in your Kiwanis club do you think I should talk to?"

Always collect as many names as possible first and then go back over the names for more details that will help you with that first meeting with them.

Such as how does the customer know the prospect? How long?

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Don't Forget Your Printed Materials

Make sure to add something in your brochures and business cards about referrals. "94% of XYZ's business comes from referrals from our satisfied customers."

If you're a new business that's about the right percentage. Probably all of your early business will come from referrals.

Don't forget the answering machine. "Thanks for calling XYZ Company. Please leave your name, number and the person who referred you."

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Don't Forget People Who Are Not Your Customers

Here in Bozeman, Montana, my current home town, there are many companies that never do a dimes worth of business inside Montana.

But that doesn't mean there are no business building contacts here.

Finding business is nothing more than effective networking with others. Many of us have friends or relatives in other states or countries.

Let them know what you are doing and who do they know that might need your products or services.

Also See: "How To Build Your Business By Networking" and "How To Make Friends And Turn Them Into Customers."

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The Last Word On How Customers Can Build Your Business

Building a loyal customer base is no different than building a strong loyal group of friends.

You provide a consistent level of quality and service and treat customers, not as numbers, but as true associates that will champion your cause to others as they go about their daily lives.
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