Advertising your small business –whether in print or digital forms, all help drive awareness and visibility. These forms of promotion, as you know, can be expensive and time-consuming to produce but one easier way to promote your business is having a friend or client recommend your product or service to someone.
In fact, 20-50% of all purchasing decisions are made by word of mouth! Sure, it won’t reach the masses but it’s one of the reasons why customer referrals matter and should be a fundamental part of your sales and marketing plan.
Now, here are 10 reasons to consider referrals.
1. Close Bigger Accounts
Closing an account or making a sale of any kind is a win. That said, your sales team can spend their time working on larger accounts and make bigger sales. However, this happens only when the person has established some trust with your company. When you start a sales call with a customer referral from someone the prospective customer respects, they will start out with a higher level of trust. This encourages them to place a larger order, which equates to a larger sale for your company.
2. Creates an Expectation
When asking a client to refer you to a friend, it creates an expectation that your company and your customer are working together. This helps your customers get excited about your company and doing business with you. This creates a sense of excitement that transfers to the person they refer to. You want your prospective customers to come to you with a strong, positive impression from the start. This makes getting the sale much simpler and increases your chances of closing the sale.
3. Referrals Produce Referrals
In this scenario, customer referrals can become viral – in a good way! When someone buys goods or services from your company based on customer referral, they’re way more likely to tell others in the industry if they had a positive experience. You can even ask for a testimonial and circulate on social media but ask for their permission first! Doing this, turns each person providing you a referral, into an unofficial salesperson.
4. Demonstrate Why Customers Do Business with You
When a customer calls a friend or a counterpart at another company and refers them to you, it reminds them why they like to do business with you. The reason could be a customer service representative they love dealing with or simply the high caliber of product you sell. No matter what the reason, when they tell others, it reaffirms that your company offers them a valuable service or product.
5. Referrals Cost Practically Zero
The cost to your company when one of your customers refers to your goods or services is nothing. You haven’t mailed out a catalog or paid a sales team member to stop by the customer’s business. Word of mouth is a powerful driver of sales for any company that takes is smart enough to take advantage of it. Once you establish a way to harness the customer referral business, it will keep building without expense to you unless you choose to establish some sort of rewards program for customers referring to other clients.
6. Appeals to Your Client’s Image
When asking a client to refer your company to someone else, you are paying them a compliment simply by implying that their opinion counts in their social and business circle. On the flip side, when someone offers your company’s name as a referral, it displays that the person being referred values their opinion in your company.
7. Increase Closing Rate
How many leads and sales calls does it take your sales team to close a deal? According to the Huffington Post, companies see up to an 80 percent rate of closings when the sales call came from strong customer referrals and makes the company money. This is in sharp contrast to the 1% of cold calls that end with a sale. The percentage of sales calls ending in a sale when the client calls the company is only between 15 and 30%. As a business owner, you know how important it is to have a high closing rate on sales calls of any kind and your efforts should make the most of those opportunities.
8. Higher Rate of Overall Sales
When someone refers your company to someone that they know through business or social circles, they know that your company is a good fit for that person or business. This translates to higher overall sales for your company because the new customer is already looking to buy the products or services you’re selling. When they see your company’s product line, they immediately find the items or services that they wanted and purchase accordingly. However, this level of purchasing can decrease over an extended period.
9. Referred Customers Remain Loyal
Nielsen reports that a referral from a friend is the most trusted form of marketing. Not only is it trusted, but it also gets around all ad-blockers since it is not an “ad.” Instead, it is a recommendation from another person. It also creates a way for your existing community to continually build on itself. Customers who already have an account and have made a purchase will refer to high quality friends that make repeat purchases, and join your community and remain loyal.
10. Shows Your Company Is Doing It Right
If your company is offering a great product or service at a fair price point, then your customers will be more likely to send a referral business your way. It is shown that 83% of customers who had a positive experience with a company are willing to extend referrals. When your sales team asks a client for a referral and gets one, this is proof of the great work your company is providing for a client. Additionally, these types of customer referrals add greater trust in prospective clients.
Customer referrals are important to your company for many reasons and almost always have a positive effect. Urge your sales staff to seek out referrals – you can even incentivize them to do so. In some cases, you might consider creating a customer referral program to share in the benefits.
Are you a Fingercheck client? If so, click here to visit our “refer a friend” page and earn $50.