Pass it On: Utilize the Power of Referral Marketing

Let’s face it: as consumers, we put our money where our trust is. If you’ve been enjoying your morning coffee from the same corner café for years, there’s probably no advertisement effective enough to compel you to switch to a new locale. But if your co-worker continually raves about the delicious new bistro down the street, you might eventually decide to give it a try.

Word of mouth is the oldest, least expensive, and arguably most effective form of marketing there is. With today’s over-saturation of billboards, print ads, radio spots, and Internet pop-ups, we’re being bombarded with marketing messages from all directions, making it easier than ever to tune them out. The power of referrals lies in the credibility of their source—when a recommendation comes from someone we know well, we’re less inclined to view it with the skepticism that often comes along with direct selling.

Sure, it’s a great bonus when your customers spontaneously sing your praises, but you don’t have to wait for it to happen. Word of mouth can actually be a managed process, where you nudge satisfied customers to crow about your best assets. It’s called referral marketing, and we’ve compiled a quick list of some easy, cost-effective ways you can make it work for you:

  • Just ask.

    Don’t be afraid to contact your established clients directly. Let them know you’re looking to expand your business and are seeking more high-quality customers like them. You may be pleasantly surprised by the quick list of qualified leads and enthusiastic offers to spread the word—all at no cost to you.

  • Scratch each other’s backs. For B2B relationships, offer to engage in reciprocal marketing: if you agree to give your client some real-estate in your next email campaign, for instance, they may be willing to include a plug for your company in their next print ad.
  • Turn “No thanks” into “Maybe.”

    If a prospective customer isn’t in a position to take advantage of your services but still seems impressed by you, tactfully ask if they might know of anyone else who would benefit from your offerings.

  • Dangle a carrot.

    Incorporate referral marketing into your budget as a way of providing more enticing incentives for customers. For instance, you might offer a discount on future services for each referral sent your way. You can set the conditions for when the kick-back is awarded.

  • Make it easy. You don’t want your customers to have to dig for your contact information or listing of features and benefits to pass along to would-be referrals. Provide them with plenty of literature, business cards, and brochures to have on hand for easy distribution.

In today’s sluggish economy, traditional advertisements are not nearly as effective or impactful as they once were. Skeptical of commercials, print ads, and radio spots, consumers are much more likely to buy into tried-and-true personal referrals when making their purchasing decisions. For instance, you might automatically file a mailed marketing piece into the trash, but if a colleague raves about his top-notch experience with that same company, you may find yourself digging it back out. There’s no denying the power of a personal referral to boost your small business, whether it takes the form of a casual recommendation over lunch between colleagues or the more direct endorsement of an affiliate marketing banner. Put the power of the grapevine to work for you.

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