How to Boost Your Customer Referrals in 7 Simple Steps

This post is a special Make a Referral Week guest post featuring education on the subject of referrals and word of mouth marketing and making 1000 referrals to 1000 small businesses – check it out at Make a Referral Week 2010

Customer referrals really rock as a cost-effective way to gain new business and regain old customers. But how do you generate more referrals…higher quality referrals? And how can you squeeze more mileage out of the referrals that you’ve got?

The folks who run my fitness club are masters at referral marketing. They’re constantly running a promotion for referring new members with discounts, free training or free stuff. Whether I’m walking in the door, opening my mail or looking online, I’m barraged with signs, banners, stickers and mailers encouraging referrals with free passes, discounts, goodies and even cash.

We all know the magic of referrals, which offer instant credibility. So why don’t more small business owners use referrals effectively? Mainly because it’s harder than it looks. For one thing, referrals come in different forms and flavors. If someone merely provides you a name and email address, that’s low-grade referral. But if a customer actively talks up your product or service, sets up a meeting or brings the prospect in the door, that’s a Grade A referral.

At we see big companies taking customer referrals very seriously. Many have turned it into a science of modeling, calculating and tracking a Net Promoter Score (NPS). At its most basic, the NPS attempts to measure how likely it is that a customer would recommend a business, product or service to a friend or colleague.

“Promoters” are your most loyally enthusiastic customers – the regulars who also refer others to help fuel your business growth. “Passives” are happy, but not enthusiastic and are easily attracted to a better deal elsewhere. “Detractors” are unhappy customers who can hurt your sales with negative word-of-mouth. The NPS is determined by taking the percentage of customers who are promoters and subtracting the percentage who are detractors. An equal amount of each gets you an NPS of zero.

Here are seven steps to getting more and better referrals, and raising your net promoter score:

Step 1 – Create a referral-generation plan: Referrals are not automatic. Some “just happen,” but most occur because you do something to trigger it. Some business owners assume that a great product or terrific customer service will generate referrals by default. Not so. You have to learn to ask, and make sure employees are on board as well. Most customers are open to being asked for referrals. Some even appreciate the opportunity to tell friends, family and associates about something good they’ve discovered.

Referral tip: The worst time to ask for a referral is at the cash register or when you present a bill. Look for opportunities earlier or later in the process when customers are more receptive.

Step 2 – Provide support: Don’t ask customers to recommend you to others without offering them some backup. It can be as simple as a supply of your business cards, or a link to a special page on your website. Or it could be a brochure, your latest newsletter or some other type of printed material that describes what you do and can reinforce the referral.

Step 3 – Offer incentives: But incentives can be tricky. The type of incentive you offer must fit with the kind of business you run. It could be a discount, service credits, an upgrade, a free item or some other trigger that will entice clients to provide referrals. Don’t be afraid to test offers to find out what works best. Communicate details of your referral program to your best customers through whatever means you have available, including a blog, newsletter, email or customer mailings. And be sure to thank customers when they make referrals.

Step 4 – Ask for the right information: Getting a name and number isn’t really a referral at all. It’s just a lead. Use a referral form, checklist or web-based system to capture details that will make the referral more valuable. The best referrals are where a customer actually facilitates a meeting, visit or purchase by the referred person, in person, by email or otherwise. This makes the customer an active agent on your behalf.

Step 5 – Target your most influential customers: Seek referrals first from your most influential customers, especially if your resources are limited. These might not actually be your best customers, but they are the people whose opinions would carry the most weight with others in your industry, community or customer base. By targeting these customers, you have a highly focused effort with a good chance to generate the highest quality referrals.

Step 6 – Target related businesses: The health care profession is one of the most adept at fostering referrals between complementary disciplines – specialists, imaging services, physical therapists, medical equipment suppliers and others. Consider the same strategy yourself. Contact businesses that provide complementary services to your own and ask for referrals.

Step 7 – Build your relationships: This takes time, but it’s critical because many of your most influential customers won’t provide referrals until you gain their complete trust. You’ll want to treat each customer contact as if it’s critical to your next referral. Through each sales, marketing or customer service “touch” you are building a foundation of trust that that will one day lead to a valuable referral.

Daniel Kehrer is Editor and Director of Content Development for, the world’s leading B2B search engine and knowledge site, and writes the What Works for Business blog on

Is It Time To Practice a Little Selfish Networking

This post is a special Make a Referral Week guest post featuring education on the subject of referrals and word of mouth marketing and making 1000 referrals to 1000 small businesses – check it out at Make a Referral Week 2010

You know him. He’s the perfect networker. He’s at every event. He’s a brilliant conversationalist. He’d give you the shirt off his back. He follows up. He keeps his commitments. He’s always happy to make an introduction.

And yet he’s always broke. He drinks water at every event. He skips the meal if that’s an option. He’ll spend hours on Twitter doing essentially nothing, but won’t spend $50 for a tool that will actually help his business. There’s always a hint of desperation hidden in his voice (or his blog posts) because his business really isn’t doing that well.

He’s drunk the networking & social media Kool-Aid. It’s a poison, and if you’re not careful, you might easily fall victim to it too.

Networking is fun. Furthermore, there’s generally no rejection in networking. People can succeed at networking even if they’re not succeeding in their business. And if you’re any good at it at all, occasionally it will work and actually generate you some business. “See? Networking works!” That becomes a validation of whatever you’ve been doing. It doesn’t matter that if you did things a little differently, you could have had ten times the results with the same amount of effort – what you’re doing “works”.

It’s an addiction. And it’s an insidious one at that. Why? Because…

More networking is not necessarily a good thing.

First off, it can pull your attention and financial resources away from other, more important things. Secondly, more networking means more exposure of anything in your business or relationship management practices that’s not absolutely rock solid.

Now I know you’ve all heard that “givers gain” – that you should give first in a networking context, without thinking about what’s in it for you.

I’m not going to disagree with that…I’m going to qualify that, and I’m going to tell you that…

It’s OK to be selfish sometimes when it comes to networking, or at least to appear that way.

Let’s look at a few facts:

· In order to take care of others, you must take care of yourself. On a plane, they tell you to put your mask on first – you can’t help your child if you’re unconscious. The more resources you have at your disposal – money, time, connections, etc. – the better you can be of service to the people you know. “Love your neighbor as yourself” requires you to first love yourself. Perhaps spend less time networking and more time becoming someone that people would want to network with.

· Time is a zero-sum game. 24 hours, 7 days…that’s it…same as everybody else. An hour you’re spending networking is an hour you’re not spending with your current clients, your employees, your close friends, your family, or personal development. Sure, networking is rewarding, but really think about this when you consider attending a particular event or whether to spend an hour on Facebook – is it more rewarding in the long run than all of the other things you could be doing with your time? You can’t help everybody.

· Your networking contacts are not the most important people in your life or your business, even for referrals. Who really gives you the most referrals (or at least the best ones)? New networking contacts? Or your current happy customers? If it’s not your current customers, “you’re doing it wrong.” The single most important thing you can do to drive referrals is to make sure your current customers are not just satisfied, but RAVING FANS. And your employees are what make your business possible. In most cases, clients are more easily replaced than good employees. And your family and close friends? They’re what make it all worthwhile. Don’t ever sacrifice those relationships on the altar of networking.

· If your business isn’t solid, your network is a house of cards. More exposure means exposing the weaknesses as well as the strengths. If you’re stretched so thin that you can’t even begin to keep up with all the little commitments you make — “Sure , I’ll get that over to you” or that stack of “let’s talk next month” people – then why are you spending your time meeting a lot of new people? Do you really think all those new people will create more value for you (or that you’ll be able to create value for them) greater than those opportunities that are already in front of you? I’ll be the first to admit – I’m terrible about this. I get massively over-extended, because I have a really hard time saying “no” to people. That’s why I frequently disappear from social media for days or even weeks at a time – I’m taking care of business that’s more important.

· People who don’t understand the items above are not your friends. If a networking contact can’t understand that in the event of a commitment conflict, you’re going to take care of your customer over them, do really even want them as a customer?

Now I’m not suggesting that people start thinking “what’s in it for me” about every interaction. What I am saying is that you need to be selective with your time. You are going to have to make some choices. And sometimes the choices suck.

Once I was scheduled to do a teleclass and cancelled the day of the event. There were a couple of hundred people registered and a very good networking contact of mine had arranged for the event. I knew it would damage my reputation to cancel and put a dent in my relationship with the friend who set it up.

Why did I cancel? Because a client of mine had a meeting for a $2 million funding deal the next day, and we weren’t done with the presentation and prospectus. Taking even a couple of hours out for the teleclass could have meant a botched meeting for him. Maybe not, but I also had to be able to give reasonable notice to the teleclass organizer and attendees, so I made the call.

Sure…in hindsight, I didn’t plan it all well. But as of the morning of the event, I had to make a very difficult decision. If I had it to do over again, I’d make the same decision. I’d risk my reputation with a couple of hundred people I don’t know and have never worked with to make sure that my current client knew I would do whatever it takes to keep the commitment I made to them.

So go ahead…put yourself first. Take care of your business. Develop yourself. Stay healthy. Spend time with your friends and family. Put your customers ahead of your networking contacts.

Don’t be afraid to ask yourself “What’s in it for me?” about your overall networking activities. If you’re not getting the returns you want, maybe it’s time to push away from the networking buffet table, go on a networking diet, and spend more time getting your business into shape.

A 20-year veteran technology entrepreneur, executive and consultant, Scott Allen is the Entrepreneurs Guide for, one of the top ten websites in the world with over 37 million readers, and a subsidiary of the New York Times. He is also the coauthor of The Virtual Handshake: Opening Doors and Closing Deals Online, published by the American Management Association.