7 Steps to Growing a Referral Based Business

— May 24, 2017

All businesses know that one of the best ways to get new customers is by word of mouth. You need satisfied customers to recommend your name to other people looking for your service or product. That’s common knowledge. It is how you can take your business to the next level. But the question is, how can a business get more customer referrals? How can you become “referable”?


Referrals and word of mouth are at the core of successful businesses. Successful businesses have sustainable growth because their customers have an amazing experience and recommend you to their friends. Word of mouth creates more purchases. In fact, it is the primary factor behind 20 to 50 percent of purchasing decisions.


Sounds good, right? So how can your business get more referrals? We’ve broken down the key steps that you can apply today to start to have a successful business based on referrals.


Establish a strong foundation for referrals


First, you need to get into the right mindset. Establishing a referable business is not a overnight quick fix, it is a long term game. Here are some tips on how you can grow your business by harnessing the power of referrals.


1. Customer Service is Key


I’m sure you know customer service is a key element of your success, but it is the baseline foundation for referrals. Yes, you know your market inside and out and no one can match your expertise. But at the end of the day, your customers are coming to you for a service. Make sure you are giving them the best customer service out there.



  • Be responsive. Make sure you respond to your customer’s emails, calls, and messaging in a timely fashion. Or at least provide them with a means of finding the answer themselves. No one likes waiting hours for an answer to question.
  • Be on-time. This is especially important if your business relies on meeting in person or via a web-based meeting. Being there when you said you would is important in building a good relationship with your customer.
  • Be professional. Be courtesy and sincere in your transactions. A little professionalism goes along way.
  • Be respectful. Some customers are tough personalities and can be frustrating. Always remember to show them respect. It can make or break your next referral.

Be consistent – Make your customer’s experience repeatable through your own systems and processes


Here’s an example. Let’s say you’re a realtor: a potential buyer calls you and leaves a message asking if a property they saw online is available to see within the hour. As a seasoned agent, you know that getting into see a place that quickly is a long shot. However, make sure you respond to their message promptly and respectfully to let them know their request is not going to work. Perhaps follow up with some ideas on when you can see the place or others like that in the area. Being available and giving them options can be a great way to put the ball back in their court.


The bottom line is, exceptional customer service sets the base foundation for a referable business.


2. Let them get to know you


Be personable. Customers refer people not businesses. Become someone your customers want to be around and trust. Let them get to know a little about you, make yourself interesting. What’s the best way to be interesting? Be interested in your customers and get to know them. Ask them about themselves, while letting them to get to know you. It’s a two way street, it’s all about building the relationship.


A word of caution, be careful to not to overshare. Don’t make your story into a sob story. We want them to root for you, not feel uncomfortable. TMI can be very off putting.


When meeting a new customer there might be some awkward silences upon initially meeting, particularly if your business requires one on one meetings. Take this opportunity to spark conversation and asking them about themselves before diving into the meat of the meeting. Use that as an opening to find some common ground and share your own experiences. Becoming friendly with a customer will make you easier to rely on and trust.


3. Go the Extra Mile


Fulfilling clients and making good on your promise is what you pride yourself on doing, but sometimes that’s not enough. The truth is, the market can be saturated with businesses just like yours or similar to yours.


Look for opportunities to go the extra mile. Remember, your customers are spending their money on you. Whenever you have the option to go above and beyond the call of duty, take it. That gets people talking.


The more help you can provide your customer the better. Offer them some extras or remind them of what your next steps will be. If your business has multiple steps in the sales process, let them know you will get everything in gear and email them along the way.


4. Closing the Loop


Ask new prospects and customers how they found you. Were they referred by friend? If so, drop some references to show that you know and remember their friend. It allows you to become more personable and further nails down your story. A friend of theirs is a friend of yours.


Manufacturing more referrals


Now that you have established a strong base, how do you get more referrals?



  1. Know your top Referrers

Try tracking your prospects and referrals in a spreadsheet or use referral software. Start to look for any patterns or trends in your demographic.


If you’re a B2C business maybe you’ll find that middle aged, single women respond to you better, or young professionals. If you’re B2B perhaps you see that startups or small businesses seem to refer you the most. There is always room to dig a little deeper to understand what type of person refers you.


We know you don’t have superpowers, but you can go the “extra mile” for every single customer. Tracking patterns will help narrow down who you should really be pulling out all the stops for.



  1. Show appreciation

This seems simple, but showing appreciation sets you apart. When you find out who referred you, send them a shout out. Thank them for thinking of you. Keep fostering that relationship and keep connected to your target market. If someone referred you once, they are likely to do it again.
A thank you accomplishes many things, most importantly it conveys your appreciation. Even if a referral doesn’t quite work out, tell the customers you appreciate it – this could reinforce the behavior of referring again.


Here are a few examples of how to show your appreciation to your top referrers.


Real estate: drop off a bottle of wine or some local goodies the next time you are in the neighborhood. A simple gesture to let them know that their referral and kindness did not go unnoticed.


eCommerce: send a thank you email and include a store discount or free shipping as your way of saying thanks.


Service type business: give them a freebie or discount off their next bill. If you’re a software company maybe let them use an upgraded feature. If you’re a bug and pest control provide them with a free add on service during their next appointment.


Additionally, you could always give shout outs on your social sites or drop a thank you in your emails and newsletters. A little public recognition can fuel and generate more referrals.



  1. Run a referral program

You can design a referral program to be incentive or non-incentive based. What is important is transparency and setting up a clear and understandable system. Referral programs aren’t just for customers either, they can also be used for referral partners who are willing to send you business.


There are many solutions out there that can help you track and manage your referrals in addition to distributing rewards. Using a referral software helps make it easy for people to refer you as well a way for them to track their own results. If your business is regulated, be to double check what you are and are not allowed to do with incentive based referral programs.


Don’t forget, you’re creating a story for them to tell


Everyone has their own version of the story they want to share with family and friends. The best way to become referable is make yourself a key character in their story. That way their friends will ask for your name.


What better way to find new customers than to have someone recommended you over drinks with friends. If you took the time to get to know your customers and gave them the best service you have to offer, there is no doubt that they will pass your name on. It’s all about working smarter, not harder.

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