Generate more referrals: to cultivate new business at little cost, try these top 10 techniques - Sales & Marketing - Industry Trend or Event

Home Office Computing, Sept, 1997 by Francy Blackwood

Melanie Deardorff was a natural networker who'd successfully built her desktop publishing business on referrals. But five months ago, the owner of Birchwood Marketing Communications realized her process of developing sales leads was a somewhat hit-or-miss approach. That's when the Kansas City, Missouri, businesswoman created a referral reward system: Each existing client who delivers a prospect to her door earns a 20 percent discount on his or her next job. So far, Deardorff has garnered four new clients. "This is a much more proactive way to ask for referrals," she says.

Sure, you may already solicit your clients for leads. But that's just die beginning. Have you created a marketing system that constantly reminds customers of your need for new business? Do you encourage leads from clients with rewards? Do you tap every potential source you encounter? Bob Burg, author of Endless Referrals (McGraw-Hill), suggests that the average person knows 250 people. Just imagine the number of new clients you'd have in a year if you added just one new person to your network a day. What's best about word-of-mouth marketing is you don't have to shell out a lot of money to get started. To help you set up an ongoing system, here are the top 10 referral techniques.

1. Create a referral form. Whether you choose to send it by post, include it in your newsletter, or post it online, a simple fill-in-the-blank referral form that's distributed quarterly to the names in your database is guaranteed to land leads. To help customers zero in on appropriate prospects, ask questions that relate to your niche: "Whom do you know who's retiring in five years? Who just bought a new home? Who's launched a business?"

And show your appreciation to those who return your form. "A referral is a powerful vote of confidence," writes C. Richard Weylman in Opening Closed Doors (Irwin Professional Publishing), "so be sure you send a thank-you note each time you receive one." If you win a large account, a basket of flowers, bottle of wine, or magazine subscription may be in order.

2. Host a salon. If you have a large office or can lock in a room at the local library, hold a bimonthly business mixer for the sole purpose of garnering new business. Invite your best clients, and ask each of them to bring a friend along. But remember, it's not easy for customers to think up prospect names when they don't know your market. So along with each invitation, include a list of the type of client you're trying to target.

3. Ask during delivery. Whether you sell lawn care or legal services, "clients are usually euphoric at the time of delivery," says Weylman. "This is an excellent time to leverage yourself." Still, you can ask for names at any point during the sale, from the first appointment to your follow-up call. In fact, Rick Holewinski, an independent financial adviser in Green Bay, Wisconsin, includes a sticker on his business cards that reads, "By referral only." It constantly broadcasts that Holewinski lives by recommendations.

4. Offer incentives for referrals that turn into business. Rewards can range from a free estimate, sample, or consultation to a discount on future purchases to extra goods or services at no additional cost. And if your marketing budget is big enough, consider cash incentives. Just beware of paying more than the referral is worth. Experts suggest that you give between 5 to 15 percent of a project's revenues to your referral.

5. Sponsor a contest. Here's an alternative to handing out token rewards to each person who coughs up a lead: Enter everyone who refers you to someone in a drawing for a substantial prize. "Make giving referrals fun," says Robert Middleton, a marketing consultant in Palo Alto, California. For example, one of Middleton's clients, a tax preparer, sponsored a referral contest earlier this year, with a drawing for dinner for two at an elegant inn. Turns out, Middleton's client had his best tax season ever -- landing 27 new accounts.

6. Give leads in return. It's one of the best ways to get referrals. Financial adviser Holewinski regularly puts together a client directory that he e-mails to all his clients. "It's a give-and-take thing," he says.

There's one caveat to recommending anyone: Make sure the person is competent and reliable. Remember, your reputation is on the line. And even though your intentions may be good, you don't want to jeopardize your relationship with existing clients by giving a referral for someone you wouldn't work with again.

7. Pump prospects who've passed up your services. Most potential customers feel bad when they have to turn your business down, so why not make them feel better by asking for leads? "People like to give referrals," says Middleton, owner of Action Plan Marketing. "They don't see it as a burden." Just make sure you call within five working days, notes Weylman, when the referral fresh and the relationship with the person who gave you the lead is still clear in your mind.

8. Swap leads with rivals. If your business is circumscribed by geography or time constraints, pass along jobs you can't handle to other businesses and ask them to do the same. "I get significant referrals from my competitors," says Jimmy Craven, a Mashpee, Massachusetts, musician. In turn, Craven will sing the praises of competitors when he's booked on a certain date. "You can only be in one place at a time," he reasons. And by giving referrals, you actually score points with potential clients who may come back to you someday. "It ingratiates you with clients, because their calls to you aren't a dead end."