It is getting ever harder to market your business nowadays, what with legal restrictions on direct and fax mail, telesales and email SPAM, increased costs and poorer responses. Business owners are also getting much more wiser and very wary now of excepting a "cold contact" made through mail or phone, plus it is so much harder to close sales at the best price and profit margin.

The only marketing concept that does not fall under this challenge is the old word of mouth leads that are generated from satisfied customers and known contacts. If you get a warm endorsement or lead from a third party, then you get greater credibility, the prospect is more receptive, price is less of an issue and the prospect is quicker and easier to close. There are no challenges with word of mouth like you have with normal "conventional" marketing, so why do most businesses throw a great of money and poor results at the former and totally ignore the later?

The answer is simply Lack of Knowledge and experience.

As business owners you know how important word of mouth referrals are for most businesses, in a lot of cases, companies get up to 75% of their businesses through the referral process. Most companies try and provide the best customer service they can, some will discount their prices like mad to be "competitive" and then sit back passively and wait for the referrals to come in.

The problem with the normal word of mouth strategy of most businesses is that they don't have one!!!. There is no plan in place to maximise referrals, so they are very spontaneous and unpredictable and there is no control over how often your customers talk about you and your company, products and services.

It is a well known fact that most businesses only receive approx. 20% of the referrals they should be getting, no matter how good they are.

But why is that? Why aren't your favourite customers giving you referrals?

This is normally down to your customer's own circumstances, like you they are all very busy people, their thoughts about you and the benefits you provide them are clouded by their own challenges, distractions and lifestyle. So it is up to you to remind them of the value you give them and what you could give to the network of people they know.

If companies start using a proactive professional referral marketing system, this should easily increase their referral leads by at least 300%.

There is a new innovative approach now towards word of mouth or referral marketing. In brief referral marketing is a very proactive, structured and systematic way to greatly encourage your customers to talk more about you and your company (it is not all just word of mouth). There are other associated benefits with referral marketing such as customer and staff satisfaction, loyalty, savings on marketing costs, greater credibility and profit margin, constant business growth etc……….

I would like to share a few ideas with you on how you can get a constant flood of additional referrals for your business. I cannot go into great detail on each idea, but hopefully you will see the general concept of how referral techniques can help you and your business.

Obtaining the maximum referrals for your business is based on the combination of four main elements i.e.

1. A strategic customer care programme
2. A customer database management system
3. A very proactive referral strategy
4. A customer Award Programme

1. A strategic customer care programme is a structured plan where you and your staff (if any) develop and operate a simple set system and policy to maximise the service, care and relationship with your customers. Customer care programmes are easy to set-up, are much cheaper than continuously having to promote your business for new customers and sales and will reap you and your company a constant flow of predictable referrals automatically, whilst you get on with your business.

A well developed strategic customer care programme will greatly increase your referrals, customer satisfaction, loyalty, up-sales, profit margin and greatly reduce your marketing costs and long-term commitment.

Any customer care programme must also include an official customer charter, a referral policy, a customer award and loyalty programme, an official complaints procedure, customer satisfaction programme, a guarantee etc……….. You will never lose a customer to competitors if you ran such a programme. Do not be daunted by this, customer care programmes are fairly straightforward to set-up for any size or type of business, as always you just need to know what to do.

2. You MUST keep a good data management system for all your prospects and customers to manage all your sales, follow-ups, customer details, customer relationship management etc. It need not be expensive and you can use anything from a manual book system, or a spreadsheet to a professional customer care programme such as ACT or Gold Mine. There are also many good low cost CRM systems available on the Internet.

A CRM system is a "must have" application to record, analysis and inform you about your customers and an essential marketing tool, which will help you sell more to your current customer base. A marketing survey a couple of years ago showed that on average businesses only obtain 40% of their potential sales with existing customers. If you could increase your sales by another 40%, what would that do for your business.

3. A proactive referral strategy - If you want even more referrals on top of the ones you'll get from a strategic customer care programme, there are at least 105 very innovative, proven and successful referral systems, which will gain you the most incredible results in lead generation and most importantly for little or no cost.

Most of these systems involve a "conventional marketing" tactic, but always with a "third party" endorsement. An example very powerful referral marketing system is what is called testimonial or endorsement mailing, where you ask your best clients to send testimonial letters to their own contact network, praising you and your company and encouraging their contacts to contact you (you can offer your endorsers a results related commission for doing this - if you wanted to!!).

If done properly an "Endorsement mailing" should result in a 20% to 50% response from warm prospects, with at least a 75% closure rate (you have to do all the work in preparing the letters, cover postage costs etc.). Compare that with a typical "cold" direct mail shot resulting in a 1% - 2% response, a very high cost and a much lower closure rate. Other referral marketing systems can include; PR, advertising, joint venture, telesales, Internet, hospitality, competitions, surveys and many more, but all include some form of third party involvement or endorsement.

4. A Referral Award or Customer Appreciation Programme where you award any person (including your staff) who brings you referrals, this is an essential policy to win maximum number of referred customers. The awards must be according to the policy of the referrer, if they cannot receive any cash or gifts in any form, then offer to take something off their next invoice or donate it to a charity of their choice.

Awards can be from simple "Thank You Letter" (sometimes that is all that is needed) to cash commissions, gifts, vouchers, loyalty schemes (look what Tesco's loyalty card did for them), hospitality, goodwill etc……..You will at least double your referrals if you openly promote you operate a referral award programme as part of your Referral Policy.

We hope this information has been of some help in describing referral marketing and some of the many benefits it can bring for your business.

For more free reports, ideas or details on how referral marketing can increase your referrals and business, contact myself on the links below

Remember "Let Your Customers Do The talking" not your competitors.

To your future success and may your referrals be many.