Frequently overlooked, but often vital to the growth of every business - referrals can make a substantial difference to your reputation and customer base. Yet, so often we forget to ask other business owners or existing customers to refer others to us. Similarly we neglect to pass on the names and contact details of businesses we trust and are happy to endorse by recommending them to those we know.

Referred prospects are more profitable

Evidence suggests that new customers that come to you by way of referral are likely to be of greater value than those that respond to other forms of marketing. So why do so many miss the opportunity to gain new business by ignoring this powerful method of promotion?

The answer could lie in the fact that the British tend to be more reserved and are apt to shy away from asking for referrals on the assumption that we may appear 'pushy' or even rude. Yet, if you offer a superlative level of customer service, or the products you manufacture or sell are of good quality, wouldn't you want those that have bought from you to spread the word by telling others just how good you are?

Farming referrals is better than advertising

Referral marketing is a most powerful method of attracting new business and far more effective than advertising. Yet, in comparison to advertising, it can costs very little or often works for free. Above all, providing you have served a customer well and they are completely satisfied; asking them to refer your business to others should be a simple matter. In reverse, when you've had a great experience with a company, it costs nothing to refer your colleagues to a particular business providing it is relevant to their needs.

Networking can generate referrals

There are plenty of networking groups about these days, such as Business Networking International (BNI) that encourages members to exchange business referrals with other members. However, the key to any referral must be based upon trust. One of the downfalls of some networking organisations is when members are put under pressure to refer a fellow member's business that they may never have used or know nothing about. It cannot be judged as a worthy referral if you are unable to vouch for the integrity or track record of a business you are referring. There is no problem in passing business between group members when it is warranted, but you should resist the temptation to refer another company simply because you have met the owner at a networking event. Referrals given in this way often have a habit of backfiring and can lead to another's trust in you being quickly diminished should a referral go wrong.

Social media can generate referrals

Savvy business owners that realise the value of good quality referrals are quick to appreciate the benefits of using social networking platforms such as Facebook and Twitter as well as LinkedIn to encourage referrals. It can also make perfect sense to establish a rewards programme that encourages satisfied customers to tell others.  Although rewards should not be the reason for giving a referral; customers nevertheless like to feel appreciated. So, when someone has bothered to refer a new customer, being given something of value in recognition can be considered worthwhile. Even a simple letter or card to thank them will be appreciated as this will show that their referral has been acknowledged. But small, yet worthwhile gifts should not be ignored either. These need not be overly expensive; for example, a free bottle of wine or glass of Champagne offered to a diner on their next visit by a restaurateur; or a free night's accommodation by a hotel may be seen as worthy forms of encouragement in return for a customer's referral.

You earn the right on the extra mile

Finally, when you are prepared to go that extra mile when serving your customers, never be afraid to ask them to refer your business to others. Alternatively, enquire whether they mind using their name as a means of introduction enabling you to make direct contact with their colleagues who might benefit from using your business.   

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