What You Need to Know About Generating More Referrals

👤 by The Bootstrap Marketer // 📅 May 6, 2022

Are you relying on word of mouth and referral marketing for your business? Do you think your business could benefit from more referrals from existing customers?

In this article, you’ll learn how and when to ask for a referral, and how to create a dedicated approach to referral marketing.

When done right, referral marketing is the most powerful advertising machine in your business. Unfortunately, most businesses pray for referrals without an actual tactical approach. Instead, referrals should be thought of as replacing one customer with another. It’s not just an afterthought, it needs to be front of mind and considered the last step of your sales cycle.

Why Generating Referrals is Important

Lower Cost of Acquisition

Advertising is expensive these days, without any known cost and guarantees. Referral marketing can generate another client without any advertising. If I do give bonuses/discounts out on my products, I still know exactly what it is going to cost. And if there is no customer-generated, I’m left with very little outlay or expense.

The Referrer does Most of the Selling

Selling isn’t always easy; you need to convince the purchaser to know, like, and trust you. However, the customer who is doing the referring already has that (assuming you have a good product/service). The referrer generally already knows the person they are trying to convince us they are most often family or friends. This creates a softer, faster process often without any price objection.

The referrer also offers the unique position of knowing the buyer’s motivation. You don’t need to work out why they are interested in the product and sell to that – it’s already known.

Referral Marketing is Infinite

A good referral program will have one client generating two or more referrals. This creates an infinite number of referrals that can be generated, and if they are a lower CPA and the referral does the selling, your business will explode.

Asking for the Referral

The number one mistake made when trying to get more referrals is NOT ASKING FOR IT. If you don’t actively ask for a referral, you would want to hope your product is something so extraordinary that they tell their friends about it. And for a quick reality check, whilst your business hopefully does a great job and offers a quality product or service, you’re not exactly Tesla or the latest iPhone.

To overcome this, let’s actively ASK for the referral. But there is the typical approach and getting the referrer to actively think about who they are going to refer you to.

Now in the first traditional approach, they aren’t processing or actively thinking about referring your business. They are probably not caring about it at all and their brain has just filed it under “useless information” for the day.

In asking who they know could benefit from your product or service, you’re now forcing their brain to search for the referral for me. For example, if you selling air conditioning, you could ask a few different questions:

“Do you know anyone who has been struggling with the cold weather at home this winter?”

“Can you think of anyone who could use a new air conditioner?”

“Do you know anyone with one of the older style air conditioners?”

Hopefully, you get the point. Ask for the customer to actively point you in the direction of the next customer.

When to Ask for the Referral

Now that you are going to actively ask for the referral, the question becomes about when you should ask. This is where you need to think about, your customer’s journey and when they are the happiest with their decision, the peak of emotion.

The customer journey and peaks of emotion are different for every business, and you must map out your customer journey. It also needs to be when the customer knows, likes, and trusts you.

An example may be a local brick paving company doing a new backyard for a customer. They would typically have two peaks of emotion; the first being when they’ve gone through picking the pavers and the design process and have committed to purchasing from the brick paving company. They are excited that their backyard is finally getting done, and they have like and trust in the company as they’ve committed to buying. The second peak of emotion would be simple: when the job is done, and they get to enjoy it.

It’s not always as black and white as to when the best peak to ask is. Some products and services take a while to experience a peak in emotion.

For example, if you were selling supplements, you may see an initial peak when they decide to buy. Whilst they haven’t tried your product yet, often it can be an initial opportunity to ask for a referral, as they want to justify their decision to others. Now we expect the same sort of peak when the product arrives, however, there may be a third and more down the line. It could be that after 3 months of using the supplement, they are feeling great and have been trending upwards in their emotion.

Whether it’s one or ten peaks of emotion, you must identify when the best times are to ask for the referral based on your customer’s journey.

Make Referral Marketing Feel Like Giving

This is a tough one to explain, but it makes perfect sense when you think about it. It’s much better to have the satisfaction of giving something to someone, rather than receiving something.

I’ll let that sink in for a minute.

An example would be, I much prefer seeing the smile on my family’s face when I give presents at Christmas than when I receive presents.

Referral marketing can follow the same principle.

So many businesses offer “cash back” as part of their referral strategy. Now I’ve already paid for the item, so I’m not going to be highly motivated to get my money back. Cashback is never a great idea, and your offer should always be around the motivation to buy your product.

But instead, if you gave me 2x discount codes that I could give exclusively to my friends so they could purchase whatever I already have, it completely changes my mindset. I’m now allowing them to enjoy the same product/service. If it’s something good, you’ll find I’ll have no problem convincing them already and this is just the sweetener to help speed up the decision-making process.

It all boils down to the referrer giving something to the referred party makes them feel like they are doing good. Of course, you can reward the referrer if they get referrals, but the aim needs to be giving them something that they want to give!

Summary on Referral Marketing

Hopefully, you now understand the importance of referral marketing. When executed as a plan like other marketing efforts, it can be the most powerful marketing you’ll ever do. Like everything in your business, it takes a bit of effort and commitment. If you find that your referral offer isn’t good enough, switch it up for something else and keep trying.

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