Developing a Strong Referral Network

Developing a strong referral network through positive word-of-mouth endorsements and testimonials can be an extremely effective means of growing your business. Word-of-mouth referrals have many benefits. For one, they’re cost efficient, as there’s really no charge related to spreading the word about a good product or service being offered. Plus, people are much more likely to trust a colleague, friend or relative over what a business has to say about their own products or services.

Business owners who provide a service, such as mechanics, contractors, masons, barbers and stylists, legal officers and accountants, often rely on word-of-mouth advertising. I can count the number of times I have pointed my friends in the direction of a mechanic who has been servicing my vehicles since I first started driving. I know that he does good honest work and would treat any customer I refer as well as he treats me.

In addition to exceptional service, another way to spread word about your business is to offer an incentive to existing customers. Similar to rewards programs, you are rewarding the existing client for bringing in someone new. The first time I personally came across this was during my high school days, when a driving school offered a $50 cash incentive to students who successfully referred the service to fellow students seeking driving lessons. You also see these types of reward systems with fitness club memberships, where gyms offer a free month to existing clients for every full year membership signed by a new client that is referred. It doesn’t really cost anything to the gym, other than the existing client gaining one extra month on their membership. Similarly, real estate agents and insurance brokers sometimes offer non-monetary incentives, such as gift cards or tickets to sporting events and entertainment shows for a solid referral.  

How often do we go to a restaurant because we heard good things about it from our friends?  If a business provides an exceptionally good service, they can rest assured that the good work will speak for itself and very soon the word will spread and bring in more and more business.