Everyone would agree: “Word of mouth is the best form of advertising;” however, when it comes to generating referrals, most businesspeople rely too much on the kindness of strangers. Fortunately, they are the myriad ways available to prime the pump of endless referrals.



Editor's note: This article, which originally appeared in the February 2006 issue, generated such a response that we thought it a good idea to run it again.

Everyone would agree that “word of mouth is the best form of advertising.” It's free, it's effective and it's substantive. A referral leaves you with a good feeling, because you know it's the result of a job well done for some satisfied customer.

Unfortunately, when it comes to generating referrals, most businesspeople rely too much on the kindness of strangers. They sit around waiting for past customers to say nice things about them. But that usually doesn't happen. In fact, it's a frightening fact of life that studies have shown people are five times more likely to spread the word when they're dissatisfied about a company's performance than when they are happy.

Fortunately, they are the myriad ways available to prime the pump of endless referrals. Here are 10 of those ways.

1. Ask for them. Make it your policy to ask every client for the names of other potential clients. Do this at the completion of every job. Ask your satisfied clients not only for referrals, but for permission to use them as references.

Also, solicit testimonials from them. If you are any good, from time to time, you may get a letter from satisfied clients gushing how happy they are with your services. Many others are just as happy, but don't take the time to write. They need prompting, and you need to make it as easy as possible for them to put their high regard for you on the record.

Often, they will compliment you verbally. When that happens, get ready to spring into action, documenting what they said, and gaining their permission to use it for promotional purposes.

Testimonials go hand-in-hand with referrals. They are the best marketing tools anyone can have.

2. Exchange referrals. “You scratch my back, I'll scratch yours” is a time-honored tradition in the business world. Work out understandings with people in related businesses to recommend one another. Do this even with friendly competitors for those times when one of you gets more work than you can handle.

Be careful, though. Only recommend people who behave professionally and do top-notch work. Bad reputations are contagious.

3. Pay for referrals. Auto dealers do this, so do realtors. Almost any business can do it, except for those bound by ethical codes that prohibit payments.

Set up a reasonable “finder's fee” scale. Make it payable upon job completion and payment in full. Don't forget to publicize this to all clientele. Don't just bury it in a fine-print paragraph. Give your finder's fee policy prominent play on its own page or on a separate sheet of brightly colored paper in your promotional materials.

Be sure to promote this to your employees as well as clients. Make it your policy that anyone whose referral leads to a successful project is entitled to a finder's fee. Put up a “Think Referrals” poster in your office. Give everyone company business cards to pass out to potential clients.

Extend the finder's fee to all of your suppliers and peripheral business contacts. Tell your attorney, accountant, trade or professional association staff, insurance agent, banker, subcontractors, suppliers, butcher, baker and candlestick-maker that you pay for referrals. It's like having dozens of salespeople on staff.

Be sure to keep track of these referrals and follow through with payment. By the time a job is done, many of your benefactors will have forgotten they were entitled to a finder's fee. Imagine how pleased they'll be to have your check materialize out of thin air! Think of how enthusiastic they'll be to track down other jobs for you.

4. Go back in time. Keep a tickler file of past clients you've worked with. Once or twice a year, give them a call to find out if any more work is in their hopper, and if they know anyone else who has something coming up.

5. Mix business with pleasure. Cultivate personal relationships with potential clientele. Treat them to ball games, concerts, theater, etc. However, make every effort to accompany clients to these events, not just pass on the tickets. You build relationships through shared experience.

6. Always acknowledge referrals. Every time you get contacted by someone referred to you, fire off a note of thanks to the person who made the referral. Remind them that they are entitled to a finder's fee if the contact results in a successful job, but let them know that you appreciate their effort even if it doesn't pan out.

Want to really show your appreciation? Enclose a lottery ticket with a note that says - “No matter what, you're a winner in my book.”

7. Cross-fertilize. If your business spans both consumer and commercial services, look to gain cross-referrals. Ask consumer customers to recommend you to decision makers in the companies they work for; likewise, try to get your commercial clientele to spread the word to employees about your services. One way to do this is to offer a 10-percent or 15-percent discount to all employees of the client organization.

8. Appeal to ethnics. Do you have anyone on staff fluent in a foreign language? Be sure to publicize this in all your promotional materials. (Se habla español.) Print business cards in both languages. This will give you the inside track on jobs in a given ethnic community.

9. Seek out the influential “movers and shakers.” The average person has a sphere of influence of about 50 people. That is about the number of friends and family members who are apt to follow their recommendations.

However, the “movers and shakers” in any given community have spheres of influence that number in the hundreds or even thousands. Get to know these people and befriend them. Join the same community and social organizations they do. Do volunteer work for charities they are associated with.

10. Network properly. Most people think of “networking” as rubbing elbows and chit-chatting at a cocktail party. That describes the crude version, and it usually is a waste of time that results in nothing except chit-chat. Proper networking could be the subject of an article unto itself, but for now let's just cover these important elements.

A. Hang around people you don't know. Most people attending social functions feel insecure and spend most of their time mingling with friends and co-workers. Force yourself to stray away and introduce yourself to any movers and shakers you can identify.

B. Talk about their interests, not your own. You bore people talking about yourself. If they're interested in what you do, they'll ask. Otherwise, the best way to get them interested is to talk about their favorite subject - themselves and the work they do.

Ask open-ended and “feel good” questions: “How did you get your start in your business?” “What do you enjoy most about your work?” “What are the biggest problems you face?”

Perverse as it may seem, this is the way to get them to think of you as an interesting person!

C. It's more important to collect business cards than to pass out yours. Most business cards end up being discarded. You can't control what the other party does with yours. But once you obtain one from a mover and shaker, you have it in your power to follow up with further contacts.

You can send a handwritten note the next day along the lines of: “It was nice meeting you. If I can ever refer business your way, I certainly will.”

And, you can keep in touch with the person from time to time by sending clippings of newspaper and magazine articles that relate to their interests.

Best of all, you can refer people to them when the opportunity arises. And that's likely to start their referring people to you.