3 Ways to Raise Your Referral Rate Put these marketing tools to work for you so your customers will refer you to their friends and family.

By Dan S. Kennedy

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.


In No B.S. Guide to Maximum Referrals & Customer Retention, business coach and consultant Dan S. Kennedy and customer retention expert Shaun Buck present a systematic approach to help you keep, cultivate, and multiply customers so you replace income uncertainty with reliable income through retention and referrals. This edited excerpt explains his three-step process for generating referrals.

The basis of the referral program I teach people is to make it easy and motivating for clients to make a referral, to plant this seed in their minds and to program clients to send you referrals at the best possible moment. There are three tools in this system:

  • Referral cards
  • Referral for a worthy cause
  • Referral newsletter

1. Referral cards.

The best time to ask your clients for referrals is at the time they love you the most. In my own successful real estate business, it was simply part of the process I followed with every new client. With a newly signed buyer or listing contract, you've just shown your new clients exactly what you'll do to help them realize their goals. Now you ask for their help in return. This is called reciprocity, and you should never be tentative about asking for referrals at this moment because people inherently want to help you because you've just helped them. Every business has some "point of best opportunity" like this, when the customer is feeling happiest or the most optimistic about whatever he's signed up for.

So when you do business with new clients, there are three things you'll want to accomplish before they walk out the door. First, you'll want to reconfirm their decision to do business with you by thanking them for their business and making them feel good about their decision. Second, you'll want to give them a sense of exactly what will happen next, and third, you'll want to take advantage of their positive frame of mind to ask them for referrals by equipping them with an easy way to give you referrals.

I made it easy for my new clients by giving them printed, postage-paid, self-mailer referral cards. These cards made it easy for them to simply jot down the name and contact information of the person they were referring, and then all they'd have to do to complete the referral was drop the referral card in the mail box. Even easier, these referral cards also included all my contact information (phone number, address, email address, and web URL), making it easy for them to get me this information in whatever way was most convenient for them.

Making things easy, however, isn't enough. As with all your marketing, you have to have a big WIFM ("What's In It For Me") to compel people to send you a referral. That's what we'll talk about next.

2. Referral for a worthy cause.

Most real estate agents reward those who send them a referral with absolutely nothing, not even a phone call or email to thank them for the referral. Others send a small gift of thanks, maybe a $50 bottle of wine or a $50 lunch, or something equivalent, so the message clearly sent is that their referral is only worth $50. This is all so ordinary.

I've found that attaching the referral to a donation to an important local charity works far better and is highly motivating to clients. So, for example, you might tell your customers, "When you refer a friend or family member who's considering doing business with us, you're helping a sick child in real need because for widget we sell this year, we're donating a portion of our income to Sick Kids Hospital." After all, what value can be placed on saving the life of a child? By simply referring a prospective customer to you, not only are they helping that person find a trusted business to work with, they're also helping those in need in a tangible way. Giving your clients the opportunity to exercise their altruism is a big WIFM and also positions you in an especially positive way.

It also supports a worthy cause, charity, hospital, school, or animal shelter. Not that there's anything wrong with Starbucks, but wouldn't you rather donate $50 to a good cause and a charity doing good work in your community than use it to buy a gift card from Starbucks?

3. Referral newsletter.

The third tool of the referral system is a mailed referral newsletter that you should direct-mail monthly to those most likely to refer. This means you must be tagging people in your database as such. The rest of your database can receive the referral newsletter via an email that works in conjunction with your blog page. I don't suggest emailing the newsletter either as an attachment or embedded in the email itself. Better to post it as a monthly blog and get some SEO value from it as well. Your email will simply be a short bullet-point note with a link to your blog page. But the "hot," most likely to refer customers should get a printed copy in the mail for maximum impact.

This kind of newsletter can give recognition to people who have referred, welcome the new referred clients, and provide stories about the charity that's being supported and its activities. Or it can be a simple letter of news, describing the fundraising goals, the cause being supported, and reminding people to refer.

Now that we've reviewed these three steps, let me back up a bit. None of this will work if your business can't produce happy customers. Once prospects become customers, they become both your salesperson and your teacher. How well they sell your services depends on how well you service them. How well you learn from them depends on how well you listen. In fact, your goal with your business system should be to produce a customer who's not only satisfied with your service but absolutely delighted with it -- "wow"-ed by it. In other words, the goal of your referral system is to produce a raving fan. A raving fan is very important to your referral system because a raving fan is your best salesman. By designing and implementing a system to elicit referral business, you're creating an invaluable network that will feed you customers. It takes time for this network to grow, of course, but by developing a system to cultivate referrals, you'll create massive leverage and be able to grow your business.

Here's a last takeaway -- a secret about referrals: People tend to refer most and most often to a non-pushy but very confident and capable salesperson. They tend not to refer to a fumbler and bumbler, someone who might embarrass them with a friend or relative by being unsure of himself and unable to make his case. When you're thoroughly prepared, ready to present, and prove your case, you sell with more confidence and more calmly. That not only helps you close that sale but also carries over to the customer's willingness to refer others to you.

Dan S. Kennedy

Author, Strategic Advisor, Consultant, and Business Coach

DAN S. KENNEDY is a strategic advisor, consultant, business coach, and author of the popular No B.S. book series. He directly influences more than one million business owners annually. 

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