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4 Mindsets That Earn You More Customer Referrals Referrals are not just prime sales leads. They are the ultimate compliment.

By Joseph Pigato Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

Jose Luis Pelaez Inc | Getty Images

What's the first thing you do when you get a referral from a customer? Chances are, you're so excited as you build your startup that you fire off an email to the new lead hoping to turn them into a new customer.

If you're doing this, you're missing out on the quickest, least expensive and most effective new business generators you can find. And you're also missing the entire point of referrals. Referrals are not about drumming up new leads to turn into new customers, and if you look at them this way, then you're probably shooting yourself in the foot when it comes to growing your business.

If you want to dramatically increase referrals, you need to radically redefine what referrals are: A customer referral is an opportunity to celebrate and show deeper appreciation to your current customers. Once you can accept this new thinking, you'll see happier current customers and more new ones.

Related: How to Be More to Your Vendors Than Just Another Customer

This model works both for B2B and B2C companies, but let's focus on a B2B model. At every startup in my career, I've approached referrals not simply as new business leads, but as a validation that we were providing value to the customer. With each new referral, we paused and took time to say thank you to our customers rather than rush to email or call the new lead. We didn't wait to see if the customer's friend became a new customer to decide if the referral were valuable. After all, the immediate value of a referral isn't based on whether you get a new customer out of it. The real value is that one of your current customers has gone out of their way to validate and support you, and your recognition and celebration of this leads to happier customers and more referrals in the long run.

I put together a four-step framework for our new approach to referrals. Here's the blueprint:

1. Earn the referral.

It's obvious, but it so often gets overlooked. If you want a customer to refer you, make them happy, and give them value. Make that your focus, and ensure that you're doing this instead of just asking them over and over for referrals. If they're happy, sometimes you don't even have to ask.

2. Offer help.

When you're just looking for business leads, you ask your customers to give you a referral because it helps you. When you believe that your service truly helps your customers' businesses succeed, you want to offer your services to help their friends' businesses because it truly will help those businesses. Right after a customer refers you to a friend of theirs, you shouldn't think, "Great! This is good for my company," but rather, "Great! This is good for my customer's friend." And remember to look for positive moments when a specific customer is having a particularly good experience with you. That's when people are most receptive to your offer to help their friends.

Related: The Golden Rule Is Just as Good for Businesses as It Is for People

3. Commit

It's a big deal for someone to refer a friend. They're putting themselves on the line for you and spending some social capital. They don't want to hear a quick, "thanks," knowing that their friend is now a new entry in your CRM with sales people ready to pounce. They need to know that you'll genuinely explore whether your service is the right solution at the right time for their friend and that if they become a customer, you'll bring your "A" game and make sure they have a great experience.

4. Give thanks.

This is the heart of it. Remember, a referral is not simply a sales lead. A referral is a huge vote of confidence from a customer and the ultimate validation that you are truly providing value to their business. When you get a referral, your whole company should pause and celebrate the accomplishment. At that moment, your customer is saying that what your company and your team provides is of great value to their business. Take the time to reach out to the customer, and have others on your team do so. Let them know that you appreciate their support and belief in you, and that the whole company is appreciative of it as well.

To understand how this can work in practice, I once created a referral program called "Awesome Bombs." The program even had a mascot, "Boomer." Every time a current customer gave us a referral, we showered them with gratitude for their awesomeness. We gave our staff "awesome dollars" (an in-house currency) to spend on our internal referral website where they could order things like a custom bottle of "awesome sauce," custom fortune cookies with awesome messages and other fun items that we'd send or deliver in person. Our customers loved it and had never had any company show them that much appreciation.

Related: How Do You Get Your Customer to Advocate for You?

In the end, this new way of thinking brings positivity to you, your team, your customers and their friends. Transforming customer referrals from a sales and marketing opportunity to a customer appreciation and celebration opportunity will then create a virtuous cycle where referrals earn appreciation and appreciation wins referrals -- virtuous cycle indeed.

Joseph Pigato

Chief Marketing Officer of Sparked

Joseph Pigato is the managing director of Sparked, which helps companies retain their customers through sophisticated predictive analytics and engagement tools.

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