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Small Business Marketing Tips: How to Grow Your Business With Referrals


It’s been said that a single customer, when well taken care of, can be more valuable than thousands of dollars in advertising. How do you get these customers? Referrals. They are often regarded as the most effective marketing tool. Why? They have higher retention, drive more sales, and can double the effectiveness of your marketing.

Most small business owners rely on referrals, and when they get it right, it can be one of the best marketing options for driving growth.

The principles of referral marketing are simple on the surface. Be amazing, and customers tell their friends. Too bad it isn’t that easy. Or is it?


A Satisfied Customer Isn’t Enough

One might presume that doing an adequate job should suffice, but when it comes to earning referrals, you could say that good isn’t good enough.

According to one study (Bain) it was found that most companies think they’re doing an outstanding job, with 80% of businesses believing they provide “superior” customer service. But when they investigated further, it was found that only 8% of customers would agree with this statement.

Small Business Marketing Tips: How to Grow Your Business With ReferralsProviding value goes a long way towards earning referrals for your ecommerce website. While the product or service you offer is a primary means to earning admiration, it’s often customer service that affects the overall experience and has considerable influence towards what customers might think.

Value comes in many forms, from the product or price to quality or service, and it’s one trait of businesses most should aspire to give their customers.

Make it easy for customers to do your marketing by providing them with what they would need to get the job done. From pre-written emails to introduction templates and similar, the more you can do for them up front only increases your odds of them doing something for you.

Your best customers can become advocates, and providing them with tools or the means to help create referrals can leverage one of your greatest assets, your customers.

Gratitude also goes a long way, and one shouldn’t forget to say thank you for any referrals they might receive. From a phone call or email to a handwritten note, even if it isn’t acknowledged, it won’t go unnoticed.

Small gestures are a big part of customer experience and appreciation for a referral with a simple thanks is one of them. You could even offer a small token of thanks, such as a coupon, but it’s advised to not mention this upfront as this could be perceived as incentivizing and can work against you.

The foundation for growing your business with referrals starts with ensuring your product or service exceeds expectations, along with customer service.

Referrals and Retention

Referrals and RetentionAdditionally, retention is more than referrals. It’s often said that it can cost five to seven times more to acquire a new customer than retain an existing one.

However, many aren’t aware that the probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is about 5-20%.

While you need new customers to grow, you won’t need as many to plug the holes of your ‘leaky bucket’ when you manage to retain the ones you’ve managed to acquire.

A lot of focus goes into an acquisition, yet it’s your current customers that contribute to near 80% of your revenue. When you focus on retention, you’re more likely to earn more referrals.

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Referrals and Reviews

About 97% of consumers say they read reviews about local businesses (BIA Kelsey). With around 85% of consumers saying they trust reviews as much as personal recommendations, and that positive reviews help 73% of consumers to trust a business more, getting online reviews is a key to acquiring more customers through referrals.

When it comes to reviews, it is more than the star rating and a number of reviews that consumers look at. They also look at sentiment and how recent the reviews might be.

Ensuring your business maintains a steady flow of recent reviews is important to staying in the good books of potential customers and improving customer acquisition through word-of-mouth referrals.

Using software for online review management helps to monitor, manage, and keep new reviews coming in with automation to send requests and reminders.

Referrals and ReviewsWhile referrals might always be the preference with consumers, reviews would be a close second, with near 90% of consumers saying they trust them as much as personal recommendations.

Also, consumers trust online reviews “6.5 times more” than advertising.

When you incorporate online reviews with your referral marketing strategy, you significantly increase the potential reach. Most consumers go online to research a product or service, even if they have a recommendation.

When they investigate local products or services, which account for over half of all searches, it’s review websites that appear in those results.

Those reviews are digital word of mouth referrals, and they can be yours. The price of admission starts with the customer experience to earn them.

When you consider that word of mouth referrals is the primary factor behind 20-50 percent of purchasing decisions (McKinsey) it’s hard to ignore their value.

  • 97 percent of consumers read online reviews for finding local businesses
  • A one-star difference in a restaurant rating can impact revenue between 5% and 9%
  • 62% of home buyers choose a real estate professional based on online reviews
  • 72% of patients use online reviews as their first step in finding a new doctor
  • 83% of people check lawyer reviews as the first step to finding an attorney

Another consideration is that referrals and reviews build trust and credibility. They provide the social proof many consumers look for as validation, and crucial when choosing a business.

Consumers are looking for reviews, and businesses that don’t embrace and manage this will inevitably lose potential customers to the competition.

Don’t Fear Asking

The biggest setback businesses have when it comes to their referral programs is that they don’t actively ask for referrals. Many companies have sales teams that don’t push starting a conversation with the goal of asking for a referral.

In order to get over this fear of asking, you need to think of it in a different light: you won’t lose business by asking for a referral. On the flip side, you will never know how much business you could lose by not asking in the first place.

If you are scared, it’s probably because you’re asking for a referral as a referral. Instead of asking for one explicitly, ask for something akin to an introduction or meeting with someone who your customer would think would be a good fit for you business.

Ask for Help, Not Referrals

You may be think it’s tacky or counter-intuitive as a business to ask for help from your customers. You shouldn’t. You know why? People like to help, especially if they already have a valuable connection to your business.

If your customers are already satisfied, chances are they will naturally share info about your business with others. It’s a part of human nature to talk about the things we like or support. However, if you ask for help, you are close to guaranteeing they are endorsing and sharing your business with others.

Don’t be proud as a business owner. You can’t afford it. Instead, ask for some introductions to new potential customers. Start your emails or phone calls with, “Hi there. I was wondering if I get your help,” and launch into the rest of the ask.

Asking for help is an endearing quality. Don’t be afraid to reach out.

Introductions That Don’t Burden

If you’re going to get the kind of referrals you want, you’re going to need a solid introduction. Many sales representatives don’t get specific about the kinds of introductions they want. Here’s where you can break the pattern and actually get beneficial referrals.

Instead of a generic, “Is there anyone you know who likes (insert product or service),” craft your message with your specific customer in mind. You most likely already have a list of customers who buy from you, so survey them to learn more about their demographics and psychographics.

Once you have that information, craft introduction emails or phone scripts for your sales team that takes the burden away from your customer when providing a referral. If you make it super easy for them, they’ll happily give your business a referral. If you make it hard or unclear, they will stammer and not give you the right kind of introduction.

When you ask for introductions, give clear instruction and detailed background on the type of potential customer you’re looking for. These details should be something along the lines of the type of industry they work in, annual salary ranges, job titles, martial status, and so on. The more you know, the easier it will be for a customer to identify if they know a person who’s a good fit.

Pre-plan Your Introductions

Think about obtaining referrals as playing the long-game. You’re not going to be immediately successful because as time goes on, you’ll get more customers. With more customers, there comes more potential referrals.

For that reason, you can plan your introductions in advance. Create a schedule or, at least, a goal to reach a certain amount of referral introduction ‘asks’ every month.

At the end of the day, it may only take you 10 minutes to complete the ask. That 10 minutes you spend may, very well, be the most important 10 minutes of your day.  Therefore, schedule these meetings as consistently as you can handle.

If you ask for one introduction a day, that’s 5 a week; that becomes 20 a month; and eventually, before you know it, you’ll have asked for 240 introductions over the course of a year. That’s no small feat.

Find Your Promoters

Finding the people who will promote your company is not an easy task. It’s one of the harder things your business will do, but it’s worth it. By doing so, you’ll help your business not only be more successful with obtaining referrals from those people, but it will tell you more about what kind of people your promoters are. And, I don’t have to tell you how great an effect this will have on your marketing.

But the question remains, how do you find your promoters? Well, there’s something called a Net Promoter Score (NPS). It’s a customer loyalty metric that is used to determine how happy a customer is with your business products or services.

By sending out a single-question survey, asking your customers, ‘how likely are you to recommend our business to others’ on a scale from 1-10, you will accrue answers as to who is likely and who isn’t likely to be a promoter.

The most effective way of sending these surveys is to arrange them to be sent out of a certain time period has passed after a customer makes a purchase on your online store. Once set-up, most email service providers can do this for you automatically.

NPS Calculator

On a scale from 1-10, with 1 being the least likely to recommend and 10 being the most likely, you can separate respondent scores into 3 categories:

  • 9-10: Promoter – customers who are loyal to your business and will happily refer others to your business.
  • 7-8: Passive – customers who are satisfied but not to the point where they will endorse your business.
  • 1-6: Detractor – customers who are unhappy with your business and can harm your business through word-of-mouth.

For each of these categories, you can set-up processes that are best suited for each one.

For detractors, you can have your customer relationship management (CRM) software automatically issue a task for you to follow up with a client and find out how you can improve their experience. This may be all it takes to turn them from detractor to passive customer.

Passive customers can be added to an automated series of emails through your email service provider (ESP) to provide them with more educational content, so they can get closer to becoming a promoter.

With promoters, just make sure to automatically send them personalized thank you emails with an ask for a referral introduction they said they would give.

NPS Follow-up

Sending out an NPS survey isn’t enough to get a referral. You need to follow up with promoters to keep the momentum going.

If you have people who will complete a survey saying they will recommend your product to others, why would you not pursue a conversation to actually get those referrals.

That’s why you need to formulate a plan for following up and making it super easy for your promoters to refer others. This comes down to whether or not you business has a business development department. If not, get either your customer success or marketing employees to personally reach out with complete information of the customers your business is looking to attract.

Create either a script or shareable document (phone call or email) about your ideal customer you can use to let promoters know who they should refer. Have your employees connect and push for an introduction.

Levels of Referrals

There are different types of referrals you can ask for from customers.

Traditional Referrals

This is the referral we are all thinking of. This type of ask typically comes after a purchase and you send out some sort of thank you. At this time, you can ask customers if they know of any friends or colleagues that could benefit from your business. Here, you can provide either discounts or rewards for referrals.


There’s a high chance that prospective customer will see your website before they buy from you. If that’s the case, testimonials will help to persuade them. Even if you get a traditional referral, those new people are likely to check out previous customers experiences to justify a purchase. This is where you can convert referral leads by sending the referrer a landing page to give to the referee.


People tend to review businesses online before they purchase. Reviews tend to come from third party websites like Yelp, so new review leads aren’t directly coming from your website. However, most people read reviews for products and services before they buy. So, if you have good reviews on a website like Yelp, you can expect to create another avenue to create referral based customers. Just make sure to encourage the reviewer to be specific about how your business helped them achieve their desire.

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Website Comments

  1. Avatar sunny

    Thanks for the nice blog and the topic is ver interesting.As a business man this is very helping blog for me

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