Small Business Articles from Make-it-Fly®
People Make Referrals
By Victoria Munro
New studies demonstrate the benefits
of referral marketing. In his book The New Art and
Science of Referral Marketing, Scott Degraffenreid
explains how the science of
social network analysis has been used to help companies
effectively utilize referral marketing.
Recent advances in mathematics made
possible by new computer technology now enable experts
to precisely quantify the impact of referrals. In his
book, Degraffenreid describes a research study on physicians’
referral patterns for a pharmaceutical company. In this
example, millions of dollars had been spent marketing
certain drugs, with very slow market penetration due
to few peer endorsements, while others with minimal
marketing exposure sold well because of high referral
incidence, making them far more profitable. By testing
behaviors in several different ways, results showed
that the primary reason we
make referrals is to enhance our standing with the people
we refer. We want to look good!
He explains that because we’re
bombarded daily with so many marketing messages, our
brains have developed methods to filter these out. This,
combined with rising costs, makes ‘traditional
media’ a less effective way to communicate your
message. People are the new
media! Referral marketing is a viable, cost-effective
The Benefits of Referral Marketing
today have developed cynicism and distrust of advertising
messages. When considering a purchase, we’re
now much more likely to ask a trusted friend or
acquaintance for a recommendation.
listen to those we know and trust. When a
friend of theirs has referred a potential client
to you, a level of credibility and trust has already
been established. They are more open to hear what
you have to say.
likely, the person referring someone has already
described your service or product and you need to
spend less time and energy educating them on the
value you offer. These
leads generally turn into sales much more quickly.
marketing is more profitable. To generate
a steady stream of referrals will take effort but
may cost little or nothing at all.
When a company’s printed materials,
website and signage send a consistent message with similar
text, graphics and colors, it conveys a solid, professional
image. It provides the level
of comfort a potential client may need to do business
with that company. Check to see if you are communicating
a mixed or confusing message that might undermine your
credibility and professionalism. Perhaps use a focus
group to give you objective feedback.
Steps to Create Your Referral Marketing
A Key Component
Your services or products must be top notch. In today’s
competitive marketplace, simply meeting your clients’
expectations isn’t enough. Aim to exceed expectations
– underpromise and overdeliver.
Remember: the person referring you is putting his or
her reputation is on the line. They
must have confidence in you!
Who will refer you?
Happy, satisfied clients
who already know, understand and appreciate what
that sell to the same target
and family are often eager to help. If someone
asks what he or she can do to help your business,
don’t waste the opportunity. Be ready to tell
Ask for referrals!
If you don’t ask, people may assume that you have
all the clients you can handle.
Make a list of those you can
ask for referrals, and keep
in touch with them regularly to maintain top-of-the-mind
Make it Easy to Refer
Your Services or Products
Educate and equip potential referrers with the tools
they need. Keep it clear and simple. If telling someone
about your services seems complicated, and there is
a possibility they might appear foolish, they probably
won’t refer you.
Be crystal clear about:
benefits and value
of your product or service
to contact you
You may also want to leave business cards, brochures
or other sales materials with them.
Follow up on referrals promptly,
expressing your sincere thanks. If appropriate, include
a gift as a token of appreciation. Always keep your
referrer in the loop. Let him or her know what’s
happening, even if it’s nothing and you’re
still playing phone tag.
Create a form to track referral
leads and measure the results and corresponding
It takes time and thought to actively seek out and
educate potential referrers, to help them look good
by referring you, but the results can prove well worth
the effort. Put your plan in place now, follow
it faithfully and take advantage
of this profitable marketing method!
© 2005-2007 Victoria Munro.
for printable version.
About the Author: Victoria Munro is
co-founder (along with husband Dave Block) of Make-it-Fly®
LLC, a company dedicated to creating success for
small-business owners through creatively designed programs
and tools. Victoria has started and run nine different
businesses. To receive FREE business success articles
with tips to help you with your business, sign up for
their award-winning ezine, “In-Flight Refueling,”
and receive a free copy of the eBook, Get
More Done in Less Time: 101 Quick and Easy Time Tactics
You’re welcome to “reprint”
this article in your ezine, print publication
or on your website, as long as it remains complete and
unaltered (including the “about the author”
info at the end). Please send a copy of your reprint