Two women talking.

What do you typically do when an existing customer sends a referral your way? If you’re like a lot of business owners, you get excited and fire off an email to the referral hoping they’ll soon become your next customer. If you’re thinking, “Yep, that sounds about right,” you could be missing the whole point of referral business.

According to our business coaches, a lot of businesses mishandle the most effective and least expensive business generators they have at their disposal. Contrary to popular belief, referrals are not about getting leads to drum up new business. If that has been your mindset, you’ve probably been taking a step backward in terms of growing your business.

Redefining the Referral Process

You’d probably love to dramatically increase your positive word-of-mouth and referrals, but before you do that, you have to change the way you view referrals. What is a referral really? It’s a golden opportunity for you to show genuine appreciation to your existing customers. Once you shift your way of thinking, two things will happen: 1) your current customers will become happier, and 2) you will get more new ones.

This model is not just for B2C businesses, it’s for B2B ones as well. Our coaches teach business owners to approach referrals not just as new leads, but as a validation that they’re doing something right, that their customer is seeing value in their product or service.

The next time you get a new referral, our advice is to pause and take the time to thank your customer rather than push them aside, and hurriedly shoot an email or call the lead. “But what if the customer’s referral doesn’t pan out? What if they never turn into a customer?”

You shouldn’t wait to see what happens before you thank your customer for the referral. Why? Because, it’s not just about turning a referral into new business, what matters is your current customer has gone out of their way to refer you, and when you recognize and celebrate that, it will lead to happier existing customers and more referrals down the road, some of which will turn into new customers.

How to Earn Referrals

Here’s advice from our coaches on how to earn more referrals.

  1. Make Your Customers Happy

If you want customers to refer business, provide amazing value and make them happy. That’s actually more important than asking for referrals because if they’re happy, they’ll naturally rave about you and they’ll refer people, often without you having to ask.

  1. Ask for Referrals

You don’t have to be salesy or pushy to ask for referrals. Instead, you can casually say, “Hey, if you know anybody who would like our product or service, send them our way!” When you truly believe in your product or service, it’s easy to tell your existing customers with confidence that you can also help their friends or family.

When a customer does send a friend or family member over to you, instead of thinking, “This will be great for my business!” think, “Great! I will be able to help my customer’s friend.” And look for those positive moments that your customers have with you. That’s when they’re the most receptive to you asking them for referrals.

  1. Show You Truly Care

It’s a big deal for people to refer customers. When they make a referral, they’re putting themselves on the line; they don’t expect their friend to come back saying, “Oh, I had an awful experience. Why did you send me to them?”

They don’t want you to give them a quick “thanks” as you send your salespeople to pounce all over their referral. They want to hear that you genuinely took the time to listen to the referral’s needs, and explore whether your product or service is right for them. And if they do become a customer, they want to be confident that you’ll deliver exceptional service.

  1. Say ‘Thank You.’

Remember, referrals are much more than sales leads, they are your customers’ way of showing you a big vote of confidence. It’s the ultimate validation, demonstrating that you are providing value to your existing customers. When a referral comes in, your whole team should pause for a moment and realize that it’s a big accomplishment.

Every time a current customer gives you a referral, you should shower them with gratitude, whether it’s through an email, a phone call, a hand-written note, a gift basket, a box of candy, or tickets to a game or concert – believe us, your customers will love it and they’ll say that they’ve never been shown so much appreciation before.

Customer referrals can be extremely powerful tools for business growth, yet they can be the least expensive way to generate new business. To learn other ways to grow your business from a business coach, contact AdviCoach today.