Is your business looking for a new method to gain customers? Referrals can be an effective way to grow your clientele. Whether you create a referral program or focus on social sharing and reviews, it comes down to building customer trust. This article will cover referral types, the best tactics for approaching them, and what to do after a referral comes in.
You can’t have a conversation about business referrals without talking about building relationships and trust with customers. Distributors can do this by simply doing “a great job and keep doing it,” says Casey Silseth, director of national accounts for HALO, Sterling, Illinois. His aim with clients is “to give them an experience that changes the way they see this channel of their business.”
In one instance, he flew to New Jersey to help pack rum bottles into kits for a president’s club mailing.
“Our boxes were very late leaving the fulfillment house because of COVID delays, and our alcohol distributor only had two workers to pack these intricate kits with flying butterflies and light-activated video screens,” he recalls. This example of excellent service gets customers talking, and that’s exactly what followed.
The packing process was captured on video and shared with the client, who was “so moved” by Silseth’s willingness to deliver, it resulted in several referrals.
“Clients want to feel special, and they want to know that their event is as important to you as it is to them,” he adds. “Show them that, and they will sing your praises to everyone.”
Additionally, Jim Owen, president and CEO of Swag Promo, Atlanta, says building customer trust happens by delivering more than initially promised and being transparent, direct, and prompt in follow-ups. Distributors also need to ensure they’re offering fresh ideas and solutions, which can often come from working with new clients, says Mark Larson, director of print vendor relations for New York City-based The Sourcing Group. Consistency, quality service, and excellent product can be the perfect recipe for bringing in referrals.
Benefits of Referrals
So, how can referrals benefit your business? If you’re a rock star at what you do and clients can’t stop talking about you to their colleagues, potential customers get a good first impression, and that’s one less cold call to make.
“This is the simplest form of sales, and can be the biggest difference between success and failure in any sales career,” says Silseth.
Although earning trust can take time with a new client, referrals grant immediate trust, according to Owen. That first encounter with your business builds a solid base for a strong customer relationship. It can even act as a closing tool to prove your capabilities, reducing the sales cycle and any uncertainty an account has about a distributor, says Larson.
Another advantage is reduced customer acquisition costs, which can take up a decent chunk of a business’ budget. Owen says referrals can help grow a business organically over time without putting funds into capturing clients. However, while referrals hold promise, distributors should be careful about putting all their eggs in one basket and relying on a single means to gain business. Doing so could limit bandwidth and put a business in a tough spot.
Referral Types & Tactics
There are various referral types — from word-of-mouth and online reviews to social sharing and even formal referral programs.
When asked what avenues have the most potential, Silseth says it depends on the industry distributors sell in and if their target buyers are online. He argues that word-of-mouth referrals offer a powerful personal aspect, while social media can be self-serving. “Do we really like something, or are we just clicking ‘like’ to stay relevant?” he asks.
Conversely, Owen says online and social shares are where referrals are happening, holding “powerful potential to quickly scale your business.” Similarly, Larson says online customer testimonials can back up a company’s capabilities. But, just as someone can share a positive review, they can quickly smear your business with a negative post.
So, how do you get people to talk about you positively?
“Do a great job and then do a great job again,” says Silseth. Then ask for a referral at the right time.
“I think salespeople ask for the referral way too fast,” Silseth adds. “It’s like going on a date with someone and asking them to move in with you after the first night. You need to nurture that relationship before you can ask someone to marry you. It’s the same in business.”
Larson suggests distributors work with existing customers to create project case studies they can share when a similar sales opportunity arises. He advises distributors to always check with the current client to ensure they’re OK sharing a testimonial before bringing it up to the prospect.
No matter the avenue, one thing to remember is the referrer is putting their reputation on the line by recommending you. It takes trust, says Silseth, and “if you screw up, you are letting down your referral partner and potentially jeopardizing their standing with the new client.”
Yes or No to Referral Programs?
Incentivized referral programs are a popular way to gain prospects — a business gives an existing customer an offer or reward in exchange for a referral. Owen says any referral program needs to include a financial incentive — gift cards, account credits, discounts, free shipping, free products, or even cash. According to the Harvard Business Review, many business-to-business buyers (84%) start the purchasing process via a referral, highlighting promise in this customer acquisition strategy.
Silseth, on the other hand, cautions distributors about referral programs because of a concern for authenticity.
“I don’t like these any more than I like people being paid to give five-star reviews on Amazon,” he says. “Bribing your client with a free gift to give you a referral might be a great way to generate some lukewarm leads when you are starting up, but it’s not something I partake in.”
While trust is a concern, there is a right way to approach a referral program. Distributors need to identify reliable accounts willing to share testimonials and reach prospects, says Larson. Showcasing testimonials from referral partners can “help sales into vertical markets,” he adds. And one major don’t is overusing referrals, which can damage business relationships and turn off current clients.
The Referral Is In!
You have the referral. Now what? First, distributors should thank the referrer and new prospect. Make your appreciation known for your existing customer’s efforts in recommending your firm. Next, you have to pull through. “Don’t screw up,” advises Silseth.
It’s critical to have clear communication and manage expectations.
“Be accommodating, but don’t over-promise or take on a job that you will fail at,” Silseth warns. “Sometimes, it’s better to say ‘no’ and ask them to give you a chance on the next one.”
Once you’ve walked through the referral process and identified the best method, don’t make the mistake of not asking current accounts for referrals. See if anyone in their network could benefit from your products and services. If you’re incentivizing them, share the details and be transparent. By leveraging this business-growing tool, distributors can broaden their network.
