Almost all businesses worldwide generate more revenues and reap better profits through referral marketing. Conversely, lack of referral marks the downfall of businesses.

Sadly, not many companies pay particular attention to referral marketing. Most business owners are very engrossed with day-to-day business operations and tend to forget the strategic value of this method.

In a way, referral is the end product or a mirror of your business performance as perceived by your new and existing customers. It is our nature to recommend those products or services that please us and bash that don’t. That is the very reason why referral marketing is deeply associated with equally powerful marketing tactic, word-of-mouth advertising.

If you are concern with long-term business continuity, I urge you to incorporate referral system as an integral part of your overall marketing and operations initiatives.

Why Pay Attention to Referral Marketing?

1. Business credibility. Trust is a major issue to us, consumers and business owners, every time we make mundane or complicated decisions.
2. Cost-effectiveness. Attracting new customers costs more time and money in advertising and trials. Why not turn your satisfied customers as your advertising or PR agents? After all, they will gladly do it for a small fee or sometimes, FREE!
3. Targeted efforts. Running advertising campaigns commonly attract people not categorized as your target market. If you accommodate them, you will lose your precious time and efforts only to know they are not interested to begin with.

Credibility

For instance, you are looking for a fine dining restaurant that will surely captivate the heart of your partner. Some will check the Internet but every establishment claims they have the most romantic ambiance. Consumers might become confused or skeptical during this process. For this reason, most of us turn to our family members or friends for advice.

What usually happens when a friend recommends a particular place? It creates more credibility and foster trust that it will satisfy the customer’s expectations.

Millions of people, including me, cling to advices every time they venture into unknown territories or try new products. Now, imagine the power of referral system if every dissatisfied or new customer is referred to your business!

Cost-effectiveness

Open your eyes and realize the power of customers as a potential source of additional revenues for your business. Loyal, satisfied customers are not easily lured by discounts and other deals. More importantly, they are your walking PR agents, sometimes without you or them knowing it.In fact, some industries like business consultancy are heavily reliant on customer referrals to expand their clientele.

Targeted Efforts

Referral system, on the other hand, automatically shortlist qualified leads and help you run your business smoothly. This is not to say that you will not encounter any unqualified leads but it significantly lessens the number.

There two divergent referral methods you can use as your arsenal to win customers - Internet-based and brick-and-mortar or traditional methods. What remains constant and consistent are the objectives of referral marketing stated above.

This hub will deal mainly on traditional methods for there are numerous hubs articles dealing with online referral methods. While Internet has radically altered the marketing playing field, there are still some time-tested methods outside the WWW market. More specifically, service-oriented companies like spas or fitness centers still need traditional referral methods to sustain their enterprise.

The First Act: Thorough planning is required before you implement your referral program. Know your target market, your competitors, and the business you are in. It may sound simple but you might be surprised if you revisit these matters.

Let me share to you my favorite quote on planning and implementation from an anonymous guy...

“Action without planning is fatal, planning without action is futile”

Traditional Referral Method

Getting in touch with local communities and small business associations is vital to your success in the offline market. As human beings, we desire recognition and association. The same nature applies to survive in this cruel business world. So, where can we get that? Here’s my list:

The best way to get both recognition and association is to join organizations aligned to your objectives.

In my other hub called, Make Your small Business BIG with Business Incubators, business incubators joined and actively participated in the National Business Incubation Association so the organization will keep them on priority list every time they need a partner.

Make sure you attend conventions or exhibits where consumers and competitors interact. Even online businesses have their own organizations and business forums where they can interact

Social responsibility. Fund raising or charity is the best way not only to earn more referrals but, more importantly, contribute to the well-being of the society.

Depending on the nature of your products or services, you can connect with your local socio-civic organizations or churches and offer referral partnership. A common approach is to give a portion of your earnings to these groups in exchange for every qualified referral.

Caveat: This is a tricky approach for it can be perceived differently by your customers. Practice with caution and make sure you really have the intention to help the society. Otherwise, this can backfire and create negative impression.

The Barbershop connection. The most untapped and the most often neglected source of referral is your hairstylist or barber! Yes, they are what I call the “crouching tigers and hidden dragons” of referral system.

Notice that most barbers or hair stylists are very fun, energetic, and highly sociable people. In short, they are your extra salespersons! In my experience, barbers love to tell stories and ask questions during the brief period I’m under the power of their scissors. Why not offer something in return for every referral made? (Make sure you don’t own barbershop or saloon though).