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How to Build Your Repeat & Referral Business

Updated on October 5, 2012
Thank your customers and invite them back again
Thank your customers and invite them back again | Source

There are many challenges to starting a business. My wife and I have experienced them first hand when we started our custom invitation and stationary business, Design Studio Creations. There are so many hoops that you need to jump through just to open the doors on your business. There are many different forms that you need to file at the federal, state, and local level to be in compliance with all of the governmental red tape. Depending on the ownership structure that you choose, you may also need to involve legal help to set it up. Once the doors open, your focus needs to shift to getting customers to buy your product or service. For our business, it meant my wife setting up her display in various wedding shows and a few other places to get our name in front of customers. One of our biggest successes is turning a customer into a repeat customer or having them refer their friends and family to us. We now get most of our business that way.

Golden Rule

"Do to others as you would have them do to you." Luke 6:31

Creating Customer Loyalty

Provide Great Customer Service

The best way to gain referrals and repeat business from your current customers is to provide amazing customer service. Remember the old adage, “the customer is always right.” Obviously, there are a few exceptions to the rule, but for the most part, follow it. Go out of your way to please your customers and make them happy. The more positive the experience the more likely a customer is to be a return customer or give a referral. I want to look at a few personal experiences that I have had trying to return things at Menards and at Target for various reasons. I have a bad habit when I build things of buying extra screws, wood, or brackets, and forgetting to return them once I know that I do not need them. Menards is great about taking back returns. I have never had an issue returning anything at Menards, even if it is a year or two later. The worst that I have received from them is an in store credit. Target on the other hand, can make you feel like public enemy number one if you try to return something even with the receipt. The funny thing is we have three target stores in close proximity to where I live and I have had bad experiences at all three. The customer service staff seems to make it their goal to make life miserable if you are returning anything. Whether or not I have bad timing when trying to return something at Target, they have left a bad taste in my mouth. Customer returns are a part of doing business, they happen even when it comes to manufacturing. It is critical to make sure that your customers are happy so that they will want to come back again.

Provide Value to Your Customers

Another great way to gain repeat and referral business from your customers is to take very good care of your current customers. Go out of your way to make them feel that they are getting a great value when they purchase your product or service. Keep your charges on a customer invoice as simple as possible. One of the worst things that you can do is nickel and dime your customers with miscellaneous charges on their invoices. My advice is to roll the charges into your price when you quote it to your customers as a single line item. People will usually pay a little bit more than, if you show them a lower price and then tack on multiple miscellaneous charges. In my experience, the more lines that you add to an invoice, it becomes more likely that a customer starts feeling that they are being ripped off. The only things that the extra lines of billing on an invoice will get you are a lot of questions and anger at all of the extra fees. I purchased two tires for my car recently and had the place adjust my wheel alignment. I ended up with an invoice with six or seven different charges on it. The more I looked at the bill, the more ripped off I felt. Phone bills are another good example if you take the time to look at all of the taxes and fees that are on there.

Reward Your Loyal Customers

Everyone loves to feel like they are getting a deal when they buy something. Rewarding customers with discounts, rebates, or other special offers is a great way to grow your business and create repeat customers. Rebates are effective for two reasons. First, customers are more apt to buy because they feel like they are getting a great deal. Second, many times customers forget to mail in their rebate forms and the store gets to keep the money. Whether you plan to offer a discounts or rebates, it is a good idea to factor that in to the price that you plan to charge so that you do not lose all of that profit. Also, customer loyalty programs are another great idea. They can be simple as a business sized punch card that gets a punch every time the customer comes in or a punch every time the customer spends $10. TGI Fridays is a great example of a loyalty program that rewards customers based on how much they spend. When you accumulate enough points, you earn a free appetizer and so on.

Keep in Contact with Your Customers

By keeping in contact with your customers, you can continually remind them of your products or services. Another benefit is that you will be able to reach them with any new products or services. This is also why it is important to make sure that all of your customers have an exceptional experience so that when you do contact them again, they have good memories and are more likely to buy again from you. Keeping in contact does not mean spamming your customers on a daily basis. Too much of a good thing is still too much. I will use a negative example here of going too far. I made the mistake of giving Pizza Hut my email address on an online order that I placed and now I receive multiple emails every week showing me their deals, however, the deals are usually the exactly the same. It is very annoying.

Increase Customer Loyalty by Asking for Feedback

The final way to encourage your customers to be loyal to your business is to have them give you their feedback. This will have two benefits. First, it will tell you how they view your product or service, your company, and their overall experience. The more detailed that the questions are, the more useful the information will be. Be sure to include room for them to offer a few sentences of their comments apart from the questions. It is crucial that you review what your customers are saying without getting defensive so that you can constantly improve the experience of the customer. Do not get prideful.

“Pride goes before destruction, a haughty spirit before a fall” Proverbs 16:18.

My wife and I love to watch the show “Restaurant Impossible” when we have the chance. It amazes me at the number of restaurant owners that are completely oblivious to what their customers think. Second, you can use their feedback as quotes on your company’s website. My wife has done a great job of having our customers write a brief testimonial.

How to Ask for a Referral and Build Your Business

If a business or product wows you, are you likely to refer that business or product to your friends and family?

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How to Get Referrals

Reward Customers for Referring Others

Offering your customers a reward for referring your business is a great idea. It gives them an incentive to try to get other people interested in your products or services. The rewards can be anything from free gifts to gift cards. Do not be afraid to ask your customers if they like your business to refer their friends and family to your business. A few years ago, Select Comfort offered a $50 gift card if you referred someone and they purchased a bed. The gift card was only redeemable for their merchandise, which was a great idea. All of their customers had a reason to try and get others to buy a Sleep Number bed. The great part of locking customers into being only able to use their gift card for your merchandise is that it will cost you much less than the amount on the gift card. Why is that? Because the gift card goes against the retail price of the product which is much higher than what the product cost you.

One of the best things that I learned in my sales and marketing class when I was in college is that it is much easier to gain repeat and referral business than trying to have to go out and find new customers. The way my wife and I run Design Studio Creations, it is a testimony to that fact. Treat the customer right, give them a good deal, great service, and listen to what they have to say and make any adjustments that are necessary to wow them every time.

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    • J Edwards Jr profile image

      James Edwards 4 years ago from Northern Virginia

      Helpful ideas, particularly for retail businesses.

    • ercramer36 profile image
      Author

      Eric Cramer 5 years ago from Chicagoland

      I agree that many businesses forget that keeping the customer happy should be job number one. Thanks for your comments.

    • BusinessTime profile image

      Sarah Kolb-Williams 5 years ago from Twin Cities

      It seems obvious that treating customers well is a sure first step toward repeat business -- but it's amazing how many business don't understand this principal (or at least act like they understand it)! Thanks for a fantastic hub -- any small business owner would do well to pay attention.

    • Perspycacious profile image

      Demas W Jasper 5 years ago from Today's America and The World Beyond

      Sound business principles now needing the addition of Internet and online marketing steps.

    • rfmoran profile image

      Russ Moran 5 years ago from Long Island, New York

      Sage advice for anyone starting a business or trying to grow one. Voted up and useful and shared with my 6900 twitter followers

    • ercramer36 profile image
      Author

      Eric Cramer 5 years ago from Chicagoland

      Thanks for your comments!

    • Faith Reaper profile image

      Faith Reaper 5 years ago from southern USA

      Hi Eric,

      What a very extensive and insightful hub here. You have been there, and are now sharing your wealth of knowledge with us all here. I know it can be a daunting task starting a small business, but with the wisdom you have shared here, helps a lot. Voted up, awesome, interesting and oh so useful God bless. In His Love, Faith Reaper