SmallBizResource Blog -- Marketing

The Cheapest, Most Effective Marketing: Referrals, Done Right

Posted by Naomi Grossman Wednesday, Apr 23, 2008, 10:33 AM ET

For a small business, there is perhaps no more effective -- and no cheaper -- form of marketing than referrals. But getting good referrals for your small business is not as simple as it sounds, nor is it truly effective if not done well.

In The New York Times' small business section, the "art" of referrals is thoroughly explained.

Writer Paul Brown quotes small business marketing guru, John Jantsch, who writes on his Web site: "Business owners tell me everyday that the way they generate the most new business is through referral marketing. Yet they don't seem to grasp the power of this statement. Few if any businesses harness the true power of referrals by making the receiving of systematic referrals a cornerstone of their marketing efforts."

Jantsch explains why small businesses need to get referrals – they establish immediate credibility; referrals tend to spend more money; and, they are cost effective – but as Brown asks, how do businesses get their customers to give those valuable referrals?

Jantsch provides some ideas for businesses on his site:

1. Expect to get referrals but don't assume you will. Talk about them early and often and build them into your sales and marketing efforts...don't wait for people to offer them.
2. Create a system. It can be as simple as advertising $20 for every referral.
3. Follow-up by phone or mail asking for referrals.
4. Give every client 3 business cards. Look in your drawer you've got hundreds. Give them out to clients and they may just pass them along.

Brown quotes Gary Lockwood from International Cyber Business Services, who says that "getting referrals requires planning and preparation."

Among his suggestions are:

• Start by making a list of all the people who might be a referral source for you.
• Zero in on the people who are already frequently recommending prospects to you.
• Help those referral sources help you by telling them exactly what kind of clients you are looking for, explaining in detail how you can help those potential clients. Also, be sure to point out the types of clients you do not want.

And then, of course, there's what not to do.

Miriam Lawrence a business consultant has a number of things you shouldn't say to get referrals. Brown lists his favorites. Mine is this one: "There are two ways I get paid -- from commissions and from your referrals."

Marketing