How to have your customers do your marketing for you (4Rs of marketing – part four)

What are you doing to use your successful relationships to create new, organic opportunities so that you can spend less and make more?

The fourth R is referral.

Since you’re doing such a great job taking care of your customers and keeping them happy, the next best thing you can do is set up systems to maximise the benefit you get from them, right? So that they are doing the marketing for you!

Well, it’s well known that if you just leave it up to people to do referrals for you, very few will—even if they are very happy with you.

You have to make it very easy—almost effortless—for your happy customers to refer your business if you really want to maximise the referrals you generate from them.

A study from Lee Resource Inc. found that attracting a new customer can cost five times as much as keeping an existing one.

Referrals make great customers


We all want referrals because they help us save money on marketing, right?

Well, there’s even more to gain from referrals than cost savings:

According to a case study noted in the Harvard Business Review, customers that come from referrals are, on average, about 18 percent more likely than others to stay with a company and they generate 16 percent more in profits!

And according to several case studies reported on by the website TechCrunch:

Friends referred by friends make better customers.

They spend more (a 2x higher estimated lifetime value than customers from all other channels at One Kings Lane); convert better (75 percent higher conversion than renters from other marketing channels at Rent the Runway); and shop faster (they make their first purchase after joining twice as quickly than referrals from other channels at Trendyol).

Why are referrals so powerful?


Because they channel the power of social proof. Social proof is a fancy way of saying that we humans are easily influenced by each other.

We’re pack animals.

When a member of our pack (family) or tribe (social circle) recommends a product or service, we take that recommendation very seriously.

Similarly, when someone in a position of power, prestige or authority recommends something, we are very quick to act on that recommendation.

You see the applied power of social proof everywhere: in TV ads, when you see a celebrity endorsing a product; on the radio, when the person hosting the pledge drive tells listeners that so-and-so donated £50 to the RSPCA; on the back of a novel you’re reading, when you see testimonials from other notable business owners; and on the web, when you visit sites like Yelp.com to read consumer reviews of local restaurants.

Moving from passive to active,
ad hoc to systematic


Almost without fail, most business owners I talk to have no clear referral generation system.

They essentially think that referrals are something that you simply wait and hope for … but the reality is that referrals don’t just happen, you have to go out and get them!

And if you’re going to spend the time collecting them, you need a system that effectively channels your efforts into tangible results.

How many formal, written referral-generating systems do you currently have with prospects or potential partners? (Check one)

[  ] 0

[  ] 1

[  ] 2–5

[  ] 6+

How to have your customers do your marketing for you (4Rs of marketing – part four)

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