Everywhere you look, you’re bombarded with advertisements. From the time you wake up, businesses are trying to win you over with TV, radio, print and social media ads. It’s information overload. But think about it, when you do need something—whether it be a service or a product—where do you look? Many look to their friends and family for recommendations. Why? Because of trust. Your customers are no different.
“Word-of-mouth is No. 1 and online reviews are No. 2,” Tom Lambert, owner of Shadetree Automotive in Layton, Utah, says. “You always have to be creating a buzz about your business. Referrals and the rest of your business go hand in hand.”
Repeat customers or customers that express satisfaction with your business are a great source for future customers, as they’re likely to recommend their friends and family. Lambert generates 15 percent of his business from referrals, which breaks down to roughly 30 customers per month.
“Customer referrals are really important because people are barraged with information more than ever, it’s hard to know who to trust,” Dorie Clark, author of Stand Out, named the No. 1 leadership book of 2015 by Inc. magazine, and a professor at Duke University’s Fuqua School of Business.
“If they [consumers] are just seeing paid advertisements, it’s very hard for people to evaluate whether it’s legit or if it’s another business chest pumping. If they hear that message from a friend that they trust and that actually knows something about their background, when that person says, ‘Check them out,’ it means something,’” Clark says.
This is cheap, effective marketing of which, unfortunately, many fail to take advantage. It’s not that customers are unwilling to refer, Clark says, it’s just that it’s not top of mind for them. That’s why it’s up to you, as a business owner, to find ways to encourage your customers. Here are four keys to winning customer referrals—and why it’s a necessity to do so.
The Reason: “Consumers are 92 percent more likely to trust recommendations by people they know.” Digital Intelligence Today
The Solution: Deliver service worthy of a referral.
“They should leave so impressed that they can’t help but tell people about our service,” Lambert says.
Lambert says the key to referral success for his business is consistency and clear communication with customers.
Lambert keeps his customers happy by letting them know exactly what they are doing to their vehicle, when they can expect it to be finished and what the price will be. If, at any point, this changes, his staff reaches out immediately to update customers. Lambert uses digital vehicle inspections so he’s able to provide proof of why the repair is needed, which creates trust.
In addition, Lambert’s team leaves a bag of fresh cookies and a thank you note in each of his customers’ vehicles; sends thank you cards to each new customer (along with a bag of brownies); and provides a shuttle service and loaner vehicles.
The Reason: “Ninety-one percent of customers say they would give referrals, but only 11 percent of salespeople ask for them.” Propeller CRM
The Solution: Ask the customer to refer.
People often “raise their hands” to show they want to refer, Clark says, but many let these opportunities pass them by.
“If they [customers] call, email or come up to you and praise you, usually the owner says ‘thank you,’ and that’s it,” Clark says. “Instead what you should be doing is saying, number one, ‘We’re so glad, would you be willing to provide a testimonial for our website?’ That way, you can capture that testimonial and people in your community that know that person, it becomes a perpetual referral.”
Beyond the testimonial, you can thank the customer and ask them straight out to refer a friend if they’ve had a positive experience. Customers are very willing to make referrals, it’s just not something that they think to do, so Clark encourages shop owners to let customers know that referrals are appreciated.
Lambert asks every customer that comes in for a referral. Everyone on the staff knows how to encourage referrals, which starts with the check-in process.
When a customer comes in, the staff asks, “Have I seen this car before?” That’s key, Lambert says, because it avoids a customer feeling like you don’t remember them. From there, if they are a new customer, Lambert’s team asks, “Who referred you?” because they like to assume that all of their new customers are referrals. Then, if they were referred by a person, the team says how much they appreciate referrals and lets the customer know that their friend or family member who made the referral will be entered in a monthly drawing for a prize. This starts the referral program conversation and gets the ball rolling to encourage the new customer to refer down the line.
The Reason: “Customers who are referred to your brand are five times more likely to use your referral program than customers who weren't.” Extole
The Solution: Make referring easy.
“They won’t make an effort if it’s hard,” Clark says of customers making referrals to their friends and family.
A customer may have loved the service you provided and has every intention of coming back to you, but if your shop doesn’t have an easy-to-find website so that customers can share the link, the referral will most likely not happen.
“Often, people will refer friends by forwarding a link and if your company doesn’t have a website—or the website looks like a ransom note—the friend will be embarrassed to send it,” Clark says.
Don’t make the customer dig for your website, she says.
One of the main ways to ensure this is to make sure your website is mobile-friendly, like Lambert’s is.
The Reason: “Customers referred by a friend are four times more likely to make a purchase.” Propeller CRM
The Solution: Show gratitude for a referral.
Lambert shows gratitude for referrals in a number of ways, including the above mentioned monthly drawing.
Each month, the shop gives something away—the month of October, it was a smoker—and puts every customer that has referred a customer in for the drawing. Lambert says it’s usually between 20–30 names each month. Even if a customer doesn’t win, they’re still sent a token of the shop’s appreciation, such as a gift card. Lambert puts aside $350 each month to cover this cost.
“It’s classy to provide some sort of gift,” Clark says. “It could be anything—a free service, box of chocolates—thanking someone for doing you a favor is appropriate and gracious.”
More important than winning the drawing or the token is the genuine gratitude that is shown, says Lambert.
“The most important part is taking the time to give someone a genuine thank you—that trumps the giveaway 20 to 1,” he says.
Every customer that makes a referral is sent a handwritten note from the Shadetree team, thanking the customer for taking the time to recommend its services. The team also familiarizes themselves with the names of its customers that make referrals and makes sure to thank those people in-person the next time that they come in.
“It’s not fake or forced—we’re excited when we get a referral,” Lambert says.
