The Power of Business Referrals
Word of mouth is a powerful tool - it is using other people as ambassadors for you, or your company.
If you offer to recommend your contacts and help them with their business development, they will reciprocate. It is possible to build a business entirely on referrals with the right network in place.
New business obtained on the recommendation of other people is highly profitable. The clients usually spend more and are loyal. But few companies actively seek referrals.
Why Referrals Work
Referrals work because they come from a trusted source that has already benefited from the commercial or professional relationship yet has no vested interest in the business. It is independent and unsolicited. In business terms it has a rapid conversion rate - acceptance being dramatically accelerated because the service or product has already been tried and tested by a reputable third party.
Referrals are the rewards that come once you have created your network, made your connections and built your relationships. They are the ripe fruit that you have worked hard to grow. Like a harvest, they only appear if the conditions are favourable (i.e. if they are deserved).
Asking for referrals is one of the most powerful and low-cost ways of building or developing your career or business. It is a simple approach which feeds on its own success. But it has to be built on secure foundations.
When to Ask for Referrals
The time to ask for a referral is when:
- you've introduced someone to one of your contacts who awards them a project
- you have successfully completed at least two transactions for a client
- you solve a problem for someone who wants to reciprocate in some way
- someone thanks you for providing a good service
- you've helped someone through a particular difficulty.
