Everyday I hear companies making claims that their largest marketing engine is word of mouth through referrals. These companies are growing their business by servicing their existing customer base so well that they’re clients are excited to share the resource with co-workers, colleagues and friends.
Historically, cold leads have a closing rate of 25-30% whereas a referred lead traditionally has a closing rate of 50%. You nearly double your success with a referral! Aside from doubling your success rate, you’re also making yourself more productive by reducing the number of steps and less time invested in the sales process. A byproduct of referrals is the boost in customer loyalty within those who gave the referral. When one makes a referral they are simultaneously providing a testimony for you and your company. Testimonies have statistically proven to alter ones self-image. In this case, your client is strengthening their self-image as an advocate and committed partner to you and the brand you represent. This is where the consistency principle comes in to play. Once a statement or position has been made publicly it is our natural instinct to behave with consistency. You can leverage this pre-programed response to your advantage by encouraging existing customers to provide referrals and publish testimony’s.
To the recipient, referrals are effective because they create what Dr. Cialdini refers to as a Social Proof. There are a number of principles that play a part in the overall effectiveness of a social proof.
• Uncertainty: When one is faced with an unfamiliar situation and seeks the guidance of others.
• Expertise: Coming from one perceived as an influential and knowledgeable individual on the subject matter. • Number: When the proof is established by quantifying the actions and behaviors of numerous people to validate what is believed to be correct. • Similarity: People are more likely to conform to the behaviors of those perceived as relatable and similar to oneself. Research has shown that our peers greatly influence and motivate our behaviors, decisions and actions.
Where will you find sources of referrals? These sources exist in two forms, internal and external.
• Internal Referrals: Existing clients who refer another buyer from the same organization. This can be within another division or department. • External Referrals: When a client refers a friend, customer or colleague outside of their organization to utilize your product or service.
Take Action Today. Grow your business with existing accounts by requesting your customers organizational chart then engage the similarity principle by asking for personal introductions to other buyers in their company. Second, ask your clients for referrals and to provide a written testimony with permission to publish in your outbound marketing and social media campaigns. This will engage numerous principles to establish a solid social proof and grow your business.
Capitalize on your existing customer base and leverage the relationships you have today. To get what you want, ask for it.