The Power of Referrals

referrals1Who doesn’t? The key to get business (or more business) is through referrals. Many entrepreneurs that I speak to have shared with me that the majority of their business comes from referrals. These same individuals advertise in popular magazines but because advertising is so competitive in a sense (and expensive, it is hard to get business from it.

How is it competitive you ask? Well, simple. Say you have 10 wedding planners advertising in the same magazine or 20 wedding planners advertising on the same online magazine…realistically how will the consumer choose which wedding planner is best for their wedding? What ends up happening is that the individual getting married ends up calling or emailing every wedding planner in the magazine or online publication, set up appointments, see who has the best “deal,” ends up wasting your time, then chooses someone else. It’s not a win/win situation.

Here are four reasons why referrals are important for your business:

  1. Referrals increase your sales revenue.  “According to world-renowned sales trainer, Tom Hopkins, in “Sales Prospecting for Dummies”; your closing ratio for non-qualified leads is 10 percent versus a 60 percent close ratio with referred leads.” {Source: 7 Sure-Fire Ways to Build Your Referral Business, by Darrell Zahorsky, About.com}.  The bottom line is the end result will be a larger sale because the prospect trusts the individual who referred you.
  2. Referrals bring you more referrals. If you have a satisfied client, more and likely that client will refer you to others. Also, encourage your client to post on their social media pages how satisfied they were with your services. If your client has tens of thousands of followers on Twitter, Facebook and Instagram, their followers will immediately start following you, communicating with you, asking questions and emailing you for business.
  3. It’s FREE. As I stated above, you will receive more business through referrals than expensive advertising. This is why networking is important. When you are at industry events, introduce yourself, mingle, talk about what you do because the very person you are talking to may not necessarily need your services, but may know someone who does.
  4. You’ll increase your closing ratio.The closing ratio of a cold call is typically under 1 percent. The closing ratio of an inbound lead usually ranges between 15 percent and 30 percent. In sharp comparison, the closing ratio of a strong referral can be as high as 80 percent.” {Source: Why Every Business Needs a Referral System by Mark Wayshak, Huffingtonpost.com}

referraltechniquesReferrals are a great way to generate (more) business. It doesn’t cost you anything but the important things to remember are to always present yourself professionally, do not be afraid to ask for a referral from your client (without sounding desperate and forceful) and do a good job. Until next time

Salud!

One thought on “The Power of Referrals

  1. Pingback: I Don’t Have Free TIME to DO Free Things | The Glitz Report

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