How Your Customers Can Help Build Your Business

Your best source for new business is literally right at your front door. Your current loyal customers are your best source for new business, as they hold the most sway with any future potential buyers. And for small companies – with a limited marketing budget – the value of your current customers can’t be overstated.

“The tendency of loyal customers to bring in new customers—at no charge to the company—is particularly beneficial as a company grows, especially if it operates in a mature industry, ” stated Fred Reichheld in a Harvard Business Review article. “In such a case, the tremendous marketing costs of acquiring each new customer through advertising and other promotions make it hard to grow profitably. In fact, the only path to profitable growth may lie in a company’s ability to get its loyal customers to become, in effect, its marketing department.”

To help you tap into this valuable resource, we’ve put together four tactics that can help you reach new customers with the help of your current customers.

1. Assess your customers

Choosing the right customers for referrals can make or break your strategy. Target the following types of customers in your efforts to ensure you select the most likely to provide a referral:

• Identify your best customers. Select both those who’ve been doing business with you for years, as well as those who’ve made considerable purchases recently.
• Look at recent positive reviews on your social media and target those customers. Since they’v taken time to leave a good review, they’ll be more likely to provide a referral.

2. Provide an incentive

Even your happiest customers may need a nudge to reach out on your behalf. Providing an incentive can help increase your chances that they will spread the word.

Free items like tote bags or T-shirts can do the trick, but incentives in the form of discounts, free products or even money back for each referral are the most common. To make the incentive even more enticing, provide a “commission” or small cash offering for referrals that make a purchase. This motivates more customers to refer their friends. Also, offer incentives for the person who is being referred. For example, a discount on a first-time purchase can spur them to buy even faster.

3. Prepare your materials

Make it easy for your customers to refer your business and you’ll increase the likelihood that they will follow through. Create materials you can provide to customers when requesting a referral. Make sure to include all the necessary details about your referral program, including the incentive you’re offering.

For in-person requests, use printed handout materials like brochures and instruction sheets. Have business cards available as well, and give out two copies — one for your customer and one for the prospect. When requesting referrals online, provide a link to a page on your website that includes instructions or a referral form.

4. Find the ideal time

Creating a successful customer referral program depends on finding the right time to ask. Asking customers at the wrong time or touch point could leave them feeling pressured, and might create a bad impression of your business.

Four good places to boost your chances of getting a referral:

1. At the register: If the customer has made several purchases in the past, inform them of your referral program in person during their next store visit. Provide printed handout materials with all relevant details so they can make the referral when they are ready.
2. In a post-purchase email: Whether they buy from your business online or in store, send an email a few days after to ask if they are satisfied with their purchase. Use that time to notify them about the referral option.
3. After resolving an issue: If you helped a customer successfully troubleshoot an issue, ask for feedback on how satisfied they were with the process, and let them know of your referral program.
4. After a good online review: When a customer has left a positive comment on your business’s social media and review site profiles, reach out with a thank-you and ask if they would be interested in participating in your referral program.

To increase your chances of more referrals down the road, express your appreciation for those customers who participated and for the referred prospects who made a purchase. Send out a handwritten thank-you note letting them know you appreciate their business, which will help to strengthen your relationship and increase their satisfaction.

Author: Melanie Neff

Melanie has an extensive writing background built on an impressive journalism foundation. As a reporter for USA Today and The Los Angeles Times for almost 20 years, she covered everything from the Los Angeles riots, fires, and floods to LA Lakers, Raiders and Clippers games and movie premieres. She followed her newspaper career with a long tenure covering commercial real estate financing and development. Melanie has been writing about small business marketing and labeling needs for the last 12 years. She thrives on reading, researching and expanding her knowledge of everything going on in today's business world and looks to provide the most valuable information she can to her readers. View all posts by Melanie Neff