Ramping up Referrals

There's a simple reason why most small businesses aren't as successful in generating customer referrals as they'd like to be: they simply don't ask for them.

According to Ivan Misner, founder and chairman of BNI, a global networking and referral organization (www.bni.com) in Upland, CA, companies believe if they provide a high-level of customer service and their customers are happy, they'll spread the word and referrals will come. "However, that's simply not the case," Misner says. "Good customer service reduces negative word of mouth, but it doesn't increase positive word of mouth, at least not as quickly."

Therefore, companies need to formalize, at some level, the process to solicit customer referrals. Once they do, here are some suggestions from Misner to make the program work:

Give Thanks. You need to recognize the people who give referrals, whether it's by buying a thank you gift or simply writing a note. It doesn't have to be fancy or expensive. Misner references a chiropractor who had a bulletin board where he simply posted the names of all patients generating referrals, with a thank you note written to all. Those wanting to be even more sophisticated can stray from what Misner terms the cookie cutter approach, to buying personalized thank you gifts, which stand out even more from the crowd.

Don't Be Spotty. It's better to have a formalized customer referral program that is consistent rather than recognizing some and overlooking others.

Know What You're Looking For. Be clear to people about what constitutes a good or a bad referral for you. "If I don't tell a customer that their referral isn't working for me, that person will keep giving you bad referrals." Misner says. You also run the risk of alienating that person if they go to the trouble to help you and you don't take advantage of their legwork. BA

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