Referrals: The Best Prospecting Tool For Adding New Business.

A recent study by New York University’s Management Institute asked the following question to sales and marketing professionals: “What is the best technique to find new customers?” A 1-5 scale was used, where 1 equaled “not important” and 5 equaled “very important”.

The results were as follows:

Marketing Technique / Average Score

Referrals / 4.8
One-to-One Marketing / 4.5
Direct Mail / 3.8
Trade Shows / 3.2
Cold Calls / 1.5

This is no surprise, as we have been touting this underused resource for quite a while, yet, it also seems to be frequently ignored. People do not like to ask for referrals. Perhaps it is being uncomfortable with rejection, unsure of the response they may get, and thus it is a tool that is used less frequently than it should be.

Here are the obvious facts:

1. A satisfied customer is your best lead generator. He bought, paid and appreciated the product or services. What more needs to be said?

2. Depending upon the product or service, a customer may be willing to buy again or may know someone who is in the market for a similar service or product. He will refer you if you ask him.

Here is the key point which seems to allude so many small business owners: You must ask for the referral. You cannot leave it to a natural evolution—it just does not work this way. In fact, you must have a structured approach with freqent visits to the client asking him from time to time for referrals or repeat business. Failure to do this undermines the potential of your business and reduces the return dramatically.

A commitment to asking will result in the best resource for new business or repeat business. It is tried and true, proven over and over. Ask and it will happen, fail to ask and it will not.  We have spoken so much about systems; here is a perfect opportunity to apply a systematical approach to asking for referrals. Whether it be by direct contact, mail or telephone, it is a job that must be planned out and implemented. The results will be stunning. Years later, after an every-six-month inquiry, you may receive dividends for your effort in the form of a new customer. Really, what does it cost you to make an every-six-month call or mailing? Not much. What does it bring in? A valuable new customer.

Many say word-of-mouth is the way to go, that your good customers will naturally and automatically refer new business to you. If you are fortunate enough to experience this form of success, then terrific, but never stop asking your customers for referrals.