There is a saying in business that it is cheaper to keep a customer than generating a new one. The next cheapest would have to be obtaining a referral from an existing customer. Word-of-mouth marketing is the most powerful kind of marketing there is, but many new businesses fail to capitalize on it.

Think about all the referrals you make….sharing a good movie, giving the name of the dentist that is good with children etc. Your goal should be to have your clients recommend your goods and services in the same manner. But you can’t just hope that your customers will talk up your business. Here are some ideas to boost your referrals!

1. Before customers will refer business to you, they need to have the best possible experience with your business. Just as positive words can grow your business, negative comments can destroy it. A happy customer will tell approximately 3 people about a positive experience and 7 people about a bad one. Therefore, try to exceed your clients’ expectations. If there are problems, fix them, fast!
2. Let your clients know you would like referrals. You don’t need to beg or pressure. Just let your customers know that you rely heavily on referrals and their recommendation would be important to you.
3. Let your clients know how and when to refer another client to you. Paul and Sarah Edwards in Getting Business to Come to You suggest writing an article “How to Know When You Need…..(fill in your service)”. Have re-prints of the article made and give them to customers, send them in mailings, etc.
4. Listen for referral flags. When a client says “I have a friend who tried…” or something similar, it is a good opportunity to offer your assistance.
5. Give incentives for referrals. Gift certificates, discounts and specials are all good ways to generate referrals.
6. Develop a method for feedback, good and bad.
7. Use letters of reference and endorsements on your marketing materials. Be sure to ask for such endorsements and request permission to print it.
8. Develop relationships with your clients. While email, newsletters and social networking are great ways to keep your name in front of clients, sending personalize notes at holidays, birthdays, or other times builds a relationship that will keep your clients loyal to you. Businesses that are built on referrals only generate must of those referrals regularly written notes to clients. Personal contact insures clients will remember you when they think of the service you offer. Here’s the service I use to keep in touch with contacts.
9. Send a thank you to any one who provides you with a referral. (Be sure to ask new clients where they heard of you.)
10. Never speak poorly of a competitor or client. Always be positive and enthusiastic.

While other marketing methods are important in getting new business, nothing can beat a steady source of reliable referrals. Don’t ignore this powerful source of generating new clients.