Customer Referrals Do Not Come Easy

by | Aug 3, 2016 | Customer Service | 0 comments

“Referrals aren’t given easily. If you don’t take the time to establish credibility, you’re not going to get the referral. People have to get to know you. They have to feel comfortable with who you are and what you do.” – Ivan Misner

It is a fact of business now that prospective customers are more easily influenced by the views and referrals of existing customers, as opposed to the company’s most effective sales persons.  Motivated, engaged, and loyal customers prove to a company’s most effective ‘salespeople’ since they would willingly advocate your company’s products and provide strong referrals for your company. These customers help to grow a business better than any advertisement and or promotion a company can put together – a massive advantage for any company / business. The catch – customer referrals do not come easy. Positive word of mouth is hard to elicit unless a company can consistently create wow experiences for a company and create offerings that stand out in the market in terms of quality and pricing. It is proving to be a challenge for companies, to increase their business and customer base unless they have a sound market reputation that is backed by recommendations from friends, and existing customers.

While customer referrals may not happen easily, the fact is that they are the cheapest, most efficient, and highly potent method of increasing business and building a formidable market reputation. A company can gain several consistent and tangible benefits from customer referrals. We know that companies spend huge amounts in trying to attract new customers and often these efforts do not pay off. However, through customer referrals it would easier to ‘influence’ these reluctant and new customers to begin doing business with the company. Their apprehensions and doubts about a company are allayed for a large part through positive words from existing customers, who may also be their friends. This in turn saves costs and efforts for a company, which it would otherwise use to gain the attention of prospective customers, and still not have as much success as through a referral. In addition, a company would be using the full potential of its existing customer base, getting the full worth of the money and effort invested in the current customers. Hence, it is a saving for a company at both ends – on gaining new customers and ensuring that existing customers feel even more connected and responsible for the success of the company.

We say that customer referrals do not come easy because unless a company constantly delights its existing customers and gives them reason to believe and trust the company, it is unlikely that even happy customers would enthusiastically refer the company and its products to others. Another great advantage of customer referrals is that the conversion rate of sales leads are a lot higher – research has shown that cold calls translate to only about 10% conversions, while there is a 60% conversion when the lead is through a reference. The reason for this is simple – customer referrals carry with it an air of credibility and trust, breaking the barriers of doubt and mistrust that new customers usually have. As a customer, you would know that it is a lot easier to pick up a product or respond to a sales call from a company if other users may have said positive things and willingly endorse the company / brand. The element of risk that new customers may feel is significantly reduced through a referral.

There is no doubt that customer referrals are an easy and cost effective means to new business, regaining lost business, and increasing profitability. However, we come back to the point that customer referrals do not come easy and it takes a lot of time and relentless effort on the part of a company to begin getting these referrals and then ensuring a steady stream. Obviously, customers will not refer your company / brand unless they have a good reason / reasons to – they must care enough about your company to tell others. A company must make their customers feel valued, offer niche and high quality products, provide consistently exceptional customer service, and go the extra mile to ‘blow their customers away’. There must be a sound strategy around how to build relationships and a rapport with customers, getting them to feel engaged and emotionally connected with the company. Such a relationship is built on trust, efficiency, and top class service – for which customers are not only willing to pay more, but also go about letting others know and providing great referrals. By exceeding customer expectations consistently, a company would be able to make them walking advertisements and enthusiastic brand ambassadors for the company. This is no mean task and requires dedication and commitment on the part of a company and its representatives. Given that it takes time and effort to please customers suitably, getting referrals out of them naturally would not come easy.

While getting customer referrals are necessary, most companies find it hard to directly ask customers for them. There is no ideal time to ask for a referral and it would be wise for a company to weave it in to the process right from the time of the start of the association. It veers the customer’s attention in that direction and makes them focus on the best traits of your company right from the start. Post making efforts and keeping customers happy, it would be appropriate to remind them about your request for a referral. A company should however remember not appear desperate or pushy when asking for a referral – it is a lot easier to gain a referral when the company has exceeded the customer’s expectations consistently, because then customers are willing to listen and comply.

A top grouse of customers is that companies take too much time to respond to their queries and or resolve their problems. This is when customer referrals become hard to get. However, companies that are proactive, keeping most problems at bay, or at least swing into action to resolve a problem as soon as it occurs, would find favour with customers. It is critical for a company to apologise to customers, allow them to vent, and then take appropriate action to resolve their problems. No problem must be left unresolved and no query unanswered – doing so will ensure that customers not only leave but also spread negativity about your company that will affect future sales and affect market reputation. The fact is that most companies are guilty of slow and unresponsive behaviour, leaving customers feeling unimportant and frustrated – not surprisingly then that customer referrals do not come easy.

Given that customer referrals are such a rare but precious ‘asset’ for any company, it makes sense to express genuine and unfeigned gratitude to customers when they do refer your company. While customers may provide a referral because they are pleased with your company, it becomes the duty of the company to reciprocate their expression of faith with heartfelt appreciation. A thank you message or even a referral in reciprocation would provide enough incentive and encouragement to keep the referrals and positive word of mouth a constant feature. Research proves that at least 85% customers said that they were extremely pleased when a company thanked them, for a referral, publicly over platforms such as social media. Not only would they be glad to refer your company again, they would also remember you for repeat business.

Customer referrals when done right are a sure-shot way to grow business and lead to sustained success. After all, customers can make or break a business. It is very simple – satisfied customers bring in more business – their own and that of others, thereby expanding your company’s influence and raising its credibility in the market.

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