How to Generate More Customer Referrals

Finding new customers is one of the key issues challenging small businesses today. Despite knowing how important word-of-mouth referrals can be in driving business growth, it’s not always easy to work out exactly how to get more of them.

So why not take the hard work out of the process and put some strategies in place that will naturally generate more customer referrals for you? Here are some ideas to try.

Convert your existing customers into raving fans

Inbound referrals generated by your best, loyal clients are some of the highest quality customers you will find. Like tends to attract like. If you have an existing loyal customer base, it makes sense that they will be connected with people in their network who are similar and could be a potential goldmine of highly valued customers for you.

Data from Nielsen via the Ambassador Blog shows that 84% of consumers report they either completely or somewhat trust recommendations from trusted others about products, so it makes sense to aim for your customers to speak in glowing terms about your company wherever possible.

Although many companies have formal referral incentive schemes in place, not everyone will be motivated by the idea of a ‘kickback’ for referring friends. Instead, work to give your existing customers something to rave spontaneously to others about by striving to exceed customer expectations.

Attempt to deal with customer issues and complaints swiftly, and try to resolve them to the customer’s satisfaction. Support staff with internal training and systems that allow for rapid, effective communication.

Remember, just because your internal structure makes great sense to you and your team, the experience should be seamless for the customer. If you transfer a customer complaint or enquiry between staff, ensure that this process does not require the customer to retell their story to each new person involved.

Make sure every interaction counts. Customer facing staff are the face of your organization – and as such, are ambassadors for your business. Ensure they are representing your company and your ethos in the most appropriate way.

Surprise and delight your customers with rewards for their loyalty. This could be through an unexpected gift once they reach a certain spend threshold or a handwritten note from your team. Think of what you would expect from a service or product, and don’t deliver anything less to your customers.


Simple, isn’t it? And yet, surprisingly effective when done correctly.

Asking your clients if they know of anyone who would benefit from your services can be confronting the first few times you try it, but it gets easier with time.

There are certainly right and wrong ways to go about it. Some of the no-no’s include asking customers upfront when you have not yet established a good relationship with them, being pushy about incentives for referring others and not thinking in depth about what would motivate your customers to refer more customers your way.

However, where you have established relationships, there are tactics you can implement to make the process easier. These include:

  • Borrowing scripts that have worked for others, and incorporating these where appropriate into client emails, customer newsletters or promotional material, for example:
  • “Do you know of anyone else who might benefit from my services? If so, please consider forwarding this email/newsletter/brochure onto them.”
  • “Have we exceeded your expectations lately? If so, please share our podcast with a friend.”
  • If you have a great relationship with an existing customer, ask them if they would consider taking some of your business cards or rate sheets to distribute to others.
  • Create opportunities to allow others to sing your praises without making it feel like a hard sell. For example, you could run a competition on social media asking customers to relate what they love most about your product or service, or even just to interact with your organization in a way that presents your brand in a positive light to others.
  • When you are asking for referrals, try and be really specific, as this makes it much easier for the customer, and thus more likely that they will act. For example, if you are an accountant, you might ask after completing a customer’s taxes if they know of anyone else who might be running behind on their tax submission this year and could use some help, rather than just asking if they know of anyone who needs an accountant. Being more specific helps the customer think more easily of specific people who might benefit from your services, which is a win for you.

Seek Out Strategic Partnerships for Cross-Referrals

Can you think of an industry partner you know of who also sells complementary products or services to your audience but is not in direct competition with you? If so, they will likely be an excellent option to approach for cross-referrals (i.e. you refer your customers to them, they refer their customers to you). If not, it’s time to sharpen your pencil and get brainstorming!

Some examples of mutually beneficial business relationships might include:

  • Doctors and allied health practitioners such as nutritionists, physiotherapists or podiatrists;
  • Pet groomers and pet kennels or day care;
  • Hairdressers and massage therapists;
  • Paint ball and go-kart venues;
  • Caterers and florists.

The better you know your ideal customer base, the more closely you will be able to fine tune your business referral strategy. It may even help to do a quick customer survey to identify which other businesses your customers commonly frequent.

If you are a local business, you can sometimes link into business referral partnerships that have a geographical focus or reward customers that shop locally. Examples include Local First Arizona and Referral Key, a purely online solution.

If you don’t have many ideas for who to approach for a reciprocal referral partnership, it might be time to dust off your networking boots and begin making some meaningful business connections in your industry that will generate referrals in the long term.

Follow all referrals up with a thank-you

Whether it’s a happy customer or a new industry partner who referred you, make sure you take the time to recognize the effort by saying thank-you.  Genuine referrals are like gold; treat them that way, and not only will strengthen your relationships in the process, you will encourage the referrer to send more referrals your way in the future.

This approach is different from a formal referral incentives scheme in that the referrer has made the referral without expectation of any reward. One good option for rewarding regular referrers is to give them some unexpected reward, to take away that feeling of ‘hard selling’ that holds many back.

Incentives don’t always have to be in the form of a major outlay for your business; they could be as simple as a discount on the customer’s next order, a free extended warranty on your products, or an upgrade to a premium service where they were expecting a standard one. These seemingly small recognitions do add up and cement you in the customer’s mind as providing a five-star service.

As a business, it’s not always easy to predict where your new customers will be coming from, so it helps if you can fill your pipeline with a steady stream of referrals that seem to come in automatically. Keeping the focus on maintaining good relationships with your customers and your industry partners should ensure a natural, fuss-free system for automating your referrals, all without the need for a hard sell.

Parker Davis is the CEO of Answer 1, a leader in the virtual receptionist and technology enabled answering services industry. He believes that the application of data analytics, investment in technology, and fostering a positive company culture together create highly efficient and scalable growth companies. In 2016, Answer 1 will achieve record revenues while also being awarded the Top Companies to Work For in Arizona award.