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You Are Here: Home - Newsletters - "Organized For A Living" - Article

Build A Referral Base

Almost everyone knows that it costs less to sell to a CURRENT customer or a referral than to acquire a NEW customer. Your most productive marketing strategy is to get new business through referrals of current customers. Yet, most business owners do not use this method.

Your primary goal in creating such a strategy is to make sure that you are providing VALUE for your existing clients. Once they know how much they receive from your services, they will naturally spread the word. Because they TRUST your services they will provide you with word-of-mouth advertising without even thinking about it. 

Build RELATIONSHIPS with people; use all the resources that you have -- including old friends, peers, and church communities. Your job is to create a customer pipeline from all your resources. Research shows that each person is linked to all other people by no more than a factor of six. You never know who your friends or customers know. Talk to your friends and give them an opportunity to become AMBASSADORS for your products or services.

An excellent way to do this is to build a referral TEAM. Simply identify 10 to 20 people who have the ability to meet the kind of people you want to meet. EDUCATE your team members. Make them aware of what you can do for people, and also become aware of what your team members do. If you incorporate traits of relationship marketing into your business style, you will be more likely to receive referral business from existing clients. When customers know you sincerely care about them, and their success, they become more willing to share you with their associates. 

Over time, team members will begin to promote each other to their best customers -- the ones who trust their judgment most -- providing excellent referrals. You may consider providing each team member with something tangible to give prospects -- newsletters, business cards, or brochures work wonderfully. And in return, be prepared to RECIPROCATE, by connecting your loyal customers with team members who can help them. It's a win-win situation for everyone.

Another method of building a referral base is to ask for referrals. When your clients are pleased with a product or service you've provided, ask them to mention you to their associates. You can also ask your clients to provide names and contact information for those they think might be INTERESTED in your services. The most effective time to ask for referrals is immediately following the completion of a SUCCESSFUL sale. Here are a few tips as you ask for referrals. 
  • Start the discussion by letting your client know this is an important area of your business. Mention that, while others may ask for referrals in passing, you are truly interested in HELPING your client's friends and associates.

  • Make it clear that you are asking for their help, yet you understand if they choose not to participate.

  • Explain the process and let them know what you'd like for them to do.

  • Share with them exactly what type of customers you are looking for.  Don't assume that others will be able to decide your preferred client type.  Be SPECIFIC.

  • Ask for QUALITY referrals and not QUANTITY. One good, repeat customer far outweighs a dozen small, one-time customers.

It will not happen overnight. Building a solid referral base takes TIME. However, remember that referrals are one of the strongest forms of advertising. As you develop a network of people who are promoting your business on your behalf, you will see your sales increase.


Carol Nicolaides is President of Knowledge Innovation Group offering business and personal coaching / consulting in Leadership, Organizational Development, and Knowledge Management. Visit her website at

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