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  Category: Articles » Business » Small Business » Article

Tap Customer Referrals, The Hidden Gold Mine

By Jim Degerstrom

This simple yet effective technique can boost your sales with very little effort. Learn what many small business owners have overlooked and how this easy referral system can help promote your business!

Boost your sales with an easy to execute plan for gaining recommendations from your customers. For small business owners, referrals are one of the most overlooked means of increasing revenue. Here's some advice and a sales lesson so you don't miss this gold mine of opportunity, plus a few tips to help you feel comfortable doing it. The last and most effective step in the sales process is "ask for the order".

This applies to referrals. Try it with your customers instead of taking a passive approach waiting for someone to recommend your product or service. Contact your existing clients and ask. You may be surprised with the results. This advice works equally well for land based or online businesses. Your customers appreciate what you do. Most of us lose touch or just forget to say thank you. By tactfully asking for a referral, most clients will jump at the opportunity.

Contact them. Thank them. Ask "How would you feel about referring me to your business neighbors or peers?" Most will say "Sure.", so be prepared to help them in the process with "Great! Thanks. What can I do, or what can I provide to help? You need my brochure, web address, or business card?" Hint: Begin your question open ended. If you simply ask "Will you give me a referral?" the answer can be "yes" or "no", so let them open up. "How would you feel..." gives the person an opportunity to explain in more depth. My scenario may not fit your business precisely, so think through how you would offer to help, but ASK. Your customers are yours for a reason. They appreciate what you do. They just haven't found time to thank you. With this request for a recommendation, you open the door for them to do something for you that costs them nothing except a few moments of their time.

Can this backfire? No. You may get an angry response which means you have an unhappy client. One day I'll write a new report on my favorite subject: "Why I LOVE Angry Customers and How to Gain Their Loyalty Forever". Hint: The best ex-customer is the one who tells you why. You can't fix a relationship until you know it is broken. Staying in touch with all your clients will help you identify the dangerous ones that quietly go away, and you realize it 2 years later! Dig deeper if they adamantly refuse to offer a recommendation.

Next, you may want to consider this short lesson in sales to help determine the best approach with your customers. The easiest sell is to an existing happy client. Not every small business owner is comfortable selling, so many use passive methods of advertising or a reactive approach once someone contacts them. Perhaps redefining sales will help increase the percentage of referrals, so here's a mini-lesson. Successful sales involve a 5 step process:

1 Preapproach
2 Approach
3 Presentation
4 Answer Objections
5 Close the Sale

You could fill a library with how-to books on sales techniques that follow this simple outline, so no details are required here. A bonus tip is included below that covers #4, but for now let's consider the last step because with an existing customer, you already passed the test on 1 through 4. Tip: Sometimes a referral can be as simple as handing someone your business card, flyer, or brochure and asking them to "Tell a friend", or you may want to add "and if you're unhappy, tell me!"

Sales are NOT an agreement between two parties for payment of a product or service. Following the roadmap, a successful sale is achieving one goal in the 5 step process on your way to actual revenue. You "sold" something if you made it past any one goal in the outline. If you have an appointment and get tossed on your butt, don't give up. You made it to step 3. Million dollar orders may take years, yet they use this same outline. Now you have a new goal: Get a recommendation from an existing customer. You are not looking for what most people mistake for sales, an offer and money in hand. You are selling to achieve this one goal, so let's go back to the 5 step process. Reapply each step to this new goal and then strategize the best approach based on your business and your customer list. Finally, just do it.

Bonus Sales Tip: Answering objections, step 4 above, is another very misunderstood part of the sales process. As a small business owner your first reaction when faced with an objection is to fix it. Avoid the temptation, and take advantage of this mini sales lesson based on years of experience studying the sales process. Silence, well timed, can be powerful. Any objection is meaningless if not fully understood, so use silence to get the details of what your customer is truly saying. Here's an example handling the big one: price.

The best answer to the statement "Your price is too high" may be as simple as saying "Oh?" and then saying nothing. It is human nature to accommodate customers, so many salespersons will immediately reply with a discount offer. Try the short question "Oh?", and silence instead. This will be very uncomfortable for you, and the customer. 2-3 seconds may seem like eternity. 10-15 seconds demands a response. Understanding the mental process during this silent standoff it the key to success. Your silence means you're done and eventually the client will realize it's their turn. Guess what happens? They will tell you in great detail why they said your price is too high.

You may find that they meant compared to 5 years ago or to a competitor who went out of business, or perhaps they will simply quantify the objection with a dollar amount. Regardless, understanding the nature in detail allows you to respond to something specific instead of blurting out a 25% discount when the customer may have been thrilled with 5% off. Try uncomfortable silence. Everyone wins.

In conclusion, repeat business and new business is much easier once you devise your plan and ask for referrals. Do this at least once for each of your customers. In the process you may identify some that quietly went away to your competitor. You may never recover the angry customer, but at least you invested enough time to learn their reasons which will allow you to improve your business model. Thank people often enough and you may get that gold mine of referrals without ever asking.

About the Author

Jim Degerstrom offers small business advice based on 30 years in management, sales, and marketing, including President or General Manager of small companies in 5 states. He is proficient in website and graphic art design, and runs his online Small Business Resource Center at from Kissimmee FL USA.

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