Building a Referral-Based Business

Most businesses have a number of satisfied clients; however they do not know how to effectively leverage that network. The name of the game centers on knowing and executing three fundamental principles.
 
1. Reducing both the cost and time associated with acquiring new clients.
2. Selecting and retaining clients who are profitable.
3. Training your clients to consistently provide referrals that fit your ideal client profile.

With this in mind, here are several proven ways to build a referral-based business.

Step # 1 - Know your ideal customer?
My old boss used to say, "If you always do what you've always done, you will always get what you've always gotten." In other words, you will always get the customers you are willing to accept.

It is essential to profile your ideal client’s characteristics. Some of the most desirable attributes should include; they pay their bills on-time, they are pleasant to deal with, they are value driven, they respect your time, they have the ability to grow with you, they are willing to refer other clients to you, and they offer feedback on how you can improve the services you provide.

Step # 2 - Determine your A-B-C-D clients
Go through your account list and evaluate each client against the criteria above. Through this process, you are able to evaluate each client's status and determine if any mid-course corrections need to take place.

In some cases, you will come to the conclusion that you have certain clients cost you money. Realizing this, you can take the appropriate action and decide if the client is worth keeping.

Step # 3- Stay in touch
It is somewhat ironic that even though we take tremendous care in bringing on a new client, we sometimes go into the maintenance mode, and take for granted our position with the client.
Research has shown that a client is 10 times more likely to refer other potential clients to you when they have purchased from you at least three times in the past.

Because of this, it is imperative that you have a constant stream of contact with each client. The minimum number of interactions should not be less than four per year.

Depending upon the business, staying in touch may encompass telephone, email, a newsletter, or direct mail contact. We suggest that you try to personalize each contact point by including a handwritten card or note wherever possible.

Where it makes sense, a personal consultation should take place at least once per year and during these meetings, you should ask for and receive referrals from your existing clients.
 
Step # 4 - Create delighted advocates, not satisfied customers
There are really only two reasons why a person would tell a friend about another business, either because they had a bad experience, or, because it was really great.

To be noticed, you need to do something extra special that the client isn’t expecting. It may cost you very little, but be perceived by the customer as having great value.
Some examples of going beyond the call of duty include:

• Referring other clients to your customers who could possibly buy from them.
• Sitting in on a meeting with another professional service firm and offering your time at no charge.
• Offering educational workshops on pertinent subjects that help make your clients smarter.

Step # 5 - Let them know you care
Given the hectic pace of business; we often forget that it is the little things that people appreciate the most.  When was the last time you received a personal note of appreciation from someone you do business with? If you are like most of us, it has probably happened just a few times in the last year.

The point is, we don’t take the time to really let our customers know how much we appreciate their business. We all know how good it feels when we get a nice note from a friend or loved one. This is exactly how our clients feel when they get a genuine note of appreciation from us.

Step # 6 - Make giving referrals a condition of doing business with you
As controversial as this may sound, you have the right to determine how you want to do business and what role your customers will have in helping to develop your success.

I know one financial advisor who explains at the first meeting how the referral process will work. He asks the potential client to list the names of five referrals and only has them write down their first name along with the first initial of their last name. He proceeds to explain that if this potential client becomes delighted with his service, he would like the complete name of the five individuals along with their phone numbers. Furthermore, the client will take responsibility for contacting each of the five people before being contacted by the advisor.
 

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