One source of leads that you absolutely cannot afford to ignore is referrals from satisfied customers. These leads are the best kind you can possibly get - they're pure gold dust, for four very good reasons:
When a customer gives you the contact details of a friend, relative or colleague, and says they are happy to recommend you, you are already half way to a successful sale. That's because a lot of the work you have to do is getting people to trust you in the first place â and with a referral and recommendation that's already sorted for you.
In Nielsen's April 2012 Global Trust in Advertising report, which surveyed more than 28,000 Internet respondents in 56 countries, 92% of consumers said they trusted recommendations from friends and family above all other forms of advertising â an increase of 18% since 2007. It also showed that online consumer reviews rank as the second most trusted source, with 70% of global consumers surveyed online indicating they trust messages on this platform, an increase of 15% in four years.
This contrasts strongly with figures for paid-for media. TV commercials were trusted by 47%, magazine ads by 47% and newspaper ads by 46%, with confidence in these media declining by 24%, 20% and 25% respectively between 2009 and 2011.
This makes sense. Friends don't give referrals lightly as they are putting their reputation, and their relationship with you, on the line. Also, they have your best interests at heart. So when you come recommended by a friend or family member it carries considerable weight and the prospect is inclined to trust you before you even meet them!
Traditional advertising is expensive - printing and distributing flyers, placing an ad in a newspaper or magazine, taking a series of radio commercials, all of these require a big budget. Whereas word of mouth referrals are free! What's more, as we noted above, referrals are almost twice as effective.
Better profit margin
When you come recommended by someone the prospect trusts then price becomes less of an issue. Put it another way - if a consumer is comparing three businesses they have selected purely on the basis of their advertising or website then price is usually the primary differentiator - they'll go with the one that offers them the best deal. So, if you constantly find yourself competing in these situations your margins are going to suffer. Conversely, if you have been recommended by someone they trust they are more likely to go with you, even if you are not the cheapest.
Shorter sales cycles improve your cash flow. If you can get to a 'yes' in half the time you have effectively doubled your revenue â you can convert twice as many sales in the same time frame. And that's what happens when you get a referral. The prospect is already in a frame of mind to buy, because they've had a lot of their questions already answered to their satisfaction by their friend or relative. That makes your job so much easier and quicker.
You'd be crazy not to!
When you look at it like this you absolutely cannot afford to be shy about asking for referrals. But are you doing it? It is one of life's ironies that common sense is rarely common practice!
The funny thing is that getting such referrals is seldom that difficult â if you've done a good job, and built up a good relationship with the customer, then they are generally only too happy to give you some names and addresses then back that up with a recommendation. The key thing is to follow up after the job, check the customer is happy, then ask the question. It takes a little time, and a bit more effort, but it's worth it. What's more, you could create a reward scheme to encourage more referrals in the future - if it's sufficiently enticing that one customer could provide you with a regular source of leads over many months, or even years!
Link to Nielsen report: