In this month’s blog we’re looking at referrals. You already know that word of mouth recommendation is the easiest, quickest and cheapest way to grow your business.

Research would suggest that you already benefit from word-of-mouth now, and if research is to be believed it is the foundation of your business (as with virtually all businesses). You intuitively know it works. After all who hasn’t chosen to eat at a restaurant that a friend, colleague or even a stranger has recommended? Or chosen a holiday resort, or a book, or a piece of music based on someone else’s suggestion?

So if word of mouth recommendation is so powerful what do you do first to get more of it?

The most common answer to this question is ‘ASK MORE PEOPLE MORE OFTEN!

This works, BUT IT’S THE WRONG ANSWER!!!

It’s easier than that. It’s less stressful than that and it’s more powerful than that.

The first thing you must do is tell them about the referrals you get from other clients and what you do to reward clients who provide referrals. To demonstrate let me share a ‘real-life’ example that a colleague of mine came across on a recent trip to the USA:

This story comes from Mike Storm, owner of one of the most successful independent karate schools in the USA. Their clients are mainly school kids (and their moms!). So what does he do to reward referrals? Mike gives very visible gifts. For example for their third referral they get a brand new bike – on which they naturally turn up at school and what do his/her mates say? “Where did you get the new bike?” And he answers “From my Karate school!” What naturally happens? More people start turning up at the Karate school to see if they can get a bike for simply referring even more customers! The original kid gets more rewards and on it goes!!!

Any wonder the owner is successful. By the way, the average annual order value for each Karate student is in excess of $3000! Get $9000, give away a $300 bike – makes sense, doesn’t it?

This is a powerful example and works because a clear, simple and emotionally powerful reward process works so well. It is systematically carried out to make sure it happens every time. And the story about the rewards gets to other possible clients and drives them to not only buy from the business but to automatically start referring more customers too!

So what do you do to make this insight work for you?

Answer three simple questions:

  1. How can you reward recommendations so that you create great stories for the recipients?
  2. How can you script the stories of these rewards into your marketing and selling so that the rewards themselves drive customers to you and to make it easy for them to recommend you too?
  3. How do you systematically measure all referrals, reward them and monitor them so that you can make full use of the stories they create?