March 30, 2016

Failing to Actively Ask Your Existing Clients for Referrals

Helen Bunford, Office Manager

Ask any small business owner: “What’s your number one source of new business?” The vast majority will tell you: “Word of mouth, referrals from our existing customers”.

Then ask the next and most critical question: “Do you have a system for consistently generating referrals?”

The answer, almost 100% of the time.


Many businesses have systems for tracking where new clients come from and others have systems for thanking referrers however, ALL BUT NONE have a system for actually GENERATING referrals from your client base.

Let’s explore this HUGE opportunity for your business, to do that, let’s start with a simple calculation …

Where you have repeat business make a note of your average customer spend , for example, $3000 p.a., $5000 p.a., $8000 p.a., $12,000 p.a., $18000 p.a., $23,000 p.a. etc.

Now make a note of how long on average customer stays with your business, e.g. typically, 5 or 7 years (or longer).

Now calculate the two i.e. your average annual customer spend per year multiplied by the number of years they stay with you. For example:
$7,000 x 7 Years = $49,000.

That means every customer is worth $49,000 in gross revenue to your business over time.

Now ask yourself this question … Would you say, that over those 7 years each customer could refer you at least one other business client?

If the answer is ‘yes’ which is the typical response from most business, then in reality every customer isn’t worth $49,000, in fact they’re worth $98,000. They’re worth that via the value they add to your business positively speaking about you to their colleagues and associates.

(If the answer is ‘no, we wouldn’t get 1 per client over time’ then frankly, you have some work to do within operations. When you offer quality products and services and high customer service, referrals come naturally).

Given the enormous value of a customer and their referrals to you and your business, the key then is to spend some time developing a system that captures referrals rather than leaving it to chance. There’s one strategy that is proven, tested and works gangbusters for SME’s and professional service firms – it’s simple:
Ask ‘em … UPFRONT!

Here’s how:

“(Customer Name) as a business owner you’d appreciate that one of THE most effective ways to grow any business is via referrals from existing customers and clients. Here at (Your Business Name) we’re no different than you in this regard. That’s why, when you are delighted with what we do for you, and ONLY when you are delighted with what we do for you, we will ask you for up to 3 referrals to like-minded business owners like yourself. I say that because of a couple of factors:

  1. We like dealing with people like you and we subscribe to the idea that often, ‘like people travel in groups’. You no doubt have other qualified business owners in your circle, business owners who are looking for better service than they may be getting now and we’d like to assist them.
  2. Lastly, we want this to show you that you can rest assured knowing we are 100% vested, more than just financially, in performing incredibly well for you here. In short, we want you raving about us and together, having a productive, fruitful working relationship for many years to come”.

This strategy impresses the client. They see that you are walking the talk. They see that you are committed and vested in providing excellent customer service and offerings. And lastly, they have plenty of colleagues they know need better service, this way that can suggest something that could make a difference for those colleagues.

Better yet, once you have this conversation the ‘seed has been planted’, clients will come back to you well before your project or work together is complete and ask if they can refer colleagues and friends into your business sooner rather than later.

Tactica Partners are no different to any of the businesses referred to above and therefore we would very much appreciate any referrals of like minded business owners like yourself (be their friends, family and/or your clients).

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