And yet, few of the small business owners that I surveyed recently had a strategy in place to generate referrals (36 out of 37, to be exact). If you're among them, you might want to reconsider. There are several great reasons to develop a referral marketing strategy.



First, when compared to radio ads, display ads, and even direct mail, referral marketing is extremely inexpensive.

The leads you generate through referral marketing are exceedingly more qualified than leads you acquire through any other means.

Referred leads are more familiar with your business and less concerned with price than other leads.

Studies show that referred leads are much easier to "close" than other leads (I really don't like the concept of "closing", but that's a subject for another day.)

I've had a referral strategy in place in my own businesses for years. One of the side benefits that has cropped out of this strategy is that I'm so much happier in my day-to-day work life. I know that probably sounds corny, but consider this:

The large majority of my new clients are referred to me by current clients whom I already like and get along with, and who already know what I am looking for in a client. So I end up with a whole crop of my perfect clients who I enjoy working with, who don't bicker about my pricing and who are ready to make a move on growing their business.

I don't have to sit around for days waiting for new leads to decide if they want to work with me or not. They've already seen my work, they already know how I do business, and I've received an implied endorsement from the client who referred them.

Don't underestimate how important all that is to your productivity and stress-levels. Having a referral strategy is critical to increasing your productivity, lowering your stress and growing your business.

You can start generating your own referrals by following these easy steps:

1. Identify your ideal clients. These are the clients you want to ask for referrals so you're sure to get more like-minded individuals.

2. Tell your clients what it is you like about them to ensure they refer individuals with the same traits and characteristics.

3. Don't wait until the project is over before you ask for a referral. Make your request before your client's excitement wanes.

4. Personally follow up on the referral immediately.

5. Thank your client for the referral, even if it didn't lead to a sale.

If you're not sure how to begin, don't feel bad. Remember that informal survey I mentioned earlier? The number one reason those small business owners cited for not having a referral strategy was that they didn't know how to create one.

Action Item - Write down a list of the traits that you like and/or admire in your favorite clients or customers. Be as specific as possible. Is there something your client does, something he thinks, a certain way he behaves? Know this list backwards and forwards. When you're ready to ask for a referral, you'll know exactly what to ask for.