Create a Referral-Only Service Business
by Mike J. Agugliaro
Can You Really Create a Referral-Only Service Business?
Referrals are extremely important to any service business.
They’re a cornerstone of service business marketing, in fact.
But can you build a completely referral-only service business?
Your customers are one of your most valuable resources as a service business owner. You do great work for them and they tell their friends all about you.
That leads to more work with more people who’ll tell more friends.
It’s classic word of mouth. And in the modern business environment, you can encourage this word of mouth using referral marketing strategies.
Your customer’s opinions about you are more important than ever before.
If they’re not happy, they’ve got a bunch of ways to tell people. They can head to your social media pages to denounce you. They can head to online review sites too.
But if they are happy, they might not tell anyone. It’s those people that you want to give a little bit of a prod and a push to get them talking about you.
Referral marketing is a great way to do that. In this article, we’re going to break the process down and show you how it fits into your service business marketing plan.
Then, we’re going to give you some great tips for creating a referral marketing strategy.
And finally, we’ll answer the key question – can you create a referral-only service business?
What Is It and How Does the Process Work?
So, what is referral marketing?
CEO Warrior actually dove into this subject with Bill Cates a little while back. You can check out the full podcast HERE.
Bill is a client acquisition expert who’s helped a ton of companies pull in new customers. He says that referrals are one of the most powerful tools that you have in your arsenal.
After all, 65% of your new business will come from referrals.
The basic process is pretty simple:
- You provide a service to a client.
- You offer that client some sort of incentive to refer you to others.
- You deliver the incentive when you get a new client thanks to the previous client.
But that all sounds pretty mechanical. Plus, you could end up spending a lot of money on your incentives.
Bill tells us that truly great referral marketing is all about engaging customers from the get-go. It’s about getting them to latch onto your vision so that they care about who you are as well as what you do.
That’s how you create people who will advocate on your behalf. And in the best-case scenario, they’ll do it without any extra incentive from you.
It’s all about relationship building. You have to understand that you can do much more than just turn up and provide a service. That’s the bare minimum that a customer expects. And if that’s what they’re getting from you, they not going to talk about you.
A true referral marketing strategy focuses on building relationships. That means building trust and going beyond a customer’s expectations.
That’s how you get people talking.
Of course, it’s easier said than done. That’s why we’ve compiled a few quick tips to help you build your referral marketing strategy.
Tip #1 – Be Likeable
Let’s come back to Bill’s point about engaging customers. He points out that engaged customers are much more likely to refer you to other people.
The more value you bring to the relationship, the better your chances of getting the referral.
But there’s another aspect to engagement that you need to consider.
If you’re not likeable, it almost doesn’t matter how good your service is. You’ll struggle to get referrals because your customers don’t connect with you as a person.
The key here is to be friendly with people. Build a rapport and make the relationship about more than just the service. That’s how you build the trust that ultimately benefits your referral marketing strategy.
Tip #2 – Give a Little to Get a Little
Do you do any work for other business owners?
Are you giving them any referrals?
If you’re not, then you’re missing a trick in your referral marketing strategy. A business owner is more likely to refer you to the people that they know if you return the favor.
In fact, take the initiative. If you know someone who could use the business’ services, send them along. That’s going to put you at the top of that business owner’s mind.
When an opportunity for your type of work comes along, you can bet they’ll think if you first.
Tip #3 – Get Creative With Incentives
We seemed to diminish the importance of incentives a little bit above. But they are an important part of your referral marketing strategy. The fact is that a lot of your customers aren’t willing to give a referral without you rewarding them for it.
But here’s the thing…
Cash incentives aren’t as effective as you might think. They obviously cost you a lot of money. But you also have to remember that people aren’t just motivated by money.
Your incentive scheme needs to offer something of value to the customer. For example, you may have a members only website. Offer free access to it for a few months as an incentive. Perhaps you have a paid VIP plan for repeat customers. Again, give free access for a month to incentivize someone.
Alternatively, you could offer an extra year of coverage on something that you’ve installed.
Think about what’s really going to benefit your customer. Then, use it as an incentive for them to send people your way.
Tip #4 – Make Referrals a Part of Your Culture
In the podcast, Bill talks about using referrals as leverage for your business. He suggests making your referral marketing strategy a part of your company’s culture.
How do you do that?
Start by celebrating the people who refer you to their friends. Post a blog about them or make a video with them. Make them feel special for helping you to grow your business.
Build a community around your customers. Plant the seeds for referrals by telling them that you don’t want to be their little secret. You want them to share what you do with everyone.
The key is to make giving referrals a desirable action on the part of your customers. Show gratitude to everybody who recommends you, even if you don’t end up getting the job.
Tip #5 – Don’t be Afraid to Just Ask
This is a mistake that we see people making all of the time.
You deliver an amazing service and you just assume.
You assume that the customer’s in love with your business.
You assume they’re going to shout your name from the rooftops.
You assume that the referrals will come pouring in without you having to do anything.
And then they don’t. Nothing happens and you end up disappointed.
That’s because you didn’t just ask the question. Talk to your customers after you’ve finished the job. Make sure they like what you’ve done and then just ask them to keep you in mind if they know anyone else who could use your service. Or, point them in the direction of the incentive plan you’ve set up.
Let them know that you’re always on the lookout for more customers.
Can You Build a Referral-Only Service Business?
Now, we get to the question that we posed right at the beginning of the article.
Can you build a service business based purely on referrals?
Yes, you can…but you probably don’t want to.
Don’t get us wrong. A solid referral marketing strategy is a crucial part of your marketing plan.
But it’s just that – a part. It’s just one channel that you can use to bring new clients on board. If you focus on it exclusively, you’re missing out on things like social media and your website. You’re also ignoring the more traditional techniques that still work.
And you’re relying on people to do what you ask of them. Simply put, not everyone’s going to refer you to someone else. Some may not know people who need your services. Others may just forget about your referral scheme entirely. They’re busy people. You can’t expect to be top of mind for them all of the time.
Here’s the point.
Following a referral-only model will provide a decent flow of customers to the business. But you’re going to hit a plateau eventually. You’re going to hit a ceiling and the business will stop scaling.
Ideally, you want to take advantage of as many marketing channels as possible.
You absolutely need a referral marketing strategy. A huge chunk of your business comes from people recommending you to other people.
Just don’t fall into the trap of thinking that it’s the only marketing strategy that you need.
Focus on referrals and use the tips we’ve shared here to build a better strategy. Just remember that all of your competitors will do the same.
You need other marketing strategies to boost you beyond what referral marketing alone can give you.
The service business coaches at CEO Warrior can help you to build a more complete marketing strategy.
So, we’ll leave you with one question:
Has success been elusive and you feel stuck?