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Small Business Marketing on a Budget - Easy Technique for Growing Your Customer Base

Aug 17, 2007
Hopefully, you're aware of the value of giving something away for free in order to grow your customer base. When using this tactic, it's good to know the lifetime value of your clients so you can determine how much, monetarily, you can afford to give away for free.

More than likely, that the lifetime value would be higher if you knew each customer would refer other new customers to you. And that brings us right to our simple technique for increasing your customer base and growing your business:

Create A Surefire Referral Program

A solid referral program is, without a doubt, the least expensive way of generating new customers.

Prospects who are referred to you are "easier" to convert into customers since they are, in effect, pre-sold. Recommendations from friends are always more trust-worthy and credible than any advertising you could ever do.

Additionally, the customers who do the referring become more loyal to your business. They've identified with you and staked their own reputation on your. It's very unlikely that their psyches and their egos will let them back down from this public statement.

Don't rely on word of mouth to generate your referrals. While word of mouth does work, it's slow and hard to control; it will never bring in enough referrals quickly. You must have a systematic plan in place and you must follow it on a regular basis.

One of the easiest ways to get referrals - and the one most mall business owners are the most afraid of using - is to just ask. I think many of us are afraid to ask for referrals because of fear of rejection. We're afraid our customer will think we're pushy and that they'll say "no". But let me share a little secret with you. Most of our customers want to give referrals. It makes them feel special, like "they belong", like they're a personal part of your business. And it allows them to be a hero to their friends by sharing an "insider's tip" or a "secret resource".

OK, we know we should all be asking for referrals, but there's a little more to it than that. You can't just ask, "Do you know anyone who could use my service?" You'll get lots of blank stares and you'll hear lots of "Not right now, but I'll think about it." You've probably been down that road before and you took that response as a rejection. Which is why you're now afraid to ask for referrals.

But the blank stare wasn't because you asked, it was how you asked. Your question was too vague. "Do you know anyone..." You're basically asking your customer to think of everyone she knows. That's overwhelming and confusing. You need to help her focus on specific people she knows.

We'll use the quick lube center again as an example. Try this: "Kathy, do you have any neighbors who drive hybrid cars like you do who might be interested in using our service?" Do you see how that helped her focus? You narrowed down a demographic (where they live) and a psychographic (what type of car they drive). If Kathy still says "no" you can try one more appeal: "Well, how about co-workers?"

Now you've got Kathy focused on three things: neighbors, co-workers, and hybrid cars. It should come as no surprise when Kathy says, "A guy at my church drives a hybrid car." or "My co-worker Jim was complaining about the condition of his wiper blades the other day. I'll tell him to come here and get some new ones."

Great! You've got Kathy focused on specifics and she even mentioned particular people she could refer. Now you might want to take the extra step to get those prospects into the door. You can hand Kathy some coupons to give to her referrals, or, if you're bold enough, you can even ask for their phone numbers.

If you want to use the coupon approach, here's an amazing tips that works on so many levels: on the back of the coupon, quickly jot down "special friend of Kathy Smith". The persuasive cleverness behind this is brilliant:
1. You made Kathy feel special by implying that her friends deserve exclusive treatment.
2. You've allowed Kathy to become a hero to her friends and acquaintances.
3. Kathy is more likely to encourage her referrals to come in for service since there is now a tracking method in place. (Remember the law of reciprocity.)
4. The referred prospect is more likely to come in since he now believes he'll get "special service".

Want a more covert way of asking for referrals? This may not be as effective as asking outright, but it's a good way to "get your feet wet" if you're too afraid to ask. Remember that free give-away we talked about earlier? Now would be a great time to pull it out. As Kathy is paying her bill, simply say, "Kathy, I have this new report 'Which Funny Noises That You Car Makes Do You Really Need To Pay Attention To?' Here's one for you, and here's one to share with a friend." When Kathy gives the report to a friend, it's sure to spark an endorsement of your services.

The key to generating tons of referrals on a consistent basis is to have a system in place that you use each and every time. If you decide to ask for referrals, ask every single customer. If you decide to use a freebie, give it to everyone, every time. It's also very important to reward the customers who send you referrals. (Remember writing the name on the back of the coupon? That's a very easy tracking mechanism. Why not send Kathy a free oil change for every three customers she refers?)
About the Author
Karen Scharf helps entrepreneurs and small business owners attract and retain more clients. Karen offers several coaching programs and a Marketing Makeover to turn your current, ineffective advertising into a new and improved system. She also accepts full service marketing assignments. Check out her FREE reports at http://www.ModernImage.com.
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