Growing a small business is a real challenge, particularly acquiring new customers. Finding the best qualified leads from your business does not come from cold calling but from building a strong referral business. Particularly with smaller businesses referrals make sense, as they can, if done effectively, greatly reduce the acquisition costs of each customer.

The business of referrals makes sense for most companies for the following reasons:

• Referral marketing reduces your sales expenses and sales cycle. With less time calling cold prospects, your small business can focus on customers and their circle of influence.
• Referrals can build your level of satisfied customers. The cycle self-perpetuates with more satisfied customers referring others to your company.
• Referrals can increase your sales revenue.

If the prospect of building the referral end of your business is so enticing, why do so few businesses do it? The first barrier to referral success is because it is often see as a time consuming process as opposed to cold calling. However, if your success rate improves it is certainly worth the additional preparation time. Sales is a numbers game, but it is not necessarily a matter of the more contacts you make the more success you will have. It is far better to do it right, than to just do it. Here are a few simple tips to start you in the right direction to build your referral business.  

1. Set a target: In business, measure the results to improve performance. Set a clear goal with a time line. Example, 10 percent increase in referral business over the next 10 weeks.

2. Timing: Conventional sales wisdom claims the best time to ask for the referral is immediately after the close. However despite the fact that this helps your timeframe it can be seen as aggressive by your client. Give your clients time to experience your service or product before asking for a referral. Ask for the referral at close only if your client is already delighted with your business.

3. Top 20: Not all customers are referral candidates. Find the top 20 percent of your customer base that are ecstatic about your business and ask them for referrals. Make sure their network is the type of client you want.

4. Give and you shall receive: Give your clients extra service and follow-up support before asking for referrals. When you give willingly to your customers, they will return the favour just as willingly.

5. Picking the right customer: Inform your referring clients of the type of customers you can help. Providing a clear picture of the customer demographics will help your referral marketing by being more targeted in your approach.

6. Rewards program: Provide special rewards to your referring customers on a regular basis. If a customer provides you with five or ten sales (whatever you are comfortable with) offer them something special, e.g. discounts.

7. Thank-You: A simple thank you in the form of a personal letter is a great way to round out any referral process. Here the personal touch is important and of course one of the critical benefits of working with a small business in the first place. If you have that kind of relationship even support the letter with a phone call. The critical aspect here is to formally acknowledge that by offering a referral your customer has gone above and beyond the call of duty. People love to hear a thank you; such a simple gesture makes customers feel truly valued.  

These tips are simple but when executed on a regular basis they can drive your referral business and build sales revenue. Start today and watch your referrals and your business grow.