Ask any good business owner how he generates most of his business and he will instantly tell you that he does it through referrals. Ask him to explain his referral system to you and you are very likely to get a blank stare. Only this week I asked the vice president of two large companies what type of referral system they had in place. Both said, they didn’t, referrals just happen. So does death, but it doesn’t mean you should wait around for it!

Referrals are the life-blood of any good business. There is simply no quicker way to build your customer base and increase your income than to double or triple your referral rate, but to make that happen you have to have an effective system!

The Psychology of referrals

Lets start by looking at the psychology of referrals. The first fact you should know is that contrary to what many believe, most people actually like to give referrals. There are 3 main reasons why people like to give you referrals:

1) The first is ego. When someone buys something new he wants his friends and neighbors to be impressed. He wants them to know what a great deal he got. When was the last time you met someone who bought a new car and told you what a schmuck they were for buying it?

2) The second reason is that most people like to feel important, they like to be the center of attention or information.

3) The third reason is that people like their friends and neighbors to share and experience the same things they do!

Many people are timid or just downright scared of asking for a referral. They dont want to seem pushy, desperate or, heaven-forbid, both. While I assure you that most people really do like giving referrals, you can make the process even more painless by re-framing the way you ask for a referral.

When a parent signed up a child for martial arts lessons at my karate school, I immediately went for a referral, but rather than asking outright that the student bring in some friends, I positioned it like this. Mrs. Smith, often when a child comes into the first class he can be a little tentative because he does not know anybody and everything is new. We have found that one of the best ways to counter this is to have him bring a couple of his friends into the first class with him. That way I can guarantee that he will settle right in, and, of course, there is no charge for his friends to take lessons with him while becomes more comfortable.

Other such conversations might be: “Who else at work would like to help out by sharing this opportunity with them before the prices go up?” or “Can I help anyone else in your organization save time by employing this service?” or, “Who else can I help become a more productive part of your team?”

How you phrase your request can make the process a lot easier. So too can your timing. The very best time to ask for a referral is right after you have completed a sale. This is the time when excitement and anticipation are always at the highest level.

The first commitment you must make to double your referrals is to simply just ask for them. Not sometimes, not when you feel like asking for it, not when you are having a good business day, not if you feel the client likes you, but you MUST ask every single time in as many different ways as you can. There are seven key groups from which you can gain referrals;

1) Ask new clients to buy again. The reason we want to get referrals is so that we can sell more products, right? Well, the first thing to judge before we even think about working on the referral stage, is, can we sell anything else to this new client in front of us right now? Dress shoes to go with the new suit? Or some dress shirts to go with the new suit they just bought?

2) Ask new clients who else might benefit even if your most recent customer doesnt want to buy something else from you, it’s almost certain that he knows someone who has similar needs. Everyone is an opinion leader to some group.

3) Ask non-customers for a referral Even when a sales presentation has not been successful, there is no reason why you should not ask for a referral. The landscaper who did my yard told me that he had contracted to do two new jobs each was worth almost $50,000, as a result of asking for a referral from two homeowners who had turned his bids down.

Simply say to your prospect, “I’m sorry I don’t seem to be able to meet your needs today. Who else do you know who might be interested in a, whatever your product happen to be?” Notice that I did not ask if they knew anyone, for that almost always brings an instant NO response. I asked who else they knew, suggesting that there must be someone. It’s a subtle difference that makes a huge difference in the response you will elicit.

4) Ask ex-customers – Just because a customer is an ex-customer does not mean he or she cannot or will not refer other people to your business. Try to stay in contact with your companys ex-clients, whether it is through a phone call, post card, monthly newsletter, or even a text message just to ask how they are doing. I recurrently get referrals from ex-clients who have since moved on to other things but still have friends or contacts in my industry.

5) Ask business suppliers for referrals. Remember, you buy goods and services from others. You are a good customer to someone. That someone should be glad to give you referrals. Be sure to remind your suppliers that you are always in the market for new leads.

6) Demand more referrals!

As a speaker I actually demand referrals from my clients by including a clause in my speaking contract that includes, as partial payment, the guarantee of 2 referrals for a job well done. As a result I have massively increased my referral base.

7) Getting referrals from your competitors. Competitors can often be a good source of referrals. Sometimes you just get a job that you dont want. It is too small or you and the prospect simply dont hit it off! In these types of cases, instead of letting the prospect bounce around to three or four more people, take the proactive approach and refer them to a company that can help them at once. They in return will refer people to your company!

When a customer gives you a referral that results in a sale, at the very least, you should send him a “thank you” note. Every time you thank a customer for a referral, you have the opportunity to repeat the cycle by asking for another referral. Always end each “thank you” communication, by asking if the customer knows of anyone else who might benefit from what you have to offer.

Make it easy to get referrals

When I sell one of my audio programs I often include postcards, fax sheets or reply cards to encourage an instant response and referrals for my programs. The easier you make it for other people to promote you and your business, the more they will do it.

Referrals are the life-blood of any good business or service, but they work a whole lot more predictably and effectively when you develop and follow a system so that good leads don’t just slip through the cracks. Oh and if you know anyone who needs sales or marketing help refer them to me!

Andrew Wood is the world’s leading expert on golf related marketing. He is the author of over 20 marketing books including Cunningly Clever Marketing. Andrew speaks worldwide on sales and marketing topics. He is the CEO of multiple marketing companies and one of the founders of the marketing success system which is the worlds only guaranteed marketing plan.