Referral systems

How they harness the power of word of mouth advertising


As we’ve drilled into you for years and years, the best way to get someone to buy from you is for them to know you, like you and trust you. What’s the shortest route to get to those three? Through someone who already knows you, likes you and trusts you.

Enter word-of-mouth advertising. Here’s how it works. If you hear from someone close to you that they’ve discovered a new product that they absolutely love. They tell you about it with enthusiasm and they’re very positive about it. Are you likely to try that product? I’d say you were. You trust your friend, you trust their judgement, and so you are, by extension, much more likely to trust the brand that they are recommending, even if you’ve never heard of it. For the brand this is a golden opportunity, because you’ve jumped straight to trusting them. Of course, this is a tentative trust and the product will still need to be really really good in order for you to actually become a repeat customer. However, it didn’t cost the brand anything at all to get you to buy the product once.

Now imagine that you are the brand. You have a few people out there who love your product and are recommending it to all of their friends. Even if only half of their friends go and try out the product, and even half of them actually like it enough to start recommending it to their friends, you still have an enormous (if not free) advertising opportunity.

The tricky part is that it’s rather hard to control. You cannot tell people what to say about your product, and you can’t know to who they’ll talk and when. The only thing you can do is make sure that your communication is crystal clear so the people who want to share your product with their friends do not cause any confusion.

The one thing you can do to encourage word of mouth advertising is to make it really easy for your clients to talk about you, to recommend you, and to communicate the right information at the right time. Once you have a system in place to make it easy for your clients to recommend you, you’ve built yourself a growth engine, called referral system.

A referral system can take many different forms but in its core it has the following characteristics:

  • You build it once (and only optimize it later)

  • It generates leads reliably and consistently

  • It is cost-efficient

  • Your clients love it

  • It creates a win-win-win situation between you, your client, and your clients friends.

Building a referral system is not hard, but you need to know what you’re doing.

Here are 12 things you need to know and do when you’re building your referral system. Take these tips to heart and next week we will share a few examples of referral systems that might work for your business.

What is the best referral system that you’ve ever encountered? Something that made you really happy to recommend someone? Let us know in the comments below. You might inspire yourself or others to build something amazing!

Press play on your potential,

The BizKaizen Team

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