Referral Programs Are an Underutilized Tool for the Entrepreneur

by | Dec 2, 2020 | Entrepreneurship

As an entrepreneur, we are constantly exploring new business ideas. One of my favorite tools for this is having weekly coffee chats with those in my network. Even if our product wasn’t the right fit for the people I was meeting, I knew that I could gain a lot by testing my messaging on them. I may not have walked away with an order, but those relationships have paid huge dividends in the long run. Not only did they allow me to practice my pitch, but they also did something amazing—they led to referrals. There’s an artform to handling referrals. Unlike leads that come in through your website, they’re a little more delicate. That’s because how you handle them can impact two relationships: one with your prospective customer and one with your referral source. If the deal goes south, it could deter that source from sending you any more of their friends, costing you much more business in the long run. Here are five general rules-of-thumb for handling referrals:

  1. Respond to introductory emails as quickly as you can. At a minimum, respond within 24 hours, but aim for sooner if you can.
  2. Send a thank you to the referral source. Mail over a nice card with a handwritten note. If it’s a huge deal, go for a gift or offer to give them a small cut of future deals they send your way. Let them know that you appreciate the gesture.
  3. Take good care of those customers. In most cases, you can bet that they’re reporting back to your referral source about how things are going. So, while you should be giving everyone outstanding service, go above and beyond for your referrals.
  4. Send the referral source updates. Set an appropriate check-in time and let your referral source know how the customer is doing. What you share and when you do it depends on your business (and the level of confidentiality required).
  5. Set up a referral database so that you can keep track of your best referral sources. You may talk to some more often than others, but make sure you know whose referrals are most likely to close.

This referral program can also translate to your employees. Incentivize them to connect the dots, and you’ll see the true power of referrals.