Business Referrals: Are You Making This Huge Mistake?

August 28, 2008

Business referrals from a satisfied customer, who has already used your product or service are one of the cheapest and best ways to get new customers.

If you’re like me, you’ll enjoy referring a great business, or freelancer to your friends. Trouble is, lately I’ve referred a few people to businesses I’ve enjoyed dealing with. And would you believe, a lot of those businesses owners didn’t even thank me?

But it wasn’t the fact they didn’t thank me, that bothered me so much. It was the reason why they didn’t thank me.

You see, I’d referred a handful of friends to one business owner I know and trust. And a couple of weeks later, I’d not heard a thing. This surprised me, so I contacted her and mentioned the name of one of the people I’d referred. She confirmed that the person I referred had been in touch and she’d made a sale. But she seemed really surprised to learn that I’d sent this customer to her. I thought about it for a while and then I realised why.

She hadn’t bothered to ask her new customer how she’d heard about her. And to me, that’s like throwing your marketing budget into a deep lake and hoping it will float back up to the surface.

If we don’t ask our customers how they heard about us, how can we possibly know which marketing activities are actually working? And if we don’t know, we could be wasting a huge amount of time and money on things that don’t work at all and not enough on the things that are bringing us the most business.

If you have a business, do you try to find out how your customers how they heard about you? If not, is there some reason why? Depending on the particular type of business - can you think of ways a business owner can find out where their customers are coming from?

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23 Responses to “Business Referrals: Are You Making This Huge Mistake?”

  1. Ian Denny on August 28th, 2008 1:53 pm

    I think it’s often better to ask the person or company you are recommending someone to to give the referred a call.

    And onviously tell the person you are referring that you’ll get your contact to call them.

    That I believe increases the chance of that interest being converted into a sale. People are genuinely interested when you recommend a product or service. But they don’t always remember to follow it through.

    And when you want someone to have the same positive experience you had, then it’s important you don’t pass their contact details. Instead tell them you’ll get the company to call them.

    Ian Denny’s last blog post..Turning Enquiries Into Sales

  2. Alex Fayle on August 28th, 2008 3:47 pm

    In my previous business as a Professional Organizer, I was always very careful to ask how people had found out about me, because I had three ways of business coming my way:

    1. Direct referrals which would take about 6 months on average from the first referral to them calling me.
    2. Getting on my newsletter list - networking or referral from someone - newsletter sign up to client - average 1 year
    3. Seeing me in some sort of media (print, TV) - average wait time 18 months.

    Yes, Organizing is a very long lead time industry (given that clients for the most part are disorganized, it’s not surprising!).

    I’ll have to figure out a way of finding out how people come to the workshop once I start selling it.

    Alex Fayle’s last blog post..Are You a Pooh-Bear? Full Text Answers

  3. Alex Fayle on August 28th, 2008 3:51 pm

    As long as you get permission first, I think that’s an excellent way of doing it - otherwise those pesky privacy laws can nab you. ;)

    But I agree - that especially worked well with my clients, but it would often take a while before the potential client allowed the contact to give me their number (like they had to build up to admitting to a problem - which being disorganized is so not - almost everyone is disorganized at some point!).

    Alex Fayle’s last blog post..Are You a Pooh-Bear? Full Text Answers

  4. cathlawson on August 28th, 2008 4:18 pm

    Hi Ian - I can see where you’re coming from if you’re the business who is wanting referrals. But I don’t work like that if I’m recommending friends to a business.

    I do it not just because the business needs customers but because the friend or acquaintance needs the service. And I don’t want to make them feel they have to go ahead right away.

    But it also depends what type of business it is too. I would do what you said if it seemed more appropriate for everyone.

    Hi Alex - wow, those were long wait times. But like you say, you were dealing with disorganised people. But at least you know how long each marketing effort took by asking them.

    Hopefully you’ll get people to your workshops a bit faster. There’s definitely plenty of people out there who’d benefit from doing it. I’ll try to help you come up with some ways and hopefully get back to you soon. I’m way behind on everything this week.

  5. New Age Bitch on August 28th, 2008 4:43 pm

    Every business that deals directly with customers/clients can easily be trained to simply ask them how they heard of the business. Filling out a response/contact card or online form is essential. You get the client’s contact info, right? Why not ask how they heard about you right then and there? In many businesses this is standard, and I certainly do it. I want to know my marketing is paying off.

    New Age Bitch’s last blog post..Let’s get personal…

  6. cathlawson on August 28th, 2008 4:51 pm

    Hi there NAB - Good point - asking how they heard about you on an online form when they first contact you is a great idea.

    I noticed a lot of online businesses do that. I don’t understand the ones that don’t - there’s some that you never even hear from again after they made the first sale. It’s complete madness.

  7. Vered on August 28th, 2008 5:22 pm

    I too have noticed that many online businesses ask me how I found out about them, then give me a few options that I can click. It’s fast and easy so I usually fill out these forms. Even if just a fraction of visitors fill it out, the business can still get a pretty good idea of how people found them.

    Vered’s last blog post..Would You Eat Spicy Chocolate?

  8. Melissa Donovan on August 28th, 2008 5:25 pm

    This is absolutely timely because just the other day, I was thinking that I need to add “How did you hear about me?” to the questions I ask new clients. Usually I know how they found me because I’m only running one marketing campaign at a time, but I’m going to be expanding on that in the coming months and definitely want to track referrals. Thanks for confirming how helpful it will be to do that!

    Melissa Donovan’s last blog post..How to Master the Writing Process

  9. cathlawson on August 28th, 2008 5:32 pm

    Hi Vered - I guess a lot of people will fill in that section if it’s part of the ordering process. And as you say, even if some don’t they could go on averages.

    I guess it would be great if you made it so that the customer felt it was necessary to fill the form in. I noticed that some sellers put the “how did you hear us” part at the bottom of the page, before clicking next to place the order. That seems like a pretty good place to put it.

  10. cathlawson on August 28th, 2008 5:36 pm

    Hi Melissa - It would be really useful to you. You don’t want to spend all that time on additional marketing campaigns not knowing what worked and what didn’t.

    And I’m glad you’re going to use more than one form of marketing too. It’s really risky to rely on just one way to get work.

    Also, try to keep a record of how much money you make from each source of marketing - that’s another useful figure to have, then you can compare time/money spent on each campaign against the profits you make.

  11. Ellen Wilson on August 28th, 2008 8:36 pm

    Hi Cath,

    Quite frankly I’m not all that savvy when it comes to marketing. I’m learning as I go along, so it’s good for me to read everything eveyone has to say.

    I will say from a customer’s point of view I like short and to the point questions regarding “where did you hear about us?” I get irritated if I have to jump through too many hoops to purchase a service or product. I would say that this part of the process is crucial to customer satisfaction and continuing use of said product or service.

    So where to place, how to ask, is going to a matter of a good first impression or not.

    Ellen Wilson’s last blog post..How to Critique a Short Story

  12. cathlawson on August 28th, 2008 8:45 pm

    Hi Ellen that’s ok - we’re all here to learn from each other. And as you’ve just pointed out - we can learn a lot from just being a customer too.

    That is a really good point. It sucks when you agree to answer a couple of questions and you’re still answering 30 questions later doesn’t it? So keeping it brief is hugely important.

  13. Akemi - Yes to Me on August 28th, 2008 9:00 pm

    I’m working to make it habit to ask how the new client heard about my Akashic Record Reading service when I first talk with them.

    But, Cath, this is more complicated than you may think. Some say “Oh, I was reading a blog . . . I don’t remember which one really . . . and there was a link to your website (could be anchored text link or my banner ad). . .”

    Another thing, which may be particular to the US, is the client’s confidentiality issue. Let’s say you refer your friends to my service (I know you have . . . but let’s just pretend we are talking about this hypothetically). Whether that person actually order my service or not is his or her personal issue and I can’t disclose that to anyone, including you. So I can’t thank you for that specific referral. All I can do legally is to appreciate your referral in general terms. And this takes caution, too, because if I send you thank you email right when your friend signs up . . . well, I’m basically telling you what happened.

    Of course, my clients can talk to anyone they want about my service. (And I greatly appreciate that!!) But I only use my clients’ names when they make it public themselves, like you writing a post about my soul reading service.

    I’m not necessarily happy about this regulation. I think it is impersonal. But I have to do all I can to best protect my clients’ confidentiality, you know.

    Akemi - Yes to Me’s last blog post..Review: The True Power Of Water By Masaru Emoto

  14. cathlawson on August 28th, 2008 9:15 pm

    Hi Akemi - I hear where you’re coming from. I’ve been there myself. Sometimes you’ll do a whole heap of research before you decide to buy a product. And when the seller asked how you heard about them, you don’t remember, because you’ve researched so many sources.

    Not so sure about the confidentiality thing though - I’ve never heard anybody describe that as a problem that would prevent them from saying thank you to a referrer.

    I think that if the customer and the person they’d referred had been discussing your service to begin with, it’s probably a given that they’re not treating it as confidential.

    I’ve had a few people not thank me for referrals. And it’s not like it bothers me a lot, them not saying thank you. But in some cases I’ve referred dozens of clients to folk who didn’t. And I’ve thought - well why bother? Maybe they can’t handle the extra business.

    Maybe it would be an idea if you asked your clients if they minded you thanking the referrer, then you have no worries.

  15. Davina on August 28th, 2008 9:22 pm

    Hi Cath. I have noticed that I haven’t had to ask too many times how people have heard of me. The conversation usually opens up with them saying “So-and-so referred me to you…” Then I always follow up with that person to thank them for the referral.

    I include a section on client materials that I develop where I ask people to note how they heard of me.

    I had recently met a friend of a friend who is a freelance writer. She started sending me quite a few referrals and I made sure that I showed her my appreciation. It is important to keep that referral wheel moving, I agree.

    Davina’s last blog post..Does Misery Really Love Company?

  16. cathlawson on August 28th, 2008 9:38 pm

    Hi Davina - it sounds as though you have it working well for you.

    The section on client materials asking people to note where they heard of you is a great idea.

    I totally agree with keeping the relationship wheel moving. It’s so important in business. I’ve been in the situation a few times, where I’ll think I’m building a relationship with another business.

    Then I wind up referring a few people, don’t get any thanks and never hear from them again. And often, those are businesses that could have returned the favour of referring people back to me.

    And I guess it does stop you from referring people - you do begin to feel used. And it does make you wonder exactly where their business will go.

    It sounds like you’ve really got yourself organised and know how to treat referrers and also not throw marketing money down the drain. Good for you.

  17. Mrs. Micah on August 28th, 2008 10:00 pm

    So far, almost everyone who has come to my blog-consulting business has told me who referred them. Some read my other blog, of course, and I recognized a few blog-friends or regular commenters.

    But I hadn’t been asking on a regular basis if it wasn’t volunteered. There was only one person who didn’t tell me by way of preliminary and talks with a graphic designer led me to believe he found out about my through a recommendation on the designer’s site. Though it’s possible that it was the other way around, since we both have PF blogs, the client does PF, and we each have recommended the other. That’s why I’d assumed it was through my blog.

    Anyway, thanks for the tip. I also try to thank people for recommendations. :)
    Mrs. Micah’s last blog post..How to Build a Wordpress Theme Preview Site

  18. cathlawson on August 28th, 2008 10:08 pm

    Hi Mrs M - You didn’t mention that you’d started a blog consulting business. When did that happen? I did notice you’d been posting less on your blog but I didn’t know why. You’ll have to let me know more about it.

    It’s great that your clients are telling you who referred them though. It will make life much easier for you. Congratulations.

  19. Barbara Swafford on August 28th, 2008 10:36 pm

    Hi Catherine,

    That’s one thing I learned to do a long time ago. When we would advertise, I wanted to know if our advertising dollars were paying off. As it turned out, most of our referrals come from satisfied customers. For that reason, I was able to decrease the amount of money we spend on advertising. Now we’re using advertising more for name recognition than anything else.

    Barbara Swafford’s last blog post..Self Promotion - From The Archives

  20. cathlawson on August 28th, 2008 10:42 pm

    Hi Barbara - that is great. And if you hadn’t asked those people, you could have wasted a lot of money on advertising you didn’t need.

    Name recognition is important isn’t it? I think vehicles with logos on are brilliant for that too. I often went for my shopping in one of the vans so everyone going in and out of the supermarket would see the logo.

  21. John Hoff - eVentureBiz on August 29th, 2008 2:35 pm

    Very important topic, Cath. I like your analogy about sinking your marketing $$

    I often ask clients how they’ve heard of us through email, however, after reading some of the great comments in here, I think I’ll add a “how did you hear about us” field to my contact forms.

    John Hoff - eVentureBiz’s last blog post..Securing Your WordPress Blog: Post 4 - Setting Up .htaccess

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