Q: Steve – You often mention word-of-mouth advertising. Is there a way to ensure that you get it on a consistent basis? If so, how?

Jen

A: Word of mouth, often called referrals, is a special marketing niche because it is in fact so powerful. Referrals are great because your best customers – those folks who love your business, products, and brand – become your advocates, your unpaid cheerleaders.

But don’t just take it from me. Consider the wise words from my friend and colleague John Jantsch. John is one of the best and most highly-regarded marketing experts out there and he recently wrote a great new book on this very subject called The Referral Engine. In it, John offers readers a step by step guide to creating a systemic, ongoing referral machine.

When we spoke recently, John explained that prior to writing the book he surveyed 1,200 small businesses. The results were striking:

• Although 89.6% said that most of their business came from word of mouth and referrals,
• Only 26% did anything about it.

So the impetus for the book was to show readers how to generate consistent referrals and thereby create more business.

While the book of course goes into great detail about this process, the essence of creating your own referral machine is this:

1. Be Referral Worthy: Needless to say, the foundation of getting referrals from satisfied customers is to be a business that satisfies customers. “You have to be a great company worthy of being referred,” Jantsch says. People don’t refer business to boring or mediocre businesses, but they do refer business to companies that exceed their expectations and do something exceptionally well.

2. Start With Existing Customers: It is not enough to simply provide a good product or service at a fair price. “That is the minimum of what is expected of you,” John correctly notes. Instead, your job, if you want referrals, is to take a customer through a cycle John calls “know, like, trust, try, buy, repeat, and refer.”

Makes sense, eh? For someone to refer you, they must first learn about your business, trust it, try it and like it, shop there again, and only then will they refer you.

Equally importantly, you have to make it easy for customers to refer business to you once they like you and are repeat customers: Create customer loyalty programs. Give people incentives to refer business to you. Ask for referrals.

And most importantly, connect with your customers and give them many ways to connect with you:

• Connect using IM, Twitter, Facebook fan pages, and your website
• Offer feedback forms on your site and with invoices
• Take frequent customer surveys
• Call them and ask how you are doing
• Create customer review panels
• Welcome customer complaints

3. Create a Strategic Partner Network: The idea here is to find businesses similar to yours – companies that share your values and are also exceptional and worthy of referrals. Then begin to do some work together, some joint projects. Maybe they can offer free samples of your products, and vice versa. Or do some webinars together. Create a group blog. Have a joint sale.

Because once you do that, once you create a valuable strategic partnership, all of a sudden you will have this other company singing your praises to their customers. A whole new group of people will be exposed to your business in a very positive way, and remember, since first impressions are often the lenses people look through when they see your business, a positive, word of mouth first impression can go a long, long way.

But don’t just find one strategic partner, advises John, “Look for many.” “Recruit and activate an army of strategic partners,” he says. Since they will have similar motivations to you and will want to get the word out about your business, by doing this you begin to create a referral machine.

Want proof that it works? Let me refer you to The Referral Engine. It’s a great book.

Today’s Tip: Speaking of referrals, a reader recently wrote and said, “We offer our employees a $50 referral fee for any new hiree they bring in. If he or she stays with us for more than 90 days, the employee gets an additional $50. This has worked for 20 plus years. We get good people that we trust and who want to be of our team.”