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Inside Business

Giving and Gaining: The Business Referral System for New Businesses

Businesspeople Discussing PlansNew businesses rarely have the capital to spend on expensive advertising campaigns. Advertising costs a lot of money and generally works better for established companies. For small businesses, referrals are much more cost effective.

Business referrals use word-of-mouth to gain new customers and foster new partnerships. While some occur naturally, you can boost your leads by building a dedicated system of business referrals. Referral programs are highly profitable, as they give your business a more in-depth strategy for generating new leads.

Giving

Becoming part of a business referral system is a two-way street. If you want to gain something, you have to give.

The first thing you want to do is provide excellent services or products. Streamline what your business has to offer and always have a competitive mindset. You want to create a product worthy of referrals. After all, no one wants to refer something of poor quality. It makes everyone involved look bad.

Once you have a solid product to offer, begin joining a referral group. Referral groups are great for new businesses as they are efficient and systematic. They often put together weekly meetings for professionals, giving you a steady flow of new business opportunities.

Business referral groups usually have an initial application fee and annual membership dues. You may also have to pay fees whenever you attend a meeting. While the fees may seem pricey at first, think of it as an investment for your business.

Gaining

People trust their friends and acquaintances. If you receive a referral, follow it up immediately. It shows that you care about that referral and proves that you are trustworthy.

Did you know that referred customers are more valuable than non-referred customers? In a joint study conducted by Wharton and the Goethe University Frankfurt, referred customers are 16% more valuable than a non-referred customer within a similar demographic. Simply speaking, referred clients are more loyal and are more likely to return.

Business referral systems are ideal for growing new businesses. Make sure you always give back to the community to gain something in return. Refer others, and they will refer you.

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