Most businesses spend all of their time, effort, and money on conventional marketing. By conventional marketing I mean marketing by direct mail, display advertising, radio and television, and the Internet. A far more cost-effective way of marketing which will produce many times more results is developing a formalized referral system.

If you analyze where your customers come from right now, youll probably find that many of your new customers actually come from referrals. Look at how many referrals you get without even knowing it. If you double that number and then double it again, the increase in your sales and profits will be tremendous.

People who have been referred to you will usually will spend more money, they will buy more often, and they are more loyal. They are also much easier to deal with and because they were referred by a friend or a colleague they are usually less demanding.

Referrals are easy to get and they are self-perpetuating, if you have a referral system in place. One of the big reasons most businesses dont get referrals is because they simply dont ask for them. For example, every time you deal with a customer in person, by phone, letter, or even e-mail, ask them for referrals.

But, before you can get referrals you first, must set the stage and ask for them in the right way. You in essence have to help your customers locate the exact referral you want. You should tell your customer that you really enjoy doing business with them and you value them as a friend and a customer. Tell them you are looking for other customers like themselves who have the same values and qualities.

Tell them that youd like to extend to them the opportunity of referring their valued and trusted associates to you. Let them know that you would appreciate and value their referrals more than any other source of customers.

At this point, you have to help your customer see a clear picture of the type of referral you are looking for. Help your customer think of who in his or her life could benefit the most from your product or service. What type of person or business could best utilize your product or service? How could they best use your product or service?

Ask them to go through their rolodex and think about people who they regularly associate with. For example, their colleagues, customers, relatives, employees, and vendors.

After, theyve come up with two or three people, make them an offer to talk or consult with the person they are referring to you at no cost or obligation. In other words offer to consult with the person whom they have referred without expectation of purchase. By doing this it allows your customer to see you as a valued expert with whom he or she can put their friends or colleagues in touch.

Studies show that within the first thirty days after a purchase there is what as call a moment of maximum satisfaction. This is the time when the customer is thinking about and is the happiest with his or her purchase. So, once you have thanked the customer for his or her purchase and made sure her or she is satisfied, then you need to ask for referrals.

There are other times that are good to ask for referrals as well. For example you could ask for referrals after youve given your customer a large refund, paid off a claim, or fulfilled your promised service or obligation.

Never ask for more than three referrals at one time. The action of asking them for referrals will get the customer thinking and after they give your three referrals often times youll hear from they a few days later to give you a few more referrals. As a courtesy, always keep your customer informed as to how your relationship is going with the person whom he or she referred to you.

Ive seen sales literally tripled in six months or less when a business put in a customer-referral system. I cant guarantee that you will triple your sales in six months, but if you have satisfied customers you will see an increase is sales very quickly by putting in a referral system.

You have to ask for referrals. Dont be shy! If you dont ask for referrals youll rarely get them.

Copyright2006 by Joe Love and JLM & Associates, Inc. All rights reserved worldwide.