3 Tips for Activating Your Referral Network to Grow Your Business with Word of Mouth  

“Word-of-mouth” certainly sounds like another marketing buzzword, doesn’t it? But before you dismiss the concept entirely and turn your focus back to cold-calling prospects, let me share something with you that will revolutionize your current approach to business development. Drumroll, please: word-of-mouth is potentially your biggest source of untapped revenue. And according to The New York Times, word-of-mouth is responsible for 65% of new business.

But wait, it gets better. The Wharton School of Business study reported the lifetime value of a new referral customer is also 16% higher. In general, people trust recommendations from “trusted sources” like friends, family, and colleagues 92% of the time, more than all other forms of marketing. Keep in mind too, that referrals aren’t limited to friends, family and colleagues; they can come from a variety of sources — provided the receiver of the message trusts them — including media outlets, customer review and opinion sites, bloggers and social media influencers, and customer testimonials.

So to grow your business through word-of-mouth, consider the following strategies for activating your referral network:

Customer Experience Matters
Like any marketing program, your word-of-mouth marketing must align with your business and brand strategy, and must feel natural to your audience to be successful. So consider: why would someone would endorse your business? There has to be something there that resonates with them and makes them think, “This business is great, let me share how I feel about them with my network!”

Also, your customer cares about a positive brand experience and, in some cases, incentives. According to the American Marketing Association, offering a reward increases referral likelihood, but the size of the reward doesn’t really matter. Keep in mind too, when dealing with larger organizations, incentives and/or gifts of any kind are generally inappropriate and may be constituted as bribery — so for larger accounts, leave the gifts behind, and consider using live events to your advantage instead.

And just a word of advice from having developed and executed word-of-mouth campaigns for both global corporations and startups: make sure your target audiences is receiving value from your business at each touchpoint. When there’s a perceived value from engaging with your business, the referrals and revenue appear almost magically.

Brand Advocates are Kings
Brand advocates typically take the form of customers or prospects. Thus, your goal is to identify these individuals, and deepen your relationship with them. In other words, build trust by interfacing with them in a substantive way, typically by giving them something of value to talk about: either give them a positive customer experience, or buzz-worthy event, or even sharable content — these type of things generally fuel your advocates and get them spreading the word about your business.

Laser-Focus on Your Target
The premise of generating leads is exhilarating, but all the effort in the world won’t matter if you’re generating the wrong leads for your business.  New business leads can come from everywhere, but in my experience, the most powerful segments are existing customers and endorsers (in my world, “endorsers” are business partners who are willing to be your brand advocates).  Endorser leads are typically the ones Sales throws in the trash, because these leads are hard to qualify and they aren’t buyers. This is where Marketing comes in, and starts engaging endorsers and extracting them for leads.

Like any successful segmentation exercise, endorsers should be selected carefully based on the relevance of your business to their networks. For example, if your business focuses on interior design, you should facilitate relationships with architects. If you provide change management consulting services, then you should probably consider partnering with corporate attorneys, etc.  So the kind of business partner or endorser segment depends on your business.

You can usually conduct this kind of assessment fairly quickly by taking a closer look at your current book of business and analyzing your most profitable customer segments. Do these customers fit into a specific industry, geography, needs category, etc.? Get to the bottom of how these customers became your customers, and how they found you: was it as a result of a brand partnership, or industry conference, or perhaps a referral? From there, you can get clear on your endorser targets.

 As far as harnessing referrals from existing customers, sometimes it’s as easy as asking. If you can’t just ask for the referral, or you’re dealing with thousands of customers, focus instead on creating meaningful brand experiences (e.g. live events and experiential moments). From there, word-of-mouth takes over organically.

Bottom line: developing a thoughtful and self-sustaining referral marketing program can take time, but it’s extremely worth the effort over the long haul. Businesses often make the mistake of focusing their efforts on cold prospects. Why bother, especially when you have a network that knows your name? Done correctly, you can build a powerful network of brand advocates who generate new sources of revenue for you business. So stop cold-calling, and start driving revenue through word-of-mouth!