How often do you ask your customers for referrals and then follow-up with them? Marketing surveys show that although customer referrals are definitely needed and wanted by small business owners, often times they aren’t asked for or followed-up. These scenarios often lead to lost business opportunities, higher customer acquisition costs and lower customer lifetime value (LTV). Asking for referrals from your existing customers can lead to lower customer acquisition costs, higher customer lifetime value and higher contribution margin (profitability). Improvements in the aforementioned can create tremendous value for not only the business but for the customer. If customers are referred to great businesses, it often reduces their business search and research intrinsic costs.
Customers often times seek to be referred to reliable businesses. Anxiety is experienced by both small businesses seeking new customers and customers dreading having to find reliable businesses. Often times, small business owners use traditional advertising methods for customer acquisition with varying results. Nothing competes with a simple referral to contact or visit a business. Previous vetting takes much of the guesswork and anxiety of dealing with a new business. There are over 31.7 “Non-employer” Small Businesses in the U.S, according to the SBA, and over 92% of those businesses rely on referrals to survive.
So why does leveraging your existing customer base make so much sense? Much of the customer acquisition process is completed when a satisfied customer simply refers a family or friend. We all like to be referred and we all like to save time and money in learning about small businesses that can serve our needs. Business value is created for all when we refer one another to our favorite small business product and service providers. What’s most important is a happy customer and happy customers almost always tell others about their great experiences. Using social media to spread the word about great small businesses creates tremendous & viral brand awareness and brand exposure. Small business is the lifeblood of the U.S.!
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