Linked Strategies Blog
 

The Psychology of Gaining More Customer Referrals

How to Get More Customer Referrals

Customer referrals are generally considered to be the best kind of lead. In fact, there is data that supports that – referral leads convert 30% better than leads that are generated from all other marketing channels (R&G Technologies).

When you think about it, the fact that they convert better makes sense. A referral is an implied endorsement from a person with credibility – they have already pre-sold you, and all you have to do is close the deal.

So companies love getting referrals. But most companies receive referrals by chance and are doing nothing to promote getting more. That’s a missed opportunity.

By putting a plan in place to nurture and deliver customer referrals, you can start receiving referrals in higher volume and with some degree of predictability.


The research supports this – 67% of companies with referral programs reported that their sales pipelines were effective versus only 36% of companies without a referral program (Statista).


In this blog post, we’ll look at how to use basic human psychology to turn more people into brand ambassadors for your company AKA referrers.

Getting Quality Referrals takes more than delivering Great Service

You have gone above and beyond, consistently exceeding expectations for your clients. Therefore, you can expect them to tell everyone they know about you, right?

Wrong!

In most cases being good at what you do is just a prerequisite to being considered for a referral.

To fully understand what it really takes to get referrals, you have to first understand what goes on inside the mind of clients that motivates them to want to make a referral.

Being able to make a recommendation helps establish the referrer as an expert authority and enhances their reputation.

However, that assumes that the referral that they’re making will lead to a positive experience for the person to whom they’re making the recommendation.

If there is any degree of uncertainty around that, then making the referral possess a degree of risk.

There are several things that cross a referrer’s mind when they are considering making a referral.

You have to Assure the Referral will make the Referrer Look Good

The downside of making a referral is that it can make the referrer look bad if it doesn’t go well. You’ll move on to the next customer/client, but the referrer risks losing their credibility.

Sure they’ll be a hero if the referred has a great experience, but there is the trust factor. There’ll always be a question of is it worth the risk of putting my name on the line when I have no control over the experience itself?

No one likes to be seen as untrustworthy.

Referrers have to trust that whom they are thinking about referring will have just as good an experience or even better with you.

Will it Hurt My Image?

There’s a me factor in everything – everybody likes to look good.

Referring a company to a friend or associate, especially in the B2B world, can be reflective on a person’s professional image.

They’ll only do it if it makes them look good.

If customers want to project a particular image of themselves, and business executives often do, they won’t make referrals that conflict with the image they’re trying to project.

There’s often separation between whom a person does business with and who they want to be perceived as doing business with.

Existing clients may be happy with you, but that doesn’t necessarily mean they’re comfortable referring your business to others.

Will I be Blamed?

Clients also fear backlash from friends or associates if they refer a company to them and it turns out to be a nightmare. Business is mainly about relationships, and most people fear damaging relationships they value.

What’s in it for Me?

That me factor again – most people give with the intention of getting something in return. Offering referrals is an act of generosity.

So how do you build trust, make it more enticing for your clients to make referrals and mitigate the risk factor associated with it?

Here are 6 ways:

  • Warranty – back your service or product with a strong guarantee or warranty – it’ll mitigate fear and lessens the chance of bad experience.
  • Keep them in the loop – continuously communicate with customers and cultivate a deeper relationship. The more you talk to them the more they’ll trust you.
  • Provide them with multiple case studies or success stories – another way to mitigate fear by instilling confidence in them and facilitating positive thoughts about your brand.
  • Don’t hold the referrer responsible – as we mentioned above, the fear factor is huge. So in case, things don’t go well with the referred, never let the referrer feel any form of guilt. Instill confidence in them that they can refer without fear of any ramifications if it doesn’t work out.
  • Know your clients – bad clients usually don’t make referrals. Good clients typically refer good potential customers. So be circumspect towards referrals from bad customers.
  • Show appreciation – in the B2B world, reputation is more important than money. However, offering referral incentives is still a good way to show them you appreciate them for being brand ambassadors.  

Conclusion

To truly get what goes on inside a referrers’ psyche you have to be able to see the world through their eyes.

And no it’s not magic!

It’s about tuning into their experience. The more you’re able to see what they see, the easier it gets.

You can apply these strategies yourself if you can find the time. Most companies neglect it. But fortunately, you can outsource this task to experts who specialize in increasing the volume of customer referrals for companies.