Everyone’s got “a guy.”

Even if that guy isn’t, strictly speaking, a guy, we tend to let people know when we have a guy. Lost a few shingles in a storm? I got a guy. Run-in with a shopping cart that left a nice dent in your car? I got a guy. Need to get that home theatre system cranking out some decibels? I got a guy.

You get the picture. The point is, when you provide a service people enjoy, they just love letting people know.

There are several fascinating reasons why. According to Platinum Strategies, your customers let people know how great you are because it actually helps their own social standing. It’s oddly selfish, but it makes sense. If they’re viewed as the person in their social group with the insider knowledge on the best businesses to save the day, their status improves within the group. They may also do it for the altruistic rush of helping others, or even of helping your business, but at the end of the day it’s more than likely them looking to appear as an expert.

Hey, as long as it gets traffic to your website, in your door and right to your bottom line, what difference does it make?

If you’re really interested in diving into the psychology that drives your customers to make referrals, InfusionSoft has a wonderful piece on the nuts and bolts of it.  

But regardless of why they do it, it’s incredibly helpful when they do. And it’s even helpful when they don’t necessarily hear it from a friend. Some 84 percent of people trust a review they’ve read online just as much as something they’re told by a friend. So no matter how it comes from, a referral is a powerful tool to landing sales. Take a look at this Dimensional Research paper on customer service – tucked away on the tenth page is an eye-opening fact: 90 percent of people say that reading a positive review of a business or service had an impact on their purchase decision.

The Power of Customer Referrals

Simply put, people trust what they hear from friends or even strangers more than what they hear from a traditional ad. Gomodus breaks it down with a slick infographic, but some of the key takeaways are:

  • 62 percent of customers trust people like themselves as credible spokespeople, as opposed to 43 percent who would trust the company’s CEO.
  • 84 percent of consumers trust recommendations and will take action based on recommendations from people they know.
  • Customers referred by other customers have a 37 percent higher retention rate.

Taken together, these numbers for a compelling case for the power of referrals.

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So now that you know how incredibly powerful these referrals can be, what are you going to do about it?

Just as we’ve delved into the psychology of why someone makes a referral, we can use a similar method to determine how best to get them singing your praises. This blog post from Extole lays out a few great methods that utilize the power of the mind to get customers on your side.

It starts with removing any and all barriers between the experience and the referral. The found that creating a link to refer a friend, tied to some motivator like a discount a bonus, etc. was 300 percent more effective when it was on the same page as the purchase vs. on a dedicated landing page. In essence, if you can keep them from jumping through hoops they’ll be far more likely to refer.

They also recommend timing your referral offer to a moment of what they refer to as “cognitive dissonance.” There’s a unique quirk of the human brain that shortly after purchasing anything, no matter how good a deal we got on it, we’ll suffer from a moment of buyer’s remorse. And in that moment, your brain gets really good at rationalizing your purchase. And in that moment, your customer is your biggest cheerleader. Internal studies from Extole found that a referral link timed to pop up just after a purchase drove conversions 16 times what they were otherwise.

There are several more suggestions they give on exploiting customer psychology to snag that referral, but they’re mostly in terms of the moment of sale. But what about after? How do you snag those customers who purchased and haven’t left any kind of review? Shopify has a pretty good breakdown here on a few techniques you can use.

Among them, they recommend waiting 5-7 days after a purchase to send an automatic thank you letter along with a link to leave a review, sending out customer satisfaction surveys, and using analytics to identify your best repeat customers so you can reach out personally.

Some of the biggest businesses have been built on word of mouth, and it’s still the one of the best ways to get your business some fresh business. The digital world has given you a platform that makes this both incredibly easy and amazingly effective. Now, go get them talking!

Like what you read? Looking for additional tips and tricks to help your small or medium-sized business succeed? Check out more of our blog posts here.

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