As you build your business, you naturally explore different avenues of networking for new opportunities. One such source is the cross-referral. Cross-referrals are strategic agreements, whether formal or informal, between companies serving like markets to trade their clients’ contact information to the other for marketing their complimentary products or services.
For instance, web designers may build referral resources from freelance writers, marketing and branding companies or web developers and other businesses that do things that the designers don't, but offer complimentary services to their end-customers. Cross-referrals are a great way to use free, word of mouth advertising though referral agreements may not always be free. There will be some arrangements where a commission can be earned based on a prearranged percentage or a flat-rate referral fee; but many startups are happy to give free referrals in return for the same courtesy.
While these referral arrangements may seem like promotional gold, you cannot always rely on other companies to sell you to their customers. There may never be more than a passing comment made to the occasional client. If you are relying heavily on referrals from others, you need to make a change in your approach. While paid referral agreements may offer more of an incentive, it is your responsibility to provide your referral sources with adequate materials to help them promote your business.
Some ideas include:
- Professional-looking brochures and business cards that contain your website, contact information, and a blurb about your services or products
- If the situation warrants, you can regularly provide referral sources with discount offers and coupons they can pass along to their own clients that are exclusive to referral clients or customers
- Promotional items such as pens and magnets that can be passed along to others
When the referrals do begin to come in, make sure your cross-referring business partners know how much you appreciate them. Courtesy thank you notes are crucial after referrals made bring you business. Keep a stack of personalized thank you cards to drop in the mail after a referral pans out. You may consider a small gift basket of cookies or snacks to say thanks from time to time. A nice lunch meeting can also help reinforce your gratitude for the referral assistance.
Referrals Aren't For Everyone
Don't expect everyone to be open to engaging in free referrals. You can quickly become tiresome to others if you are constantly asking for help in getting business. You should have a strong marketing system in place, so that you aren’t relying exclusively on referrals for new business, making any referral that comes in icing on the cake. It is good practice to touch base with your cross-referring sources to keep them up to date on what is new with your business. Remember – it's a two way street, and you should be working as hard to make referrals to your cross-referring business partners as you expect them to in exchange. The more often you make referrals, the more likely the favor will be returned.
Don't Forget Your Clients
One of your biggest resources for referrals may not be from other businesses. In fact, it is your clients’ praise that will warrant consistent word of mouth advertising for you. This is one of the reasons that excellent customer service is vital to your referral success. Clients who have consistently had a good experience with your company will be more than willing to spread the word to others who are in need of your product or service. While there is no obligation to reward these acts, you might provide something in return for their advertising on your behalf. The better you take care of the clients you already have, the more likely you are to expand your client base. For those clients who are particularly good to you, a token of appreciation like a gift basked of cookies or treats sometimes goes a longer way than a discount on a service or a referral commission, and it humanizes the relationship between you beyond a business one..
Referrals can be a great source of business for you, especially when you are just getting started. You cannot expect everyone to cooperate, but you certainly cannot be a wallflower when approaching the situation. Be direct but flexible – and always offer to return the favor.