Increase Profitability

Word of Mouth: The Key to a Thriving Referral Program

Word of Mouth The Key to a Thriving Referral Program

As a small business owner, sometimes it can feel as though your message is getting lost amid all the marketing noise—particularly when larger competitors have blanketed your customers with advertising blitzes.

You do have a valuable competitive advantage, however: The ability to increase business by reaching your top existing customers on a personal level and inspiring them to refer their friends, family and co-workers to your business.

Increasingly, building referral programs is the top marketing strategy for small-business owners. In a 2014 survey conducted by the online small-business network Manta and BIA/Kelsey, more than half of the nearly 1,000 small business owners who participated said they still rely on word-of-mouth or paper-based programs for customer loyalty and referrals.

Mark Deutsch, a Richmond, Virginia-based marketing and networking consultant, says he is seeing small businesses succeed by spending less time and money on formal advertising campaigns and putting more effort into converting happy customers into loyal referral sources.

To ensure outreach and marketing efforts targeted toward your existing customers are worthwhile, you need to establish the groundwork for a referral program so you can maximize the benefits and measure the results.

Build a strong foundation

Before you encourage customers to spread the word about your business, step back and make sure that your products or services are worth referring, that you are providing each customer with a personal, positive experience and that you are ready to build your business presence.

“The first step is to get your house in order and understand your client base,” Deutsch says.

Be confident that your finances are in order, your business plan is set, your mission is clear and that you have the right staff and facilities to satisfy existing customers—and take on new ones.

Survey your customers

Customers tend to make referrals when a business is sound and goes above and beyond to meet or exceed their needs and expectations. It is important to know if your business is achieving that goal from the customers’ perspective—and the easiest way to find out is to ask them directly.

Give customers an ongoing opportunity to provide you with direct feedback. Deutsch suggests reaching out with a simple customer survey distributed through the channels in which your customers are most likely to engage. This may be in-person, through social networks like Facebook or business rating sites like Yelp, or through email or comment cards.

The survey can ask questions such as: “On a scale of 1 to 10, how likely are you to refer us to friends and family?” and “How did you find our company?” Leave space for comments and contact information so you have the chance to follow up for more information.

If you have too many people on the low end of the scale, assess their concerns and make changes before moving ahead. As you directly address consumer complaints or comments, you can get back in touch with them to let them know you’ve taken action based on their feedback.


Understand the data

In addition to surveys, you may also want to request referrals from your top clients. The same Manta/BIA Kelsey survey reports that repeat customers spend 67 percent more than new customers. Consider connecting with your loyal customers on social networks, offering limited-time incentives, or hosting an event where they can bring family and friends. The key is to do your homework ahead of time to know who is in your clients’ networks, what their needs might be and how they like to do business.

To better know your customers, Deutsch recommends closely tapping into available information, starting with what you might already know from your records—how long they have been a customer and how much they typically spend. This lets you sort out your top-tier—and often top-referring—clients from others and target your efforts to reach the right people.

“If you’ve got an existing client base, database management is critical,” Deutsch says. “It doesn’t need to be super complex, and you don’t need to spend thousands of dollars—it can be as simple as a spreadsheet.”

Deutsch looks for a 10-to-1 return on investment when it comes to referring customers. For every $100 you spend reaching out to your top clients, you should see $1,000 come back in added profits.

“The best programs I’ve seen really leverage what I call the principles of influence,” he says. “Embed reciprocity within your programs so you are consistently giving to your clients, and they are giving referrals right back.”

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.


Investment and Insurance Products:

Are Not FDIC or any other Government Agency Insured   Are Not Bank Guaranteed  May Lose Value 

© 2018 SunTrust Banks, Inc

equal housing logoSunTrust Bank is an Equal Housing Lender. Member FDIC

equal housing logoEqual Housing Lender. SunTrust Mortgage, Inc

SunTrust, SunTrust Mortgage, SunTrust PortfolioView, SunTrust Robinson Humphrey, SunTrust Premier Program, AMC Pinnacle, AMC Premier, Access 3, Signature Advantage Brokerage, Custom Choice Loan and SunTrust SummitView are federally registered service marks of SunTrust Banks, Inc. All other trademarks are the property of their respective owners.

Services provided by the following affiliates of SunTrust Banks, Inc.: Banking products and services are provided by SunTrust Bank, Member FDIC. Trust and investment management services are provided by SunTrust Bank, SunTrust Delaware Trust Company and SunTrust Banks Trust Company (Cayman) Limited. Securities, brokerage accounts and insurance (including annuities) are offered by SunTrust Investment Services, Inc., a SEC registered broker-dealer, member FINRA, SIPC, and a licensed insurance agency. Investment advisory services are offered by SunTrust Advisory Services, Inc., a SEC registered adviser. GFO Advisory Services, LLC is a SEC registered investment adviser that provides investment advisory services to a group of private investment funds and other non-investment advisory services to affiliates. Mortgage products and services are provided by SunTrust Mortgage, Inc.

SunTrust Mortgage, Inc. - NMLS #2915, 901 Semmes Avenue, Richmond, VA 23224, 1-800-634-7928. CA: licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, IL: Illinois Residential Mortgage Licensee #MB-989, Department of Financial and Professional Regulation, 100 W. Randolph, Suite 900, Chicago, IL 60601, 1-888-473-4858, MA: Mortgage Lender license #-ML-2915, NJ: Mortgage Banker License - New Jersey Department of Banking and Insurance, NY: Licensed Mortgage Banker—NYS Department of Financial Services, and RI: Rhode Island Licensed Lender.

"SunTrust Advisors" may be officers and/or associated persons of the following affiliates of SunTrust Banks, Inc.: SunTrust Bank, our commercial bank, which provides banking, trust and asset management services; SunTrust Investment Services, Inc., a registered broker-dealer, which is a member of FINRA and SIPC, and a licensed insurance agency, and which provides securities, annuities and life insurance products; SunTrust Advisory Services, Inc., a SEC registered investment adviser which provides Investment Advisory services.

SunTrust Private Wealth Management, International Wealth Management, Business Owner Specialty Group, Sports and Entertainment Group, and Legal and Medical Specialty Groups and GenSpring are marketing names used by SunTrust Bank, SunTrust Banks Trust Company (Cayman) Limited, SunTrust Delaware Trust Company, SunTrust Investment Services, Inc., and SunTrust Advisory Services, Inc.

SunTrust Bank and its affiliates do not accept fiduciary responsibility for all banking and investment account types offered. Please consult with your SunTrust representative to determine whether SunTrust and its affiliates have agreed to accept fiduciary responsibility for your account(s) and if you have completed the documentation necessary to establish a fiduciary relationship with SunTrust Bank or an affiliate. Additional information regarding account types and important disclosures may be found at

SunTrust Robinson Humphrey is the trade name for the corporate and investment banking services of SunTrust Banks, Inc. and its subsidiaries, including SunTrust Robinson Humphrey, Inc., member FINRA and SIPC.