The absolute best marketing channel in the world ever

Drum roll please, the winner is...Word of mouth.

It's proven to bring businesses the most profitable and the most loyal clients*. It's probably happening right now without you doing anything or spending a penny but if you want to amp it up there are lots of ways to so.

Pretty nifty eh? So, how does it work and how can we make the most of it?

Why word of mouth brings in your best customers

There are two elements at play here - the first is what's known as "better matching". This means your referred customers are the best fit for your businesses products or services. We all tend to spend time with people with whom we have traits or lifestyles in common. Your most enthusiastic customers will have friends and family who are similar to them and so when they shout about the brilliance of your business it's being heard by people just like your best customers.

Second is the role of "social enrichment". Your new referred customer already has a relationship with your brand - they're connected through a positive experience a respected friend or family member has had. These referred clients also have an additional support and information channel about your business. They have someone to remind them if an offer is about to expire or remind them when an offer is about to end. You've got a one person marketing and customer support team that you're not paying for.

How to get more referrals

Again, good things come in pairs.

Your first method is giving people a reason to talk about you. The options for this are pretty much limitless and just take a little imagination. A holiday home I'm promoting is having brollies with the house name for guests to take home along with branded reusable water bottles that will be left with a note about how high water quality in the area is so there's no need to buy bottled. What's key is to make sure the items are of a quality you're happy associating with your brand, that they are relevant and the items are to be used outside the home for maximum impact.

The holiday home will also develop it's own personality to nudge visitors into remembering and mentioning it to friends. For example in the 'information for guests' booklet we're including locations for great selfies, the owners nickname for and a photo of the rare bird that sometimes comes into the garden and the best ale on tap at the local pub.

It's also possible to industrialise the referral process - the best way to do this is to identify your most profitable clients and encourage them to refer clients with an incentive.

Setting up a referral program

Referral programs are fantastic, they can be as big and complex as you wish.

They’re easy to test and tweak in terms of who you ask, the rewards you offer and if you follow up etc. The only outlay is when you’ve got someone through the door. Plus if you’re giving branded merchandise as a reward you're inserting reminders of your brand into people’s homes.

A few elements are key to success:

• Record keeping: You need to track who is connected to reward the right people. You'll also need to ensure the program is profitable.
• Reward promptly and well: You need to incentivise both the referrer and the referee with something they will value - at a price below your target acquisition cost. As these are all people who value your brand so I usually recommend either a discount or branded merchandise.
• Ask the right people: Target clients who are a good match for you and you’d like to clone.

If you’d like to do a trial run with zero investment, pick out a dozen clients as a pilot program, ask them in person and use a discount as an incentive.

When you're asking for a referral bear in mind be honest with your clients. Tell people that they are brilliant customers, tell them that this is a pilot program only open to a select few and tell them you'd appreciate their feedback on the incentive.

If you decide you'd prefer to have an expert set up and run your referral program please get in touch with me.

*The Keller Institute has some great research into this showing lifetime value of referred clients is 16-25% higher than clients acquired through other channels.