Creating a Customer Referral Engine

Mar 4, 2011
3 Min Read


John Jantsch is one of the top strategic thinkers in business today.  The author of the Duct Tape Marketing blog, John mostly focuses on marketing the small business, but I find myself applying his lessons to leadership in the Fortune 500 all the time.

No System in Place

In researching his new book, The Referral Engine: Teaching Your Business to Market Itself, John conducted an informal survey of thousands of business owners and found that 63 percent felt that over half of their business came by way of referrals.  But of that same group, nearly 80 percent readily admitted that they had no system of any kind to generate these referrals.

Making it Simple

Even if you’re not in sales, as a leader in your organization you should aim to make it easy for existing customers to refer new ones to you.  John suggests making referrals an automatic habit for your customers by equipping them with tools that allow them to introduce you and your products and services in logical ways.  Some of John’s ideas include:

  • Personalized referral cards that credit your customer with sending a lead
  • Gift certificates with tangible value that a customer can simply hand out
  • Trial offers and free evaluations only available through customer referrals
  • Customer-exclusive “bring a friend” events
  • Personalized web pages that customers can use to educate prospects

Money Doesn't Talk

Interestingly, John does not advocate any kind of financial compensation for customer referrals.  He explains:  “when referral sources are motivated out of a desire to help, they will often go to great lengths to do so, but on the other hand, when the motivation is monetary, they will view it as a market transaction and the motivation is often significantly lower.”  Instead of offering to pay them, we should consistently communicate our appreciation to loyal and vocal customers.

Do you facilitate customer referrals to your organization?  If so, how?

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