Due to their apparent similarity, many people think references and referrals are synonyms and use them interchangeably. However, there is a slight difference between them. While a reference is a customer (present or past) who will vouch or validate your claims about your product or service, a referral is someone who will recommend your product or service to potential clients. While references generally offer their testimony reactively in response to a potential customer soliciting it, referrals often do so proactively. Some companies even reward referrals for their services by offering them gift vouchers, discounts, exclusive deals, or cash.
For a business owner or marketer, references and referrals are powerful instruments of persuasion and social influence among sales leads and prospects. That is because people are more ready to buy something when they hear that someone they know has already bought it and is pretty satisfied with it, or somebody known to them is recommending a particular product they are contemplating purchasing. Thus, their purchase decisions are bolstered by social proof. Since references and referrals can be immensely beneficial to your business by facilitating more sales, you should use both to grow your customer base.
As a small business owner, you can go to local social events, industrial meets, and trade fairs or contribute to political campaigns to get references and referrals and grow your customer base. To methodically use references and referrals for your small business, you need to refresh your perspective and look beyond your immediate social circle of friends and relatives and drive referral programs and campaigns. Host exclusive social events, ask for introductions, and regularly work to build references and referrals. It may take time, but the results are more cost-effective than spending vast amounts on advertisements or marketing campaigns. One of the best ways to increase your customer base is to identify your satisfied and happy customers and turn them into your brand ambassadors or referral champions. You can even reward them in cash or kind for referring new customers. To make your business referable, have a visually appealing and well-designed website and a social media page with referral links so that your existing customers can easily share them with potential clients. Absolute client satisfaction, customer delight, and superior after-sales service are the first steps towards building your references and referrals. And all the efforts, time, and money invested therein would pay rich dividends as references and referrals can significantly contribute to your firm’s profitability over time.