Recently, a friend of mine reminded me of the most powerful way to build your business.

Telling a story about her dad’s auto mechanic, she mentioned that the mechanic had been repairing her entire family’s cars for over 30 years.

They are completely loyal to him too. More than 20 years ago her sister moved further away yet she still drives 45 minutes to have him repair her car.

Not only have they stuck with him, but, over the years, they have referred many people to him.

How would you like to have a heap of customers or clients like that? Loyal, repeat customers who send new business your way?

I think you’ll agree that those types of customers are always welcome. So how do you find these valuable customers?

Well, if you speak to some of the most successful small business owners in business today, they’ll tell you many of their best customers and clients come from referrals.

Why? Because people referred by satisfied customers come with a certain level of pre-established trust. They are predisposed to buy from you. And they are less resistant to price than new customers attracted by advertising. Plus a customer obtained by a referral is generally much more likely to refer a new prospect to you than an advertising-generated customer.

Research has also shown that a referred customer is more loyal and will stay with you longer than a customer generated by advertising alone.

If you’ll recall I gave you some tips for how to increase your referrals by linking your Google + customer reviews to your AdWords.

Here are 4 additional ways to increase referrals.
1) Nurture your existing customers. Customers who feel neglected are not likely to refer you. So your system should include mechanisms such as follow up campaigns with your existing customers, clients or patients to help nurture and build your relationships with them.

For example, we send emails and record videos every month which are pure content to help our customers market their business better. This added benefit demonstrates that we care and want them to get the best results possible. Not only are customers hearing from us every month, but they hear from us multiple times a month. Plus, and this is important, every time they hear from us we are not asking them to purchase something from us.

2) Ask. If you ask your customers for help, they will often enthusiastically help promote your products or services. Because while people don’t often volunteer, when given the chance, they enjoy telling others about things and experiences they like, use or try.

3) Show appreciation. People like to be appreciated. When you show appreciation properly, people will be pleased and will be more willing to refer you the next time you ask. Remember to thank your customers for their referrals. Let them know when one of their referrals works out and give them an update on what happened.
For example, one way we show appreciation is to offer a month of free service for each customer they refer that stays with our service for at least 3 months.

4) Make people comfortable giving you referrals. People don’t like to feel like they are “selling” their friends to you. While it is okay to offer something as appreciation, offering an inducement in exchange for names makes people uncomfortable.
For example, a friend’s cousin is in college and started selling knives to earn some extra money. A big part of the sales pitch he was trained to give is his story – that he is a struggling student who gets paid by the appointment not by the sale. Because people want to help him out, they feel obligated to give up their family and friends phone numbers. But this makes them feel very uncomfortable.

Instead give your customers easy ways to refer you without making them feel obligated to do so and you will receive more and better referrals.
Developing a well-designed referral system that includes following up and building a relationship with your customers, asking, making them feel comfortable, and showing appreciation is one of the highest converting lead and profit sources around. And when you use a well-designed referral strategy, you’ll replace tired, worn-out salesman techniques and cold-call tactics with a reliable strategy that consistently produces the best customers—ones who stick around for years to come, never hassle you about price, and serve as a rich resource of referrals.