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Marketing Strategy: 5 Reasons Why Customer Satisfaction Does Not Generate Referrals

Most satisfied customers DO NOT give referrals!  While most referrals come from satisfied customers, most of our satisfied customers just do not give them.

Everyone will agree that referrals are the best source of new business.  As a result, we all want business by referral to be a part of our marketing strategy.  We also know that customer satisfaction is essential for generating referrals.  But customer satisfaction does not automatically lead to a referral.  There are at least 5 reasons why this is the case.

First, your customer does not know when they are talking to someone who would be a good referral for you.  It’s easy for us to take this for granted but it is true.  Would they know it if they spotted a good referral for you?  It is critical that we be continually educating our customers on how to know when they encounter a good opportunity to make a referral.

Second, your customer doesn’t know what to say.  Chances are they tried making a referral once and it was awkward.  Maybe they just think it will be awkward because they don’t know what to say.  Nobody wants to feel awkward so they avoid the subject.  It is essential that we help our potential referral sources with language and simple scripts to help them create the conversations.

Third, your customer is uncertain that their friend or colleague will get the same outstanding customer experience that they have received.  We must find ways to let our customers know that we take great pride and attention with EVERY customer.

Fourth, they don’t realize that you want them to give you referrals.  In one study 82% of the customers said that they were never asked for a referral from their service provider.  They don’t know that you want to build your business by referral.  Most small business owners just don’t ask, and if they do, they don’t have a system to help their customers actually generate a referral.

Finally, your customers forget!  Maybe you did ask for a referral once but you didn’t want to keep bugging them, so the subject never came up again.  I have seen many very satisfied customers simply forget to make the referral.

Think about yourself for a minute.  How often do you make referrals?  I’m sure you can easily think of someone you trust and whose service you value.  You have a high level of customer satisfaction and I’m sure you would be comfortable giving them a referral.  But how many times in the last 6 months have you independently picked up the phone to make a referral on their behalf?

Research indicates that very few of us do this!  Our intentions are good, but like everyone else we are busy and don’t always know how to recognize referral opportunities.

As a business coach serving Sugar Land, Katy TX, and the Houston area, I talk to business owners every week about creating a referral marketing system.  Make business by referral a central part of your marketing strategy by creating a system.  A good system will help you overcome these 5 obstacles and double or even triple your number of referrals!

John Jantsch in The Referral Engine sites from his own research with small business owners that 63% indicate that over half of their business came by way of referral.  However, almost 80% of these same owners readily admitted that they had no system of any kind to generate referrals.  What could happen in their businesses if they did?

I hope you can see how powerful and valuable a good referral marketing system could be.  In future posts I will be sharing more tips and insights on how to create a strategic marketing plan around referrals.  Stay tuned and I will be your virtual business coach.  In the meantime, let us know how referral marketing is working for you!  Do you have questions?  Let us know!

Tags: Customer Satisfaction, Marketing, Referral Marketing