3 Reasons Why Relying on Referrals is Risky Business

 

relying-on-referrals-is-risky

“I don’t need to do any online marketing, I get all of my business from word-of-mouth.”

In this day and age of technology, you’d be surprised how many small business owners have this mindset.

Don’t get us wrong – Referrals and word-of-mouth marketing are great ways to get business. It shows that you’ve created a solid reputation with your previous customers. But it can’t be the only way you are trying to attract new leads.

Here’s why:

1. Depending on your customers to spread the word about your business puts the control of your lead generation in someone else’s hands.

Your customers shouldn’t be your sole marketing team, and they’re certainly not your salespeople either. There is nothing wrong with saying, “Mr. or Mrs. Customer, I’m so glad you were pleased with the work we did for you recently. If you know of someone looking to have similar work done in their home as well, please let them know about us!”

However, trusting that those happy customers are going to spend their spare time spreading the word about your business to their inner circle is bad business practice. You can’t control what people say, or if they say anything at all. You need to make an effort as a small business owner to get your name out there on your own through other marketing strategies outside of referrals.

2. Referrals provide a limited pool of potential customers for you; and on top of that, referral business won’t last forever.

You are missing an opportunity to get business from a large amount of people who are not discovering your services through word-of-mouth. Your customers’ networks are only so big, and once they run out of people to tell about you or move on to other things, what are you going to do?

Plus, referrals are never guaranteed work for you. The individual who heard about you through a friend, family member or coworker may not need your services at the time, or they forget about the conversation completely and don’t remember who you are when the time comes for them to seek help with a project. You need to have other strategies in place to continue to promote and market your business to the target audience in your area so that you’re the first business that comes to their minds when they’re ready for your services.

3. Your prospective customers are searching for your products and services online.

Having a website and using free social media platforms such as Facebook and Twitter allow small business owners enter into the digital world and connect with customers online. Every business owner should invest a portion of their budget into marketing, especially when it comes to marketing online. How else will people discover your business through search engines to research who you are, where you’re located, what you do, and how to contact you?

Maybe you don’t consider yourself internet-savvy, maybe trying to market or speak to potential customers you have no connection to makes you uncomfortable, or maybe you just think online marketing is too expensive. Whatever it is, chances are your competition has figured out a way to use online marketing to reach a new group of potential customers. Do you want that business to slip away to the biggest competition in your area just because you don’t have a website people can find to read more about what you do? Probably not. You will see more growth for your business, in addition to the referrals coming your way, if you seek out the endless opportunities to create an online presence.

Referral-based marketing is a great way to build your business’ reputation, but it is crucial to have a balanced mix of strategies including online marketing to reach potential customers who need your services.


About the Author:

Alyssa Shillingford is a Digital Marketing Specialist at Townsquare Interactive. She works with each of her clients to develop a comprehensive web presence that attracts customers and drives new business.

 

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