Why customer referrals are so golden to any business

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A customer's stamp of approval through a personal referral is one of the biggest compliments that can be paid to a merchandiser, retailer, supplier or other vendor.

Referrals are one of the best kinds of advertising a business can receive. I'm not talking about the kind where businesses seek out or pay people to endorse, but the kind that comes organically.

Businesses can benefit tremendously from referrals because the customer recommendation is a powerful one. The reason why is due to the fact it is an external kind of endorsement, which can carry a lot more weight than a self-generated advertisement.

Why referrals carry so much weight

Internally-generated promotion, such as an ad in a magazine or newspaper, Internet, radio or TV advertisement written by the company's marketing campaign, may not have the same impact as a good experience from a customer who has nothing to gain by offering a referral other than the fact he or she was satisfied by the transaction.

Any business can make up self-imposed claims of greatness, superiority or effectiveness about itself, but essentially this information is less meaningful. If you think about it, when compared to a customer's statement that backs up a company's claims of quality, it tells the world "they like me."

Marketing and advertising still matter

This is not to devalue the value of marketing and advertising because these do indeed play an important role in a business. It helps increase brand visibility and help the business become known as an authoritative presence in any given respective industry.

A company's marketing campaign needs to be on target, but this is only a part of the equation. Looking at the big picture, advertising only gets people in the door (be it physical or virtual), it does not presume people actually believe a business' product or service is all it claims; the business has to prove its claims to be true to the potential customer.

Other benefits of customer referrals

In addition to the assurance of quality and statement of approval a customer referral gives, there are other additional benefits to getting customer referrals. Depending on how you look at it, it is maintenance-free advertising.

While obtaining customer referrals is not exactly free, because in order to get the word-of-mouth advertising, initial investments to attract customers had to be invested, it is a way of advertising that essentially runs itself once it's established. The word of mouth spread through customer referrals is powerful, complimentary and effective. Not to mention, social media has widely increased the opportunities for exposure through social sharing and comments.

It's all about the experience

Customers generally will not recall average service or products, but they usually remember excellence. Businesses that offer superior customer service, stand by their guarantees and claims, and are willing to go the extra mile for their patrons are the ones likely to get customer referrals. The sale does not end with money exchanging hands at the register, it is only complete when the customer has received satisfaction with their purchase.

A business cannot get any better advertising than having gained the trust and satisfaction of their customers. When customers spread the word that, as a purchaser, they feel a product or service is good enough to share with others, this is an influential statement.

Theoretically, it is the consumer that can make the excellence claim through a customer referral and have it truly mean something. No one is going to refer a company in good conscience if they feel the service and/or quality of products are inferior, so when a customer refers family, friends and/or colleagues, this is one of the highest compliments a customer can pay to a business.

Businesses have a lot to gain with the benefits received through customer referrals. If from these referrals a result a steady stream of new and repeat customers comes through your establishment, this shows that as a business, you have officially arrived.


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