Which is the better growth strategy: marketing or client referrals?
Client referrals are very important for many businesses. It is a longer-term growth strategy though. Should SMBs spend more of their time, effort and money into marketing their business or getting client referrals?
A systematic approach to Referral Marketing should be an integral part of every business' overall marketing plan.
Referrals reduce the overall cost of new client acquisition (a key metric) and if properly tracked allows you to more accurately track the full Marginal Lifetime Value of a client by allowing you to identify the average number of new clients referred by existing satisfied customers and the additional profit that is generated through that referral.
This can be a Key Performance Indicator (KPI) of the level of client satisfaction you are providing. Many business owners are hesitant to ask for referrals. They shouldn't be. It can be a natural part of asking for feedback on the client buying experience.
If they are happy, simply ask them who else they know know who would enjoy the product or service you have provided. And don't forget, asking them if you can post their feedback on your web page or in your other marketing material as a testimonial is also a form of "referral marketing" that can promote 3rd party validation and increase trust and good will that will increase overall conversions of prospects into client.
Thanks for asking your question. It is an important one. I hope I have provided some value. All the best Shubhada.
Hi, I believe in the combination of those two strategies.
Client referrals are good for the starting point, but, as we all know, they are getting into our marketing funnel in different buying stages, therefore, good marketing strategy will enable us to create a long-term relations with those referrals, and when they are ready to buy, they will buy from us.
You may find that one or the other works better for you over time, but they are both viable strategies.
I had a marketing coach who said, "I can't teach you one way to get 100 clients, but I can teach you 100 ways to get 1 client."
Certainly you can't try everything and be effective at it all - focus is important. But I think it's a "don't put all your eggs in one basket" scenario.
You might check out the Breakthrough DNA Blueprint at ILoveMarketing.com.
You need both. With referrals, at some point they will not be enough to sustain the growth rate you need to stay in business. You also need to generate leads, qualify those leads and convert them to paying customers.
In any case, you need a process and a system for both referrals and lead generation marketing.
Don't bother comparing apples to oranges. Use them both. But focus on turning a great client experience into referrals. Most of my business is from referrals. Still I rely on marketing to create new referral origin points to grow the business. Obviously the more origin points the more referral growth occurs exponentially. For more help creating referral points of origin see the article... http://www.smallbusinesssuccesstips.net/2015/09/99-winning-direct-sales-marketing.html
You need to ask clients for referrals; and at the same time carry our a Marketing excercise.
Also remember that even in good times you should put aside a fixed amount of time very week for Marketing your Business and Yourself.
Both are important.
If you are just starting out, then you need to market effectively to pull in leads and then convert them into clients.
It'd be a mistake for one to neglect his/her existing clients in the bid to win new ones through marketing.
The best approach would be to...
1. Market to only attract a new set of clients to a product or service that your existing clients have already endorsed (i.e. got so much value they rave about it)
2. Keep on giving more value to your existing clients and then ask them for referrals
The referrals will come based on what you are GIVING, not from what you GAVE! Bear that in mind.
Remember also, your competition is not sleeping (they are marketing to your clients as well).
90% of my clients in 2015 came from referrals. That doesn't mean I stopped marketing.
You have to draw out a strategy on how to keep your existing clients happy and willing to give you referrals and also how to grow your client base through strategic marketing.
Marketing does not have to be based on a huge budget; with the social networks we have today, you can position your business to attract new leads if you know what you're doing - the downside is that it'll be a slow process.
I hope this helps.
All the best!
It depends on the current health of the business. Can you tell us more about the current situation? Are you at a company with stable clients? Or a start up?
As others write - both are good. I think you might also consider flipping this issue around. "Where do potential clients go to find a consultant, service, or product?" In my mind the answer to that flipped around question, suggests that you have several actively maintained paths down which clients walk to find you AND info about you. You might consider the original question you pose as being self-centered, while the flipper around version is more client-centered.
Nothing really new - do as much as you can manage. When you find that your clients are only coming from one place then you might have a better answer, but I'll bet most firms get discovered by clients all over the place.