Referral marketing is a systematic marketing method that uses recommendations and referrals to get new customers for their company. This is done by word of mouth from an existing customer to a new one. Referral marketing is credible because of the existing trust between your customers and their friends.

This act is mostly spontaneous because individuals are doing it out of free will. However, by using smart strategies you can influence their actions and generate potential clients in the future.

If you’re doing something right in your business, you will get the accidental referral but, by creating a systematic approach to consistently generating referrals, you will find that your job of marketing and selling can become a pretty simple affair.

Here are the 7 essential steps to ensure that your referral marketing is well-planned.

Make a list

List down people that can help you refer potential clients. These individuals can be your suppliers, friends, relatives, banks or managers.

Identify the right referral sources

Slowly identify people in your list who give you more prospects and have the network to endorse more. Once you have completed, make plans to strengthen your relationships with these referral sources. Better a few sources with strong connection compared to superficial relationships with many sources. In order to receive high quality referrals you must be able to quickly communicate the exact type of person or business that makes a great referral.

Create and communicate your core referral message

You must be able to easily explain the value you can bring to anyone who is referred. Outline your referral lead offer and system – this is the heart and soul of the system. This is where you devise the creative offer that makes people want to refer you.

Create a referral conversion strategy

What good are referral leads if they don’t become referral clients? You must map out a specific set of steps that will allow you to convert your referral leads. What do you do with a lead when the phone rings?

Keep Track – and Keep in Touch!

Don’t worry if a number of your referral candidates don’t immediately recommend your business. Depending on your business, the referral process might take longer. Make sure you have your referral contacts’ info on file and keep in touch with them by sending quarterly letters or newsletters.

Think incentive!

Ultimately, everyone likes to get a deal. Offering a discount, free item, unique promotion, etc. is often the best way to prompt referrals. Most satisfied customers will be more than happy to recommend your business – especially if you’re offering them an incentive to do so. To ensure that your plan gets off to a successful start, make sure that all of your employees are onboard.

Devise a referral follow-up strategy

After an existing client successfully refers someone back to you, what do you do to make sure that your old client continuously sends some leads again your way? Another thing worth strategizing about is – what do you do when a referred prospect does not immediately turn into a client? These are two things which are very important – and may spell the difference between being referred again or not.

A good strategy is to update your referrer about any developments between his referral and your business. Communicate the progress of a referral back to your referral sources to keep them motivated. If it was such a successful referral, maybe you can think of rewarding your referrer. Give them discounts or freebies, or acknowledge them in some way as they refer. This way, you consistently communicate how much you appreciate their support on your behalf.