I just finished speaking with a woman who runs her own studio. She is generating 90% of her new clients from Google Adwords.

An impressive result, and one that has kept her business going for the last 3 years, but with diminishing returns.

With the economy falling, and people tightening their budgets, she is scared.

She contacted me because she realized one thing. She has lots of happy clients…

…But She Is Getting ZERO Referrals!

How does your current marketing compare to word of mouth referral methods on these 5 measures…

1. How much someone spends the first time they see you (Immediate Profit.)

People who are referred to you automatically trust you to a greater degree, because of the trust they have with the person who referred them.

This is probably why referred customers tend to spend more than clients brought in by any other marketing method. They have less need to test you out with a small sale first, just to be sure.

(How price sensitive do you think your customers are becoming?)

2. How often they come back (Repeat Sales.)

Word of mouth methods automatically include follow-up and client retention with the referral generation.

Clients are much more likely to return to you, even if only because they will often be in contact with the person who referred them to you in the first place.

If their experience with you is positive then the discussion about the referral will be a positive one too, perhaps encouraging both parties to want to come back to you again!

3. How often they refer others (Doing Your Marketing For You.)

Referred clients need much less education on referring others to you. They were referred themselves so they understand a) you accept/want referrals, and b) you will take good care of the person they refer, just like you looked after them.

This measure is so often missed when calculating the value of other forms of marketing, but is absolutely crucial when deciding the lifetime value of what a particular client brings into your business.

4. How effective are the referrals they give you (Quality Customers.)

Word of mouth clients generally complain less, pay on time more often, and are generally more enjoyable to work with, when compared to clients coming from any other method.

With good education of your best customers, word of mouth and referral methods will maintain and even improve the quality of customers you get.  Therefore, when your very finest clients refer people to you, you end up receiving incredible clients as a bonus, and your overall business goes up a level.

5. The overall profit per customer (The Life-Time Value Bottomline.)

Just on the basis of the first 4 measures alone no other method of marketing will produce as good a return on your investment as word of mouth referrals.

And… here’s the extra kicker!

Even though “Word of Mouth Magic” covers many referral marketing methods that require money to get started with, some of them can be done without even spending a single, solitary cent!

At its simplest, you just need to adapt what you are already doing. For instance, add to your written information on letterheads, emails, website and even invoices, something that lets people know that you get, want and appreciate referrals.

Planting the seeds for a harvest of referrals can often be done at no cost at all.

The woman running the studio knew her current marketing wasn’t giving her as good a return as referrals. That’s why she contacted me to discover more.

How well does your current marketing measure up against word of mouth methods?

-Martin Russell

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