I constantly hear things like “most of my business comes from referrals,” and “word of mouth is the only marketing I need.” But when I ask these business owners, “So, how’s business?” I hear, “slow,” “things are tough right now,” or “I don’t have enough customers.”

By far, word of mouth—or referral—marketing is the best kind of marketing there is. But what I usually see is a passive approach to referral marketing as opposed to an “active” approach.

Most business owners have no real system in place to drive referrals on a consistent and regular basis; they just show up to their networking events and referral groups, cross their fingers, and hope someone will have a hot lead for them. This type of referral almost happens by chance, doesn’t it?

Yet, I constantly hear: “Word of mouth is all I need—90 percent of my business comes that way.” But my question to them is this, is 90 percent of “not enough” enough?

What if you could be more proactive about referral marketing and actually put a system in place to improve the number, quality and consistency of referrals you get? What if you could have more control over when and how they come?

In his new book, “The Referral Engine,” John Jantsch gives five great reasons to take the time to build a systematic approach to referral marketing:

  1. People love to give referrals: People love to help other people and they like to appear smart and in the “in.” If someone can offer a tip to a friend, family member or colleague about a great product, service or business, it makes them feel (and look) good. So, don’t be shy about asking for referrals—you’re actually doing them a favor!
  2. Greater ROI (return on investment): Good referral marketing isn’t usually free. There are costs associated with joining networking groups, printed materials and maybe incentives. But compared to some of the other forms of marketing (print, radio, television, etc.) the potential for return—when done correctly—can be huge.
  3. More qualified prospects and customers: When you “train” your referral sources, i.e.: meticulously describe to them your best customer, the quality of prospects, and customers you get will be better.
  4. Built-in credibility and trust: People like to work with people and companies they trust. It’s hard to trust someone you’ve never met face to face. But it’s easy to trust a friend, family member or colleague—so if someone who has already gained the trust of the prospect refers you; you’ve already achieved a level of credibility and trust.
  5. Fewer issues regarding price: Your referral source did the selling for you! They already told the prospect how great you are and the value you deliver so you don’t have to compete on price.
AvatarCarolyn Higgins

Carolyn Higgins is the President and founder of Fortune Marketing Company. Her personal mission is to help small businesses stop wasting money on advertising and promotions that don’t deliver and help business owners implement an effective marketing system that will bring in more customers—consistently. For more information about Fortune Marketing Company visit the Fortune Marketing Company website or blog.