Word of mouth

As well as costing nothing, referrals are the most effective way to gain customers. But how do you increase the number you get? Afsheen Latif finds out
Referrals are recommendations about your services or products made by satisfied customers to others. Their power is greater than any paid-for form of marketing or advertising because they are highly convincing personal endorsements of your business.

"Because they cost nothing, referrals are the most cost-effective way to get more business," says Devon and Cornwall Business Link adviser Penny Heath.

"You should always focus on doing a good job for all your customers. It will give them confidence in your ability, which should mean they'll feel happy referring you to others."

Once you have completed a job or have made a sale, ask satisfied customers to tell other people about your business, but don't be too pushy.

Always carry around business cards you can leave behind. "They're an effective way to get your contact details out there, but they are a drip-feed way to get referrals, so don't rely solely on them," Heath argues.

"Don't forget to give people information they might require, such as the full range of products or services you offer," Heath adds.

"Family and friends are usually good sources of referrals. They should be the strongest advocates of your business," Heath says.

Keep people updated about your business, so they have accurate information when telling others about you. "Make the information simple and clear, and highlight the things that set your business apart from the competition.

"Also, tell them about the type of customers you're looking to attract and, if relevant, the best time to contact you," Heath adds.

Providing you are prepared to vouch for the quality of the products or services they offer, remember to refer businesses that refer you. "If a business knows you recommend them, it adds an incentive for them to reciprocate the gesture," Heath explains.

"Remember to say thanks for any referrals you receive and consider offering incentives, perhaps a discount on their next purchase or cash for new business they bring you, to encourage them to continue referring you," she concludes.