Referrals - The Cheapest Way to Attract New Business

Have you ever considered just how expensive it is for your clinic to attract new business?

The costs involved in electronic media are often prohibitive, while printing, mail costs and even local papers can cost hundreds of pounds. Now don’t get me wrong. I fully believe in advertising and understand that each of these highly effective advertising mediums can generate increased turnover and attract new customers. But what if there was a way to attract new customers to your salon that cost you virtually nothing? Well there is. Having a systematic referral programme in place in your salon is the answer!

Referrals are an extremely effective method of advertising your business. They are a personal recommendation of satisfaction from an existing customer that is both cost and time effective for your salon. Yet many salon owners fail to encourage their customers to refer their business or products to colleagues, friends and relatives. Simply presuming that your customers discuss your business with others is unrealistic; they must be actively encouraged to talk about you and your staff and be given the necessary tools to make referring your business easy.

Over the years we have implemented a simple set of procedures in a number of salons to encourage referrals. In every instance there has been a significant improvement in the number of referred customers attending the clinic. Indeed some salons have been able to cut their advertising budgets in half simply by implementing a simple referral strategy. Here are some key points you may wish to try:
 

1. Test and Measure

In order to know how effective your strategy has been, you need to measure how many referred customers you are receiving. Every new client should be asked how they found about your salon. This can be done either by inclusion on your new client information form or simply by asking each new enquiry. Recording this information will help you to determine which of your advertising strategies are working most effectively and provide you with names of people actively referring your clinic.
 

2. Ask for Referrals

It seems simple enough, but for some strange reason not many businesses actually ask their existing client-base to tell others about their business. However, we know that when we do start asking, the number of referrals usually increases, almost overnight.
 

3. Provide current clients with materials to make referring your salon easy

Make sure that your regular clients have extra business cards, magnets, pricelists, promotional products, newsletters, anything with your contact details on it. Now potential new clients have easy access to contact details and the chances of them acting on the recommendation are much higher than if they had to look your number up in a phone book that also contains your opposition.
 

4. Say “Thankyou”

Whenever you have someone referred to your business find out who it was that referred them. Then say “thankyou” to them. You can phone or write to them, but cards work best. Cards get displayed for all to see. They are often kept while letters are thrown away and phone calls are quickly forgotten. In fact, I prefer home made cards and hand written messages rather than mass - produced cards with a printed “thankyou”. Show that you have gone to some trouble and that you really do appreciate them referring a new customer to your salon. The idea is to sincerely thank them so that they will be happy to do it again and again. After all, how often do you get a “thankyou” card? Whenever you receive one it really makes your day and that’s how they will feel. More importantly, it’s just a nice thing to do. 

Often this is as far as most business owners need to go with their referral programme. By simply fulfilling these points, most customers will be very happy to recommend your services. However there is one more step that will ensure your customers refer others to you time after time.
 

5. Reward those who refer others to you

Now remember I said that referral programmes were inexpensive. Rewards do not have to be expensive. There are plenty of small, relatively cheap ideas that can be added to you card that will absolutely delight your customers. Try adding a £2 ‘scratchie’ lottery ticket or a chocolate frog or a small book of uplifting verses. It’s not the value that’s important, it’s that you took the time and effort to thank them that they will remember. For that reason, I don’t recommend using salon products or gift vouchers as rewards because they are items these customers are prepared to come in and pay for anyway and it seems just a bit too easy to give away something from the salon.

Of course underpinning the notion that anyone will want to refer others to your business is customer service. Failure to provide excellent customer service and fair prices will result in dissatisfied customers and many lost referral opportunities.
 

by Paul Carbis, IFA Specialist Advisor

Paul is the Principal of Carbis Business Management is acclaimed as one of the world’sleading presenters in the area of small business management. A specialist to the Beauty Industry, he works with numerous salon owners internationally to increase business and train staff. Paul specialises in advertising and marketing for salons and is a popular speaker to conferences and seminars. He can be contacted via email at paulcarbis@bigpond.com