Capitalizing on Referral Marketing as a Local Business

Referral marketing is one of the least expensive marketing strategies there is, yet at the same time, one of the most effective. For a business looking to grow specifically in their local area, referral marketing can be even more effective. 

So, what is referral marketing? Referral marketing is a tactic of gaining new business through word-of-mouth recommendations. Have you ever had a friend rave about an amazing experience they had at a local business? This is the backbone of referral marketing. Getting your customers to share their positive experiences with friends, family, co-workers, etc. 

It is in our nature, as humans, to want to share our experiences with others when we socialize. According to, 92% of customers trust recommendations from friends and family above all other forms of advertising. Consumer opinions posted online are 2nd to recommendations from family and friends, but when we shop online, we may have to spend a bit of time reading various reviews to get the best idea about a product or service. On the other hand, when someone shares an experience with a friend, it may only take that one single interaction to convince them about the quality of that same product or service. 

This is why referral marketing is such a powerful tool. Ken Krogue, President of InsideSales says, “A direct referral lead is over 36X more valuable than a lead generated by a cold call, 10X more valuable than a trade show lead, and at least 4X more valuable than a web lead.” As a local business in a small community, this impact is even greater. Cold calling within a community can quickly earn your business the reputation of being bothersome whereas referrals throughout the community can rapidly build trust. 

While we mentioned above that it is in our nature to share experiences with others, not everyone does. This is where referral marketing comes in. As a local business, you want as many of your customers as possible to share their positive experiences others. Let’s take a look at some ways you, as a local business owner, can ensure you are generating as many referrals as you can. 

Make the Experience Something Worth Sharing 

Whether it is the product you are offering or there service you are providing, you need to give customers a reason to get excited about sharing their experience with your business. Start by making sure your product or service is perfected. If what you are offering needs work, or is incomplete, it will be very difficult to generate positive referrals. Make sure you iron out any kinks in what you are offering so that customers are truly happy with the experience you are providing.  


Always be sure to provide outstanding customer service. Go above and beyond what your competitors are doing. Even if a customer doesn’t end up buying what you are offering, you may even generate positive referrals based on your service and attitude towards your customers alone. If your product is perfected and you are providing exceptional service, you are likely creating an experience that customers would be happy to share. 

Always be Asking for Referrals 

You may be providing an experience that blows your customers away, but as we mentioned, sometimes people simply don’t share their experiences with others. The best way of increasing your chance of someone sharing their opinion with others is just to ask!  At the end of a sale, customers are often the most excited about your business or their experience. Think about buying a car. It can be a bit of a stressful experience but when everything is said and done and you take the keys, the stress fades and the excitement of driving off in your brand new car takes over. These are the moments you should capitalize on. Ask your client if they don’t mind sharing their experience on social media, or leaving a review on Yelp or Google for you. Mention your referral rewards program, which leads us to the next point. 

Reward Your Referrers 

You can ask your customers for reviews as much as possible and you will certainly generate more than if you were not to ask, but a referral rewards program can boost your referrals tremendously. The rewards program can be simple and it doesn’t have to be much, but that little extra incentive can go a long way. 

You can offer your customers 5% off their next purchase if they leave a review on Facebook for you. Offer $10 off for any client that sends you a direct referral. Enter clients into a monthly raffle where anyone who leaves a review or sends a direct referral is entered into a drawing for a $50 gift card. Rewards do not have to be large. Keep them simple and make it easy for your clients to participate. 

gift card

Referral programs are also a great way to keep in contact with clients. You may ask that customers join the referral program using an email or phone number so that you can send them details of the program. Not only does it serve as a reminder to post reviews or to refer you to friends, but it provides you with a way to contact clients down the road. Let your customers know that when they sign up for the rewards program, they will get additional notifications with sales, or coupons, or news about your company. This is an excellent way to stay in front of past clients. 

Referral marketing is one of the most highly effective forms of marking any local business has at their disposal, and the costs are minimal. Create an experience that your customers will want to share with everyone. Always ask your customers to do so and incentivize them to give that little extra push. If you can do all of this, your reputation in your local community will soar and so will your business.