We’ve all witnessed the power of a recommendation…

The way your perspective instantly changes when a friend tells you they’ve tried a product, eaten at a restaurant, seen a great movie or read a book and said, “It was unbelievably amazing-you have to experience it!” Or “I’ve tried that and I loved it!”

You’re instantly inclined to try whatever product or service is in question simply because you trust your family and friends. In fact, according to Nielsen research, 92% of people trust recommendations from their friends and family more than all other forms of marketing.

Some other findings about referrals that make them even more desirable:
– Customers referred by other customers have a 37% higher retention rate. (Deloitte)
– A referred customer has a 16%-25% higher lifetime value. (Wharton School of Business)
– Referral customers tend to be more loyal than other customers. (American Marketing Association)
– According to Market Force, “81% of U.S. online consumers’ purchase decisions are influenced by their friends’ social media posts.”

It follows that one of the best marketing strategies you can put in place is a referral marketing campaign. Not just the traditional “ask for a referral” campaign, but one that leverages your customers and turns them into sales ambassadors who spread the word about your product and services.

Imagine having a whole sales team of customers out there working for you for free. Not only that—as the stats clearly show above, they are more effective!

Which means…because referrals have a much higher close percentage, they are an excellent way to maximize your profits.

The best part… you can create sales ambassadors for your products and services…essentially at no cost to you.

Let’s look at a real live example of this in action.

For the past three years, the Walt Disney Company has done a summer campaign called “Jet, Set, Go.” Now I want you to think about Disney. It’s a name people already know and trust. There is a massive audience already engaging with Disney who are loyal fans. Yet with this one single campaign, Disney received a 40% increase in their reach of core television media thanks to referrals.

Imagine what a 40% increase could do for your business? Even better imagine what a 40% increase looks like in your profits when you don’t have to deduct advertising costs because the increase came from free referrals.

Now you might be thinking…sure this can work for a company like Disney, but it will never work for mine because I don’t sell a product or service that people talk to their friends and family about.

The thing is, this works for even the type of businesses that people rarely, if ever, talk to their friends and family about. It even works for products and services that are considered uninteresting to talk about…such as insurance or accounting.

You see when it comes to referrals, there is a lot more to it than what type of product or service you sell.

Here are three things that will affect referrals:

1. A customer’s entire experience. Have you ever visited a website and although you loved the product, you were so frustrated with your user-experience, you left without buying? Or maybe you went to a restaurant where the food was terrific, but when you went to use the restroom it was dirty.
It’s not just about having a great product or service. It’s about the entire experience. Impressions can affect whether or not a customer gives you a recommendation or not.

In fact, if their experience is bad, you might receive negative publicity. Remember impressions don’t always have to do with the product or service you sell. It could be that they experienced slow service, were treated badly by a staff member, the packaging was awful, or that they grabbed your product off a dirty shelf.

2. Your communication. A friend of mine has a large online following. Although she wanted to recommend a business she loves, when she went to their Facebook page, the posts did not reflect the brand she had come to know and love. Therefore she opted NOT to give the recommendation because she was embarrassed to tag the business Facebook page.

3. Your ads. Another thing to think about is how your ads are structured. We’ve all seen clever Super Bowl commercials that spread like wildfire—yet, when asked later, nobody can remember what the product is that was being sold.

When creating your ads and videos, be sure that you don’t get so caught up in the creative that your ad doesn’t sell your product. The content of your ad must match your company’s message and reflect a core benefit of your product or service.

That way, if your ad or video is shared, it has the potential to convert casual viewers into eager buyers.

Focus on intentionally creating referrals for your product or service and you’ll grow your business faster and easier — and maximize your profits too.