3 Ways to Grow Your Business (Part 3): How to Generate Referrals and Repeat Business

In my last two posts, I talked about two ways to grow your business: how to increase your number of clients by increasing your conversion rates on your marketing materials and sales consultations and how to increase the average transaction value. Today, I’ll discuss the third way to grow your business: repeat business.

Buying or selling a home is a big decision, so regardless of what you’d prefer, you probably won’t be able to persuade people to move on a whim. That said, there are still opportunities to generate repeat business from past clients in the form of referrals.

How To Get More Referrals

First and foremost, your past clients are your best sources for referrals. In fact, most real estate agents say they get most of their business through referrals, yet the vast majority of them don’t have a formal system in place for asking current and past clients for referrals.

Here are some tips for generating more referrals:

• Set an expectation for referrals. When you start working with clients, explain that you get the majority of your clients from referrals and that you expect when the job is completed and they see what a great job you’ve done for them, they’ll refer others to you. Explain that this allows you to spend more time caring for and serving your clients rather than spending the bulk of your resources prospecting for clients through advertising and direct mail, as most agents do.
  
  
• Ask for referrals at celebratory moments. Clients are most appreciative of your services when things have just gone extremely well for them. Use one of those opportunistic moments to ask for referrals - and follow up with a letter or email explaining that you do your business primarily by referrals and would they know of anyone who they could refer.
  
  
• Ask for referrals just after the transaction completes. Take a gift basket or other nice gift over to your clients to check up on them after they’ve moved in. Again, ask them for referrals, while explaining how you will provide the same level of service they received from you to anyone they refer to you.
  
  
• Hold contests or give referral bonuses. Give others an incentive to refer business to you by giving referral bonuses or holding contests. For instance, anyone that refers business to you will receive an entry in your contest to win an all expenses paid trip to Hawaii as well as smaller prizes like an iPod or even cash if your ethics board allows it. Or, you can give referral bonuses by partnering with local service providers - if someone refers three people who become your clients, you’ll pay for your personal accountant to do their taxes this year or a 6 month gym membership to your local gym or 3 months of golf or cooking lessons or whatever your clients might like.
  
  
• Hold client appreciation events. Have an exclusive summer BBQ or a holiday Christmas party and invite your clients. Then, be the facilitator at your party by introducing people who might share common business goals or hobbies.

In addition to getting lots of great referrals, the longer you keep in touch with your clients, the more likely they will be to contact you when they move again. According to the 2005 National Association of Realtors Profile of Home Buyers and Sellers, 82% say they were likely to use the same agent again or refer the agent to others. Yet only 11% claimed they had used an agent from a previous transaction. That’s a big opportunity for you.