How To Develop A Referral-Based Business

Any of you who have had a look around my site may have noticed that I am fortunate enough to have a lot of work on at the moment. I currently work with a number of awesome clients who are keeping me busy, and almost all of these projects have originated from recommendations from previous satisfied customers. It is a process that has taken a lot of time to achieve and it certainly hasn’t always been this way, so I thought I’d share some tips on how to get and sustain a viable referral-based business…

Provide great customer service… always

The best way to keep your customers is to provide them with exceptional customer service. When they interact with your business for the first time make a point of making them feel special, and show that you appreciate them. You only get one chance to make a first impression – use it well. Do you have a plan or system in your business for providing awesome customer service every single time a customer interacts with you? It could be the most important system you ever create in your business. If it works and they keep coming back, then keep repeating the process for truly fantastic service. Good reputations spread, but not as quick as bad reputations. Strong referrals come from good reputations.

I do have standard (“canned”) responses to help speed up emails but I always personalize them and address any specific questions the potential client has asked.

Give customers a reason to keep coming back

How often do your customers have a reason to come back and use you again? Is it as long as once or twice a year? Or once or twice a week or even a day? The more they have the chance to use you the quicker your reputation will grow. If your sales are only once or twice a year then keeping in touch with customers via Birthday cards, Christmas cards, regular blogs or newsletters subscriptions keeps you in the forefront of their mind. If they can use your products or services more regularly then give them an incentive to come back through a voucher off their next purchase or a free gift as a loyal customer. Whatever you think will build that all important reputation.

Get testimonials

After a while of your customers receiving great service from you the best possible thing you can do is to ask them to describe how they’ve been treated whilst dealing with your company. Customers love to tell other customers about the great decision they made using your company, a testimonial gives them the chance to say that in writing. It is an awesome reputation builder and will give new potential customers the confidence to use you as well.

I love my testimonials page, it’s my favorite page on my website. You should read it, it makes me proud!


Once you have created a great reputation for providing customers with awesome service and they are regulars in your business the final part of gaining referrals is to ASK for them. Many business owners can find this a tough thing to do but it is an opportunity for your customers to validate that they made a great choice in choosing your business by recommending you to other people. You can wait and wait expecting the referrals to come without asking and it may happen but it will be much quicker if you start by asking them.

Offer an incentive

How about giving them a reason to refer you to their friends by offering them an incentive to do so? It becomes a win:win:win scenario, you win as you get more business, they win as they get a gift for recommending and the new client wins because they get to experience what a great business you have and they can receive awesome customer service too.

Keep it up

Once you establish a referral-based cycle like the one described above, the way to keep it is to continue to do what you say you will do, really, really well. Remember that reputations can be trashed much quicker than they can be built, so keep sharp, stay focused and asking for referrals will lead to the holy grail of a referral based business and remove the need for expensive, untried marketing.

How do you generate leads for your business?

29 thoughts on “How To Develop A Referral-Based Business”

  1. Excellent advice on all points, Joel!  My favorite suggestion is the incentive.  Making things a win for everyone is fun!

  2. Joel,

    My tutoring business is mostly referrals. One way I know I’m doing a good job is my clients keep coming back for other subjects or the next child in the family who needs help. I ask for referrals and offer a free session to anyone whose lead results in a client who signs up for at least 4 weeks, and pays, of course. The incentive works, but not as well as parents or guidance counselors talking with parents and students.

    My Primerica gig is also referral-based. I’m not doing to much of it right now because of a corporate paperwork problem I hope to have solved in a couple of days. For that, I not only ask for client referrals, I also ask for referrals to people looking for a part-time business, a plan-B, or even a full-time business. I’m still working on my friends and their referrals. There is little resistance when all you need is a half-hour of time with a client, a free money check-up, and they don’t ever pay me a dime. Primerica is a marketing and distribution company for many other large financial firms. those firms pay us for referred business instead of spending all their marketing budgets on advertising.

    Great post and so very true!


    1. @joubess That’s a great incentive for people to refer you to others. At the moment I don’t do that, although I do a few affiliate things for individuals who have asked. Your Primerica thing sounds great, hope it goes great for you!

  3. Keeping in touch with regular clients is the best advice. I can’t tell you how often I just ask my clients to reconnect with their clients, and it brings in instant cash-flow. The rest of your advice is spot on as well.

    1. @MichelleVandepas Thanks Michelle, I think reconnecting is always a good idea, I guess a newsletter works to a degree too in reconnecting with people.

  4. It’s crucial for a business to get referral. A business without a referral system is just waiting to die. If you’re not growing, you’re dying. The same goes to business.

  5. Hi Joel,

    Great customer service makes a big difference. I will always come back to someone when i feel they are really listening to me.

    I also answer comment and than if they have a blog I will always click on it and comment on there post. As you have notice I always use there name if I know it when making comments. It is the little things like you talk about that can make a big difference.

    Thanks again Joel for great information.

    Blessing always,


    1. @BlogTechGuy @happymakernowco No worries. You made me laugh. We are talking about customer service and you missed my comment. Shows me that we all make mistakes. Glad to see i am not the only on that makes mistakes. LOL

      No worries

      thanks for the smile and laughter. It is appreciated.

  6. It has to start with providing great customer service. But how do you know you are providing great customer service? Ask!

    Ask your clients how you can improve…then take action to improve.

    Great post.


  7. I like your post. It’s a recipe for success – ‘cooking’ your business with these ingredients guarantees you’ll end up with a successful referral business – any business person’s dream.

  8. Dear Joel –

    This is a great post. The most important thing I have found that works for me is to respond to a comment immediately.

    The firs thing I do when I roll out of bed is to see who has responded – and as sleepy as I am, I respond.

    i know, when I have taken the time to make a comment, I can’t wait to see what the blogger has to say about it.

    If you do nothing else, this is the best PR.

    1. @miraclady Thank you Corinne, that’s exactly what I’m doing right now! I see a few big bloggers not responding to comments and it annoys me that they don’t practice what they preach.

  9. Dear Joel –

    This is a great post. The most important thing I have found that works for me is to respond to a comment immediately.

    The firs thing I do when I roll out of bed is to see who has responded – and as sleepy as I am, I respond.

    i know, when I have taken the time to make a comment, I can’t wait to see what the blogger has to say about it.

    If you do nothing else, this is the best PR.

  10. Dear Joel –

    A great reminder. Ask for referrals.

    “Don’t thank me – tell your friends” with a chuckle can go a long way.

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