Professionals and service business owners who have been operating for a while always say they get most of their clients by word of mouth. If you're new in business, how can you start building word of mouth now instead of just waiting for it to happen?

The fastest and most effective way to do this is by actively working to generate referrals. A referral acts as an endorsement for your business. A prospective customer who is referred to you by someone they trust is much more likely to buy from you immediately than customers you attract through advertising and promotion. Referred customers are also less likely to question your credentials or your pricing.

Referrals come from a wide variety of sources, primarily: satisfied customers, your friends and family, colleagues and competitors, and business owners who share the same market as you. Here are a few ways you can work with each group to increase the number of referrals they give you.

* Satisfied customers are your best source of referrals, but you need to remind them you are around. Keep them on a mailing list -- postal or email -- to which you send announcements, reminders, or a newsletter three to four times per year. Host an annual open house or free workshop to thank them for doing business with you.

When your customers buy big-ticket items or hire you for a major project, give them a call a few weeks afterward to ask how your product is working, or the outcome of the project you worked on.

* Personal friends and family can send plenty of business your way if they know enough about what you do. Don't be afraid to include them on your mailing list and invite them to your business events. Let them know what kind of customers you are looking for. They already know and love you, and will be happy to help your business grow -- just ask them.

* Colleagues and competitors will refer you customers under many circumstances. Perhaps you have a specialty they don't, or they have more business than they can handle at times. Get to know other people in your field through your professional association, or just call them up.

Propose a referral partnership, where you and a colleague look for areas of business you can potentially refer to each other. And remember that the only real difference between a colleague and a competitor may be your attitude.

* Business owners who share your market are in contact with your prospective clients all the time. If you can form referral partnerships with a variety of businesses in other fields, you will create a far-reaching referral network. For example, a marketing consultant might get to know graphic designers, business planning specialists, and CPA's, all of whom have contact with businesses looking to grow.

Spend some time brainstorming about the categories of businesses that serve your marketplace, and begin to seek these people out. Since referral relationships like these can be reciprocal, savvy entrepreneurs will welcome your contact.

Finally, to generate more referrals from every group, remember to thank the people who refer business to you, even when a referral doesn't turn into a client. The more thanks you give, the more referrals you will get.

Copyright © 2000, C.J. Hayden

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