Skip to main content

The Globe and Mail

Put your customers to work for you

Every small-business owner knows that one way to inexpensively build a client base is to get referrals from satisfied clients. But how do you induce existing clients to refer new ones to you?

You should just ask. Business and marketing consultant Pinny Cohen in Fairlawn, N.J., points out that the people his clients refer tend to "match that client in outlook and perspective, so when a good client refers people, they are usually good clients. Make sure the person you're asking a referral from is your all-star client."

Mr. Cohen himself focuses on word-of-mouth referrals to help keep costs down.

Story continues below advertisement

"My hourly rate has gone up over the years, but any one of my clients can refer another client to me, and I offer that new client the same grandfathered hourly rate as the referring client gets," he says. "Instead of spending on advertising -- and I don't spend a penny--I'd rather pass on the savings to the customer."

Many entrepreneurs reward their clients for their referrals. Garde Robe, a luxury wardrobe storage service in New York, relies heavily on referrals. "New-business revenue generated by a member is automatically deducted from the existing member's account," says Doug Greenberg, the company's vice-president of sales and marketing. "If your monthly membership fee is $1,000 and you refer a new member who pays $1,000, your fees are comped for at least a month – or more, in some cases."

More from Entrepreneur:

Some firms reward both the existing and the new customer. VoicePulse, a voice over Internet protocol service provider, offers existing customers the opportunity to send an e-mail to their contacts with a referral code. If the referred person signs up for service, both customers get a credit to their accounts.

Other small-business owners offer gift certificates for items clients would enjoy – think house cleaning services, chocolates, flowers, spa days, theatre tickets and the like.

Finally, don't forget one old-school incentive: a straightforward thank you.

"It sounds simple, but a handwritten thank-you goes a long way," says Alexandra Mayzler, owner of Thinking Caps Tutoring in New York. "Incentive programs, especially in service industries, aren't always appropriate, and genuine thanks go a long way."

Story continues below advertisement

Copyright © 2010 Entrepreneur Media Inc., All rights reserved

Report an error Licensing Options
Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

Combined Shape Created with Sketch.

Globe Newsletters

Get a summary of news of the day

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at