Referral vector illustration. Flat tiny products promotion persons concept. New customers word of mouth engagement method. Marketing consumer audience communication service for influencer advertising.

Contributed by Cyan Labs

Traditional word of mouth advertising is the most profitable way to expand a business, especially a service-based company or a distributor. Giving referrals offers highly qualified leads that are easier to close, and have a higher lifetime value, according to a recent Cyan Labs survey of 600 B2B professionals. But only 30 percent of the companies in that survey had a formal program.

Unfortunately, most business owners simply don't know how to create a program that will make them more money. Having a great product or service and great customer service is a starting point, but it takes a lot more.

Here, Cyan Labs offers six ways to create a successful referral program that generates leads and, above all, sales.

1. You just need to ask.

Customers aren't likely to make referrals without prompting, so waiting for it to happen naturally can leave you very disappointed. A better way to do this is to have a system for regularly calling and emailing your best customers to ask friends, acquaintances, or colleagues for potential customers who may use your services or products.

2. You have to be clear.

Asking for references just for doing it is a bad plan. You need to know exactly the types of referrals you want and then ask for them. Being specific about the types of people who are almost certain to buy from you will bring you some very good leads. It's also a good idea to generate a list of buyers (or companies) you'd like to meet, and also check LinkedIn for shared connections with your clients to request a presentation.

3. Automate it.

To truly turn referrals into a profitable marketing strategy, you need to make them part of your standard operating procedure. Use certain actions as triggers that will automatically ask you to request a referral (in other words, make it routine to submit a request every time a contract comes up for a renewal or at the beginning of a new month).

4. Make it easy.

Create lots of easy opportunities for clients to make a referral. Put a form on your website, create a clickable PDF to email to customers, and add a "share this" button to all of your content (blogs, newsletters, etc.). The easier you make it easier for someone to share your information, the more likely they are to do so.

5. Add an attractive reward.

This can make a big difference. Whether it's a small discount on your service or a free add-on product, these little tokens of appreciation often motivate people to take action. Remember to be careful and set rules in your rewards system so that it doesn't cost you more than expected (for example, limit the number of gifts a referrer can earn or a time frame to take advantage of discounts).

6. Say thank you.

Not because it is the last, it ceases to be the least important: show gratitude to any client who makes a recommendation that ends in a sale. Establish a well-planned system for thanking referrals and do so in a timely manner. At the very least, send a thank you card or make a personal phone call. If the recommendation generated significant business, you may also want to send a gift, such as a gift card or food basket. If you show your customers your appreciation, they will show it to them with high-quality references.

For more advice on how to maximize your referral program, click here