The mantra of every business revolves around growth potential. Business owners who have figured out how to generate referrals from their existing customer base are more likely to survive and thrive. A study published in the Journal of Interactive Advertising indicated that word-of-mouth advertising appeared to have a more significant impact on shopping and buying decisions than traditional marketing methods. Generating qualified referrals is a solid strategy with positive outcomes, but it is a strategy that requires planning and finesse.

Referrals from third parties who have experienced your product or service are considered highly credible

However, these referrals should be treated as part of a business relationship. A survey by Dun and Bradstreet found that referrals and advertising topped the list of most effective marketing methods as far as small to medium businesses were concerned. With social media platforms and other venues, referral marketing involves minimal expenses. It is also a way to build customer loyalty because the referring customer is putting his name and reputation on the line by endorsing your product or service.