Most service businesses already get referrals. What they lack is a system, so referrals arrive when a customer happens to remember them, happens to be asked, and happens to feel generous that week. That’s luck. This guide covers when to ask, what to say, how to make it easy, whether to thank or pay, how to track it, and a four-step routine you can run yourself.

Why referrals are worth building a system for

People trust people they know. In the 2013 Nielsen Global Survey of Trust in Advertising, which covered more than 29,000 online consumers in 58 countries, 84 percent said they trust recommendations from people they know completely or somewhat. That survey is more than a decade old and covered online respondents only, so read it as direction, not a forecast.

Referred customers also tend to be worth more. A study in the Journal of Marketing followed about 9,500 customers of a large German bank over 33 months. The referred customers were about 18 percent less likely to leave and about 16 percent more valuable over six years. It was one bank, not a service trade, and the referrals came through a program that paid a 25-euro voucher, so treat it as a signal and not a guarantee.

A referral needs three things at once. The customer has to remember you, have your contact details within reach, and be asked at the right moment. If any one is missing, nothing happens. A system decides in advance when you ask, what you say, and where the result gets recorded.

Three moments to ask

You don’t need a campaign. You need three triggers, each tied to a point where the customer already feels good about you.

When the job is complete. This is the highest-value moment. The work is finished and the customer is looking at the result. Ask in person or in the completion message.
After a good review or compliment. A customer who leaves a positive review or says something kind has just told you they’d recommend you. Thank them, then make the ask in the same thread.
At a natural check-in. Most service work follows a calendar: a seasonal start-up, an annual inspection, a renewal date. Use it as the reason to reach out. Confirm service, answer questions, and end with one line asking if they know someone who’d benefit.

If you want a list to start with, past customers who went quiet are a good one. We covered winning them back in The Segment Most Businesses Forget: Past Customers Who Went Quiet. This guide is about turning your active customers into a source of new ones.

What to ask for

“Tell your friends about us” almost never produces a lead. It asks the customer to do open-ended work: think of who might need you, decide whether to bring it up, and figure out how. Ask for a specific introduction instead:

“Do you know one neighbor or colleague who’s dealing with the same problem we just solved for you?”
“Is there someone you know who’s been putting this off? If you’re comfortable, would you introduce us by text?”

A specific ask gives the customer a face to picture. Keep it to one person and one situation.

Make it easy

Every extra step costs you referrals. Give the customer a message they can forward without editing, such as “If you know someone who needs [service], forward this and I’ll take it from there: [your number or link].” The same line works in an email footer or at the end of a completion message. Put a short link to a simple inquiry form behind it so the person being referred can reach you in one tap.

Ask for a warm introduction by name where the customer is comfortable, but always give them the forwardable option too, because some people would rather pass along a link.

What to do when a referral comes in

When someone sends me a referral, I start with an introduction call. I take down what they’re looking for and who sent them. That second part matters. It tells you who to thank, and it tells you which of your customers are sending you work.

Thank-you or incentive

Thank every referrer, every time, and do it quickly. A personal text or a short handwritten note costs almost nothing and tells the customer their introduction mattered.

An incentive is a separate decision. I used to give referrers a credit on their account. I don’t offer one right now, and it’s something I may bring back. A credit is easy for the business, because it costs nothing until a referral turns into paid work, and easy for the customer to use. The bank program in the study above worked the same way, with a small voucher for each successful referral.

Incentives carry rules. Whether you can offer one, and how, varies by trade, by state, and for licensed professionals. Before you offer anything beyond a thank-you, check with your state licensing board or an attorney who knows your trade. Start with the thank-you.

Track where customers come from

If you don’t record where a customer came from, you’ll never know whether any of this works. Add a “source” field to every new lead and customer record, with “referral” as one option, and a second field for “referred by.” Then you can see who sends you the most work, thank them first, and ask them again.

A spreadsheet is enough to start. A CRM such as HubSpot or Zoho CRM makes it easier to see as you grow. The tool matters less than the habit. A field that’s always filled in beats a feature nobody uses.

If you already send automated follow-ups, add the referral ask as one step. Our guide to setting up an email automation sequence covers building that kind of sequence.

A referral routine in four steps

Decide the ask. Write one specific request and one forwardable line, short enough to send by text.
Attach it to the three moments. Add the ask to your job-complete message, your replies to reviews and compliments, and your check-ins.
Make it easy. Use the forwardable line and a link to a simple inquiry form. Don’t ask the customer to write anything.
Record, thank and review. Log the source on every new lead, thank the referrer within a day or two, and once a month look at who referred, which moment produced the ask, and which jobs came from it.

Run it for one season, then adjust the ask, the timing or the follow-through.

FAQ

When’s the best time to ask a customer for a referral? Right after the job is complete, while the result is fresh. Second best is right after a compliment or good review. A natural check-in, such as a seasonal start-up or a renewal, is third.

Should I pay customers for referrals? A thank-you is always safe and always worth doing. A credit or other reward is a separate decision, and the rules differ by trade, by state and for licensed professionals. Check with your licensing board or an attorney first.

How do I track where my customers come from? Add a “source” field and a “referred by” field to your customer or lead records, and fill them in for every new inquiry.

Co-authored by Brandon Sheriff and SPARK, the CRM and marketing automation platform from Intelligent Analytics and Data Management.