By Cathie Garnier

Referrals are the life blood of any business, but are particularly vital to the small business owner. Advertising costs can be incredibly expensive and, therefore, having others provide word-of-mouth referrals is the most cost effective way to advertise and bring in new customers. In addition, word-of-mouth referrals are the best customers you can get since they have been sent to you by someone they personally know and trust; that trust extends to you and your business.

So how can you get more referrals?

1. Be the  Go To Person: Be the person that others go to when looking for a dependable product or service. Keep your business card holder handy and always be ready to make a referral to businesses you know and trust when someone asks, or mentions the need, for a particular service or product. By making yourself the person others seek out when looking for a reliable referral you show your support of other independent business owners, thereby making yourself the person others think of when making referrals themselves. The best way to get referrals is to give them.

2. Have a Referral Program: Letting others know that you offer a referral program encourages those who know you to make referrals to your business. The referral program might be one that provides a monetary reward (a referral fee) or offers a free incentive gift or special incentive discount. Be sure to define the terms of getting the referral benefit. For example, offer a $5 referral fee or a free specified product for all referrals that purchase a certain dollar amount. Whatever the benefit you offer for referrals will far outweigh the cost of the benefit in the end. The referral fee you pay is one time, but you may continue to benefit each time that customer comes back to purchase your product or service.

3. Acknowledgement: When someone makes a referral to you they are paying you the highest compliment you can receive; make sure to acknowledge that compliment immediately. Send them a nice thank you letter letting them know you appreciate their trust in you by sending a new customer your way. It is a small gesture but it is a very powerful one. Never let a referral come your way without acknowledging the person who made the referral. This will also let the person making the referral feel appreciated and valued and, therefore, they will be more inclined to continue making referrals.

4. Good Follow Up: failure to follow up puts your business in a negative light. If you do not follow up on a referral and the referrer finds this out you may have lost a potentially good referral source as well as imparted a negative reputation for your business to others who may consider making a referral. Always follow up immediately on any referral, no matter how small it may seem.

5. Freebies: While many small business owners spent considerably money on print or online advertising they overlook the power of giveaways as advertising. Giveaway items go directly into the hands of local recipients who often wind up as a customer of donor. The donor also typically will have their name mentioned by the charity as a donor, giving you extra exposure. Donating a giveaway for a charity event does not mean you have to go overboard. Set a budget for the giveaway, an amount you can live with, then check with local charities to see what dollar value, if any, is expected of the giveaway. If you find that providing a giveaway is just not in your budget check with other small business owners who would like local exposure to see if you can do a co-op giveaway.

6. Define Your Best Referral: when networking don't be shy about asking for referrals. Those who network know the power of referrals and are more than happy to provide referrals to those they know and trust. Be sure to be clear on what kind of referrals you are looking for. Don't ask for generic referrals. Tell others precisely the type of referral you are looking for.

7. Go the Extra Mile: people are always eager to make referrals of friends and associates to those who go the extra mile. Be sure to under promise and over deliver. Give new customers referred to you exceptional service; after all there are two reputations involved: yours and the person who made the referral. There is a lot of power in the wow factor, be sure to use it to your advantage and you will have a continual flow of referrals coming your way.

8. Stay in Touch: be sure to stay in touch with current customers and business associates. You can do this by sending them interesting articles, updating them on new products, or sending them out a monthly newsletter. This will help build a strong relationship that fosters referrals. It is relatively easy to have a monthly newsletter. There are a number of online businesses that provide this service for a very low cost, such as www.constantcontact.com or http://www.mynewsletterbuilder.com.

9. Just Ask: when you are seeking a specific product and service and don t know anyone in that business that provides it, be sure to ask your associates for a referral. It shows you support other business owners and encourages other business owners to support you by making referrals to you.

10. Don't Just Talk, Listen: When networking, never hit people with a hard-sell sales pitch or make the conversation all about you and how wonderful your business is. This is called spam, whether it is online or offline. Be courteous and open to sharing information. You must build a relationship with others before expecting them to trust you enough to provide you with referrals. By making it  all about you you turn people off and make them unwilling to refer their valuable contacts to you.

Often we are so focused on making a sale that we fail to see the big picture that is the opportunity to inspire the trust of others who can help us grow our business through referrals. Don't do all the talking; be sure to actively listen for verbal cues of wants and needs. Ask about the other person's business and what kind of referrals they would like to have from you. In being willing to help others grow their business your business can't help but grow as well. It is not just about you, it is about teamwork and building relationships. Together we are able to achieve much more.