Last entry, I discussed the multiplier effect of business from referrals. One happy customer tells several prospects, and good will about you spreads.

Now let's talk about another key benefit of business referrals: the fact that it is free advertising. 

With referrals, you are not paying for an ad, a click, a radio spot, a booth, or a flyer. That is priceless! Referrals have worked for me. Let me elaborate on a specific instance where the benefits of  business paid dividends for my company. 

The flow chart here shows the progression of business we have received from one word-of-mouth channel.

The sales above all began with a cold call that I made to a home builder in November of 2010. I pulled the active building permits from my city’s web site, tossed out the ones that did not match certain criteria, and called on the ones that did match.

We finished up that initial house of cabinets in January of 2011, and in the 18 months since, we have closed on six more jobs for three new clients, with close to $42,000 worth of business directly attributed that first client.

Follow Woodworking Network's (WWN) IWF 2012 updates on Twitter at #IWF2012

Also, WWN Bloggists Jared Patchin and Bernie Bottens will participate in a live Twitter Q&A during the show.

Tweet your questions to:

Jared Patchin, #PatchinIWF  Wed., 8/22 - 11-11:30 am

Bernie Bottiens, #BottensIWF
Thurs., 8/23 - 11-11:30 am


That’s a $42,000:$0 return on my advertising investment! I understand that not every client will result in this kind of repeat business. This revenue stream is my company’s largest example, but we have three other referral streams that I know of that have resulted in one to two more additional jobs.

The key to making referral business and word-of-mouth marketing work for you is simple, but takes sustained and consistent effort over the long term. The key is to provide a great product, at a fair price, with great customer service. It is not rocket science, but constantly keeping those three balls in the air, year in and year out, can at times be incredibly difficult.

Good luck.

Have something to say? Share your thoughts with us in the comments below.