Companies usually get the majority of their customers from referrals.
This makes sense right? Customers who have had a positive experience with your product or service tend to direct their friends toward you when their friends realise they need your product or service too.
This is known as a referral and the process in which referrals happen is commonly becoming known as the customer flywheel.
The flywheel represents a circular process where a company’s customers feed its business growth.
Flywheels occur when companies aren’t the only ones helping their business grow — their customers are helping them grow as well. This is done by turning strangers into promoters of your company.
The image below explains this quite well:
Image cred: HubSpot’s Article, The Flywheel
It can be really hard to get the flywheel spinning initially. For both new and existing companies.
New companies may not have a huge amount of customers nor a backlog of happy customers.
Existing companies may not actually serve many customers. They may serve a small handful of high-value customers. And sometimes they’ve done a pretty shabby job of delighting those customers too.
When growing his agency, Brennan Dunn had a larger salary bill to pay at the end of each month and needed more customers as a result, quickly.
Referrals were the main way his company was acquiring new customers. After thinking about why referrals happen and why people refer services, Brennan ultimately came to the conclusion that it was because his company had provided some type of value for his promoters.
Rather than waiting for customers to refer new customers – he sped up the referral process by hosting local Meetup groups and Chamber of Commerce meetings.
The interesting thing was that it wasn’t the people who attended who would usually become clients of his. Instead, people who attended would refer his services within their own network.
This method allowed him to create a much higher volume of referral sources in a short period of time.
You can hear his full interview here, well worth a listen.
It’s easy to fall into the trap of sitting back and waiting for new customers to roll in the door – but this won’t allow you to grow your company quickly.
Being proactive in how you turn strangers into promoters will ultimately increase referrals and give you a competitive advantage in the long run.
As always, thank you for reading!