Most small-business owners in one large survey said referrals win them local customers, so the useful question is how to make networking pay over months, and what to have ready when a recommendation comes your way.
Local work is rarely won through an advert. Someone in the room mentions a boiler that keeps cutting out, or accounts they have been putting off, and someone else gives a name. So is business networking worth it for a small business? For most, yes. In an Alignable survey of 7,500 small-business owners, 85 percent named word-of-mouth referrals as the best way to win local customers. There is no fixed date when it starts to pay off. The return depends on turning up regularly and making the most of each recommendation you receive. The figures, and a practical routine to go with them, are set out below.
What small-business owners say wins local customers
The survey was reported by Dan Slagen, CMO at Alignable, in a contributor piece for Entrepreneur. Alignable asked small-business owners in North America a single question: what is the best way to acquire local customers?
The answers were lopsided. Word-of-mouth referrals came first with 85 percent. Google and Facebook ads were next with 9 percent, followed by radio ads and direct mail on 2 percent each. Newspaper ads were last with 1 percent.
The survey has limits. The respondents were in North America, the article says nothing about how they were chosen or how the survey was run, and the person reporting the result works for the company that ran it. Alignable is also one of the referral communities he recommends later in the piece. Those are fair reasons to treat the exact numbers with some caution.
Even so, the gap is large. Referrals were named nearly ten times as often as online ads, the next most popular answer, and far more often than every form of paid advertising put together.
How long networking takes to pay off
The source gives no timeline for a return, and we will not invent one. What it gives is a rhythm. Slagen recommends working on your referral network consistently, starting with once a month, and spending 20 minutes a week focused entirely on generating referrals.
That is a modest commitment, and it changes the question you should ask. Judging networking on a single meeting is like judging a new van on its first delivery. Referrals build as people get to know you, hear how you treated the last client they sent, and start to think of you without being prompted. A judgement made after one morning will usually be the wrong one.
Our view is that the fair test is whether you keep the rhythm going over several months. A referral meeting that falls once a month gives you the monthly contact, and the 20 minutes a week is the work you do between meetings: following up a warm introduction, booking a one to one, or thanking the person who passed your name on.
Why a recommendation still gets checked online
A recommendation opens the door, but most people will still look you up before they ring. Slagen says over 90 percent of consumers depend on online reviews, so someone referred to you will probably search your business name on Google first and look at your rating.
He also says over 50 percent of businesses haven’t claimed their Google local listing. If yours is one of them, the person who was given your name may find a bare listing with no reviews, no opening hours and an old phone number, and decide to ring the next name on their list instead.
On reviews, Slagen suggests 10 written reviews as the minimum for people to trust a profile, though he does not explain where that number comes from. He also says 94 percent of consumers would use a business with a four-star rating. You do not need a perfect score. You need enough honest reviews for a stranger to see that real customers have used you and been satisfied.
Bing, he says, accounts for 22 percent of all search engine queries, and you can set up a local listing there too. It takes little time and covers people whose computers default to it.
The article gives no origin for any of these figures, so read them as his numbers. What they point to is a common mistake: earning the referral in the room and then losing it at the search stage. The person who recommended you has put their own reputation on the line, and a thin online presence makes that recommendation harder to act on.
A four-week routine to start with
Slagen proposes a four-week schedule built around the 20 minutes a week. It works as a starting plan for anyone who has just joined a group, or who has been attending for a while without much to show for it.
- Week 1: email your referral network. For a group member, that might mean a short note to the people you met at the last meeting, saying what kind of job you are looking for and who makes a good introduction for you.
- Week 2: complete your Google listing and ask five people for written reviews. Choose recent customers who were pleased with the work, and make it easy for them by sending the link directly.
- Week 3: look for referral opportunities you have missed across the customer lifecycle. Think about when a customer is most likely to mention you: when you finish the job, when they get the invoice, or when they call you back for something else. Consider whether you are asking at any of those points.
- Week 4: brainstorm 10 ideas for being more memorable. Most will not be worth doing, but one or two usually are.
Twenty minutes is enough for each of these if you sit down with a clear task. Once the four weeks are done, the emails and review requests can become a regular habit, and the third and fourth weeks are worth repeating every so often as your work changes.
Being remembered so people pass your name on
A referral depends on someone remembering you at the moment a friend or client mentions a problem. Slagen offers a few suggestions for staying in mind.
One is to post a photo with each satisfied customer on Facebook and tag them, so their own contacts see the finished job and your name together. That suits trades with visible results, such as a garden, a kitchen or a new driveway. It suits advisers less well, and nobody wants a photograph taken with their accountant.
Another is a handwritten card after the job, offering 10 percent off for a referral made within the next week. The deadline gives the customer a reason to act while the work is fresh in their mind.
His third idea is wristbands printed with “$0.65 vs. $0.35”, meaning that $0.65 of every dollar spent with a local business stays in the local community, against $0.35 with national businesses. Treat it as an example of the kind of thing he means.
The article offers no evidence that any of these tactics increase referrals. Pick the ones that suit your trade and your customers, and drop the rest without guilt.
Choosing where to network
Slagen lists several places to build a referral network: networking events, referral networks such as BNI, and online communities such as Alignable, LinkedIn and Nextdoor. Each has its place, and many owners use more than one.
A structured referral group adds two things a casual event usually lacks. One is a regular meeting, which supplies the monthly rhythm without you having to organise it. The other is accountability. The same people sit in the room each time, they notice who follows up and who does not, and they will only pass on a client to someone they trust not to let them down. Each FindaBiz group holds one seat per trade, so the member who holds the seat is the one the group recommends when that kind of work comes up, and the referrals for it go to them.
If you run a business in Leicestershire, Warwickshire or the West Midlands, come along to a FindaBiz group as a guest first to see how a meeting runs and who is in the room. Your first visit is free. If you would like a look before committing to a morning, our free online networking runs every Friday and is open to anyone with a free account.
If you are looking for a recommended tradesperson or adviser instead of a seat, the members of our groups are a good place to start.
