Most good businesses receive new customer referrals automatically from their existing customer base; however this normally has limitations, as follows:

* The flow of automatic referrals is unlikely to be adequate to build your business exponentially

* Referrals emanating from the whole of your customer base does not provide targeted and highly qualified leads as only the best customers provide the best referrals

To overcome these limitations you need to proactively seek greater volumes of highly qualified customer referrals. You can do this in two ways. Firstly you need to segment your existing customer base to identify the best customers. This may typically be 20% of your customer base. Secondly you need to ask your best customers for referrals in the most appropriate manor.

Customers who refer others to you tend to refer those who are of similar mind, having similar purchasing needs and purchasing power.

Every business has problem customers from time to time. This can be due to bad service levels or the inability of your business to meet the ongoing needs and expectations of certain customers. Equally, I find, the problem customer has nothing to do with the quality of your services at all, but everything to do with them as a customer. They may have unrealistic demands or they may just be badly aligned to your business proposition. In other words there may be a mismatch between their specific needs and the solution that your business provides for people. So despite the fact that they have become a customer they don't actually meet your requirements as a well qualified targeted prospect.

Here's an example. Let's say that you provide a complete domestic carpet cleaning service for your customers. You are able to provide a whole range of domestic carpet and upholstery cleaning within a home environment. What you don't do however is provide industrial cleaning for factories and warehouses. All your best customers enable you to keep their carpets and upholstery clean and fresh within their home.

Let's assume that you attract a new prospect that is looking for a large-scale refresh of their entire factory and warehouse facility. You decide to take on this customer because you don't like to turn people away. Given the best will in the world this is unlikely to work out and difficulties will probably occur. This situation can be avoided by only taking on qualified

* You have ready access to them for regular contact

* They have a genuine and a matched need for your solution

* They are able to afford your prices

* They are willing and prepared to pay your price

* Their purchases are capable of generating gross margin for your business

* Their ongoing servicing needs are matched by your service levels

Once you have identified your best customers you then need to ask them for referrals. It is unlikely that you will receive the maximum potential of quality referrals without asking for them.

If you would like a sample of a customer referral letter that has proved to work time and time again then this is available free of charge and without obligation from: mail@brianjamesgroup.com

Brian James Copyright 2006. All rights reserved. www.brianjamesgroup.com