I have written in the past about the high percentage of customers who give referrals. Our research indicates that between 30-40% give referrals depending on the market in question.
In preparing for a presentation to a group of bank executives, I discovered that referring customers in the banking industry are not that unusual either. An E&Y study from 2014 (“Winning Through Customer Experience,” E&Y Global Consumer Banking Survey, 2014) found that 77% of banking customers were very likely or likely to recommend their banker. Furthermore, if the customer expressed “complete trust” in the banker, the percentage of those very likely or likely to refer shot up to 95%.
We have uncovered something similar in our work. Among those who indicated they did give a referral in the last six months, over 90% came from those giving a 9 or 10 on likelihood to recommend. Few if any referrals came from those giving a lower rating on the recommend question.
What are these two findings telling us?
- Many customers have a predilection to refer or recommend IF given the reason(s) to do so. They need to feel good about the service they receive from a provider.
- Trust is critical to any business relationship; especially in banking. If you do not trust your banker, you are much less likely to be loyal (I can confirm this from practical experience). Trust also matters in other types of business relationships as well. For example, I take my car to the same dealership because I trust the service writer to “act in my best interest.” At The Daniel Group, we have completed research projects where we have found a connection between trust and “share of repair spend” that a customer does with a provider.
- Referrals and referral analogies (e.g., Angie’s List) are becoming more important in the buying process. After all, we are bombarded with emails, ads everywhere, social media, etc. As buyers, we need a way to cut through the clutter and find good, reliable, and trustworthy providers.
It is axiomatic that customers are your best salespeople. This axiom needs to be modified to say “Customers who are pleased with your products and services and trust you are your best salespeople.”