involve their staff members on an on-going basis with their former
firm. Although this approach is typically used by the professions,
other suitable organizations may be able to benefit from utilizing
their former staff to generate referrals.
Developing relationships with referral markets
Most organizations fail to exploit the opportunity of maximizing
referrals from their own customers, from third parties, and, where
appropriate, from their own staff. With respect to its customers,
many organizations still do not realize the power of customer
delight and the benefits that accrue from significantly exceeding
customer expectations. However, there is a small, but increasing,
number of companies which do significantly exceed customer
expectations. These organizations have been able to grow through
word-of-mouth referrals from highly satisfied customers (and other
groups) and include The Body Shop, Shouldice Hospital,
Nordstrom and First Direct. In the case of the first two they have
achieved a strong market position without advertising and the
latter two have achieved their market position with either rela-
tively low levels of advertising (Nordstrom) or television advertis-
ing that has not been considered particularly effective (First Direct).
Similarly, referrals by third parties have the potential to play a
major role in many industries, especially in professional and finan-
cial services. In the context of professional firms Wilson^9 has
pointed out the benefits, which include extremely low cost and
high yield in acquiring customers:
There can be few business activities wherein this overwhelming value
of business is acquired through the effectiveness of a single marketing
tool and yet so little knowledge exists of that tool or so few attempts
have been made to establish whether, despite its undoubted success,
it is nevertheless capable of further exploitation.Our work in this area suggests a number of steps need to be fol-
lowed to ensure successful implementation of referral marketing.
They include:
●Review sources of past business.
●Undertake a relationship audit with all major referral categories, identify-
234 Relationship Marketing