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Whether you offer products or services, you are known by the quality of your work. And the word gets passed around--resulting in referrals.
Take a look at the comments posted on social media. A glowing review of your business spreads the good word about you. The reason that Angie's List works has a lot to do with the quality of the work described there.
If you do quality work, or if you sell quality goods, your clients and customers will do your advertising for you. They tell others--both online and off.
Example: Gwen runs a pizza shop. She is a stickler for quality. She imports ingredients from Italy--tomatoes, cheeses, garlic and flours. She makes her pizza dough herself in small batches every day. Her pizzas cost more, but they are prized by a loyal customer base. These customers return frequently, and they bring others with them. Gwen draws customers from a 20-mile radius, many of them passing several pizza shops on their way to her place.
Example: Jeannine makes pottery and she signs every piece produced. Her pottery business specializes in limited productions. She and her two employees inspect every piece. No flaw escapes their attention, and these pieces are destroyed. Jeannine sets a high bar for quality, and her reputation is spreading. She is not looking for awards, although she has received some. Instead, she sells and consigns to high end gift shops and through her website.
Example: Joseph is a carpenter who does each job as if he is working on his own home. He is also a stickler for quality. Whether he's framing out a door or constructing a wall of shelving, his attention to detail is readily apparent. He never advertises, but his customers praise him and pass the word among their friends. The only thing he does is he passes out multiple business cards to customers, asking them to pass them on.
See to the quality of your work, and your business can take care of itself. If your clients and customers are happy, they'll spread the word around your community and beyond.
The referral process is a natural undertaking--people talking with others. You can do some things to speed up the referrals. See other blogs in this series with "Referrals" in the title.