For many small businesses in Gillespie County, attracting customers is expensive from time and money perspectives. There are websites to maintain, social media to manage, advertising to purchase and increasingly sophisticated digital tools competing for our marketing dollars. There is another marketing channel that costs very little and may be more powerful than all of them: a recommendation from a satisfied customer.

A recent Harvard Business Review article, “Don’t Underestimate the Power of Customer Referrals,” offers a compelling reason for business owners to pay more attention to referrals. An analysis of more than 10 million consumers found that referred customers represented about 20% of new customers but generated 72% of the profits from those customers. The research also found that referred customers tend to cost less to acquire, stay longer and spend more.

Our local economy is particularly suited to referral marketing because so many businesses depend on visitors. A couple comes to Fredericksburg for a weekend getaway. They have dinner at a restaurant, visit a winery, shop on Main Street and perhaps book a massage or another experience. If they have a memorable experience, they don't just take home a bottle of wine or a purchase. They take home a story.

And that story can become your next customer.

Think about what happens when visitors return home to Austin, Dallas, Houston or San Antonio and tell friends about their weekend. “You have to try this restaurant.” “We found a great winery.” “There is an incredible shop downtown.” “We stayed at this wonderful place.”

That is referral marketing—and the business didn't have to buy the recommendation. The lesson for local businesses is that referrals shouldn't be left entirely to chance. They should be earned and encouraged.

Start with the customer experience. Every smile, every conversation, sale should create an experience worth talking about. That might mean remembering a customer's name, providing an unexpected extra, explaining a product particularly well or simply making a visitor feel welcome.

Next, make it easy for customers to recommend you. Ask satisfied customers to leave a review. Encourage them to follow your social media accounts. Give them something memorable to photograph and share. If you have complementary businesses as customers or partners, develop referral relationships that benefit both businesses.

Most importantly, track where new customers come from. If someone says, “My friends recommended you,” make a note of it. If a guest tells you they saw your business on social media because a friend shared a post, record that, too. Over time, you will begin to understand how much of your business is generated by existing customers.

This is especially important for small businesses because every marketing dollar matters. Rather than continually asking, “How much should I spend on advertising?” perhaps we should also ask, “What can I do to make my customers want to tell someone about us?”

In a destination community like Gillespie County, that may be one of the most important marketing questions a business owner can ask.

Your next customer may not be searching Google, seeing an advertisement or scrolling through Instagram. They may simply be sitting in a coffee shop listening to a friend talk about a great weekend in Fredericksburg.