Here is what happened to me the other day:
I love to go mountain biking with my friend. We both had average bikes and we talked about upgrading. One day my friend came along with his brand new fancy bike. He kept bragging during the whole ride and as I became more interested he started telling me about the great service he had received from the bike shop he bought his bike from.
A couple of weeks later I decided to also have a look and guess where I went and bought my new bike?
Straight to the shop he bought his bike from. Price was important but not my main deciding factor.
Here is a referral strategy I helped a local builder with and it works really well.
When the builder has completed the renovation or building project they do a couple of things most builders don't do very well.
They get the house or room professionally cleaned including the windows. Clients absolutely love this and always comment how delighted they are about that.
The builder then has a meeting with the client where they agree that the job is complete and the client signs off.
The builder has a payment app on his iPad and the client pays right there and then. This is the best time to get payment because the client is happy. It is also great for cash-flow and the money is dealt with and quickly forgotten. (This strategy alone is worth a lot of money and time to any builder.)
Within 24 hours, the builder couriers a gift box and a thank you card to his client. This box contains all sorts of yummy stuff you can't buy at a supermarket. The cost is about $100.
At the same time a questionnaire is send to the client by post.
This questionnaire asks the client for feedback and also reminds her of the things that were done that are not the norm.
For example we ask: "Did we leave your house clean and tidy?".
We then ask for permission to use her replies for our marketing purposes and they always say "yes".
As you can imagine the feedback is typically extremely positive and if there are areas that need attention the builder can address it right away and get even more bonus points for being pro-active.
We include a self-addressed envelope to make it really easy for the client to send the questionnaire back.
Once the questionnaire is received, we send a quick thank you card with a couple of movie tickets to the clients. We also include 2 fridge magnets and ask them to give them to a couple of friends who might need a builder sometime in the future.
This builder needs to do no advertising and gets most of his work from repeat business and word of mouth referrals from his clients.
His prices are well above average and because of that he can invest in good quality equipment and hire above average trades people that he pays very well to do a top job. It is a real win-win.
This type of positive referral strategy is possible to implement for many businesses.
"Satisfied customers who will spread word of mouth are the most powerful assets you have."
Andy Sernovitz
Action Exercise:
How could you get clients and customers to positively recommend your business?
Graham McGregor is a marketing consultant and the creator of the 396 page 'Unfair Business Advantage Report.' www.theunfairbusinessadvantage.com (This is free and has now been read by business owners from 27 countries.) You can email him at the link above. 
