July 16, 2010

Many businesses enjoy receiving referrals, but feel they come by mixing good work with chance mentions from satisfied customers. 

Certainly, many referrals happen this way, but if you understand the realities of referrals listed below you might rethink your approach to referral generation, with an eye on taking a more proactive view of the process.

1) People Make Referrals Because They Need To

Some people hesitate asking for referrals out of fear that it feels like begging for business. If done with that frame of mind, it probably is. But if you realize people enjoy making referrals, and do so to build their own social capital, or to create a flow of referrals for themselves, then you might start to look at this entire subject a little differently.

If you truly believe in the results you or your products can bring, then maybe you’re doing your customers a disservice by not showing them how to bring those results to their friends and colleagues. 

So, how can you change how you view what asking for a referral means?

2) All Referrals Involve Risk

While people enjoy making referrals, they also represent a great risk. If you refer a friend to a business, and that business doesn’t perform, you bare some of the responsibility. 

When you refer a business, you loan some of the trust you’ve built to that bsuiness or individual being referred. You minimize risk with out of this world guarantees, a great education process, and a professional follow-up system.

So, what can you do to eliminate risk?

3) People Don’t Refer Boring Businesses

Think back, when’s the last time you got excited about a perfectly satisfying experience? People make referrals most when they are excited about a business. Having a great product or service is a great start, but you must also look for ways to drape that great product or service in an equally great experience.

This is the place where investing in a culture of great service can pay big. I recently interviewed Tony Hsieh, CEO of Zaapos, and he claims that Zappos is a customer happiness company that happens to sell shoes and apparel. 

Remarkable businesses rarely happen by accident. This might be the hardest work yet. But get the customer experience right and you won’t need to spend much on lead generation going forward.

What can you do that no one else in your industry is doing?

4) The Greatest Referral Truth Is Trust

I’ve long used a non-textbook definition of marketing for the small business. Marketing is getting someone, who has a need to know, to like and trust you. While you can buy a little know and like in your marketing efforts, trust is hard earned and easily eroded. Without trust, referrals rarely happen.

Trust comes from keeping your promises, doing the right thing, and setting proper expectation. These days it also comes from working very hard on a fully developed web presence. 

Even a referred lead is likely to turn to the Internet to research that great company their buddy keeps raving about. It’s a fact of business these days, if a referred lead can’t find significant content, including reviews, video lessons and social network participation. The sum of participation online is a large trust factor.

What would I find if I searched your name on a search engine?

5) Marketing is a System

Businesses need to view marketing much like they view other aspect of business. Most businesses have processes of some sort to allow them to deliver consistent work in an efficient manner.

I think marketing needs to work this way as well, and this certainly applies to referral generation. It’s important to create a referral strategy, a set of steps or processes to make referrals happen, a set way to educate and collect from referral sources and a rock solid follow-up plan. Once in place, all you need to do is operate the system. Market get a lot easier when you view it this way.

What does your referral system look like?

John Jantsch is a marketing coach, award winning social media publisher, and author of Duct Tape Marketing and The Referral Engine.

Join the conversation ( 9 )

• John Couté 10 months ago

  

  If you are good at what you do give prospects a reason to believe it. Word of mouth referrals are great but you can expect you and your company will be scrutinized online for more reasons to respond.
  
  We provide our clients with a performance evaluation form after completion of every project. In it they rank service performance in eight areas from 1 to 10. After the last question there is a place for them to write a review with an email address where they can be contacted to discuss their experience. We compile these reviews by project type and include with our proposals to prospects with similar projects. www.adimagination.com
  
  We show the referrer our gratitude for their confidence with a 10% discount on creative services for their next project.

• ALLISON MORAN 10 months ago

  

  Small business owners seem to understand that referrals are key to their business growth, but often stumble on how can I get them or get them on a consistent the basis. It seems like the businesses that get it are the ones who know who their "ideal" client is and how to describe that person and the issue they need to resolve in detail to someone who has the ability and inclination to refer their business. Once a business owners owns this, they can more easily ask and receive referrals.

• ISABELLA MCPEAK 1 year 5 months and 6 days ago

  

  Thanks for your support in promoting the need for a referral system. Most business people and sales professionals know they "should" ask for referrals, but don't do it or don't do it regularly. After teaching referral marketing in workshop formats for many years, I came to the conclusion that it requires higher impact and more frequency to really create a referral system and get into the habit of using it.
  
  That's why I finally created the Referral Marketing Marathon - 21 days to get into the habit. It encourages 21 daily activities combined with 5 learning segments to find the exact language and the referral tools that are right for a particular individual, business or industry.
  
  The interactive class is online at http://www.referralmarathon.com.
  Enjoy more practical ideas from Coach Isabella about getting more referrals at http://www.referralmarketingmarathon.com

• JOSEPH HUMAN 1 year 5 months and 22 days ago

  

  Great article, the referrals have really started to grow my business. Although on a few projects the clients took the design so personal they took it as there own. Basically telling everyone they did the work and had no help, which put me in an awkward spot. In a way I felt good since the designed space came out so well that they wanted to claim it as there own but you know, I would like credit for work and services I provided.
  
  Has anyone found any success with offering a kickback or reward for referrals?

• Niladri Chowdhury 1 year 6 months and 19 days ago

  

  The example of Zaapos I believe is lot over hyped. I last time called to buy a pair of shoe and get bit more info about the model. Waited very patiently for 28 minutes and then had to disconnect my call.
  
  Now that is not a great happy customer experience. I think they need serious rethinking and improve on the same.

• Christine Grudecki 1 year 6 months and 19 days ago

  

  Fantastic article! I always give referrals for other businesses, and hope that they will do the same. I need to start concentrating on how to make refferals work for me, since our clients are our best marketing tool.
  
  Thanks for getting the gears moving in my head!
  Christine
  http://www.pmicreations.com

• Kev Borg 1 year 6 months and 19 days ago

  

  Referrals are our favourite system, because they are the most enjoyable for our clients. They never used to be, staff hated it, and that was the "lite bulb moment"\
  How do you harness the awesome power of (WOM) Word Of Mouth to get your customers talking about your business, to their family, to their friends, their contacts, their workmates about your business, without paying them, asking them, bribing them? Its very Simple we use Human Nature and it works well over 90% of the time and here it is in 1 word __ __ __ __ __ __ __ __.
  You can work the answer out easy, enjoy. cheers Kev
  Oh and by the way we never mention the word Referral.

• Marina Shapiro 1 year 6 months and 20 days ago

  

  Thanks, John! I agree that all marketing actions should be systematic--consistency is key to successful marketing strategies. Here are my thoughts on referral generation. http://www.targetingyourmarket.com/blog

• Joel Libava 1 year 6 months and 20 days ago

  

  Thanks a lot, John.
  
  Many years ago when I was in the car business, there was no better feeling than when a customer would walk through the door, and ask for me. By name. They were referred to me.
  
  Good stuff. You're such a referral engine.
  
  The Franchise King®