|How To Make It Rain Referrals
|By David Frey
CEO, Marketing Best Practices Inc.
|Why are Referrals so Powerful?
- The reason referrals are so powerful is because they come from a credible third-party
that has experienced first hand the benefits of doing business with you. They are even
more powerful when they come from a friend because you know that a friend has no ulterior
motivations but to do whats in your best interest. You can believe what you friend
is saying versus hearing a commercial from a salesperson whose sole purpose is to make
money from you.
- Referrals are also valuable because most of the time they are completely free. How would
you like to receive the benefits of the most compelling sales advertisement on earth for
absolutely nothing? You can through referrals.
- Research shows the importance of referrals. According to Paul and Sarah Edwards (authors
of "Getting Business to Come to You"), up to 45% of most service businesses are
chosen by customers based on the recommendations of others. A recent Dun and Bradstreet
survey found referrals to be one of the two most popular small-business marketing methods
(the other one is advertising).
- Lastly, and I think this is the most powerful reason of all, customers that give
referrals become more loyal to you and your business. Once someone stands up and makes a
public statement about you, psychologically they will become more loyal to you and your
|Good Customer Service Doesnt Always Equate to Lots of Referrals
- Customer service is critical to the success of your referral program. It is the
foundation of the referral process. But just because you give good customer service, it
doesnt mean that you will get a lot of referrals. Receiving referrals on an ongoing
basis is as much a function of deliberate planning as it is great customer service.
- Many small business owners assume that referrals will happen by themselves if you give
good customer service. This isnt true. If you are not deliberate and proactive in
creating referrals, the chances of you receiving as many referrals as you want are slim.
And your best customers are ready and willing to give you referrals as was shown in the
statistics above, you just need to show them how.
|Word of Mouth Advertising and a Referral System are Not the Same
- Word of Mouth advertising happens when one of your customers or friends mentions your
small business in a casual conversation. Its not intentional or planned. Its
just something that came out of their mouth.
- A referral system is a methodically process that you have put in place to capture
qualified prospects through your association with other people. A "system" by
its definition is a "process that products predictable results." A system can be
turned on and off like a light switch at will. Your business needs word of mouth
advertising but don't mistake that with developing a methodical system for referral
- Perhaps the simplest way to systematize your referral program is to write a simple
letter to your customers asking them for their help. Click
here for an example of a successful customer referral letter that I have used for a
spa dealership in the past.
- Another simple method of systematizing your referral process is to give referral cards
to each of your customers. Click
here for a simple example of a referral card and its the process used by a small
animal hospital to obtain new customers.
|Making it Rain Referrals Starts with Your Attitude!
- Time and again the same question keeps coming to me, "How do I get more
referrals?" My answer is always the same, "You must ask for them." In
reality, most small business owners know that they have to ask for referrals to get more
referrals but its the fear of asking that impedes them from moving forward.
- This fear of asking is rooted in your attitude. If your attitude is one that believes
that you are asking that person to go out on a limb for you by asking them to give you
referrals then you will always be battling with fear.
- If you truly believe that it will be helping them if you ask them to give you referrals
your fear would fade quickly. Your customers want to give you referrals. It makes them
feel good that they found a great small business that they had a good experience with and
they want to share their "little secret" (you) with their friends.
- They will be seen as a hero, or someone "in the know." And when their friend
receives great service from you as well, your referring customer will feel as though he
was able to do their friends a great favor.
- When you ask for a referral, and you have treated that person right, you are actually
doing them a special favor.
|How to Ask for a Referral
- Has someone ever asked you for a referral? Did it go something like this: "Hey
John, by chance would you know someone who could benefit from my services?" John
starts to ponder and think about it and eventually says, "Well, not off the top of my
head, but I'll keep thinking about it."
- This is how 90% of all referral questions are asked and unfortunately, you might as well
not ask the question. Rarely, if every, will you get a positive response. Why? Because you
didn't ask the question right. "know anyone who..." questions are too broad for
people to think about.
- People need a frame of reference to help them narrow down the playing field of potential
referral candidates. For instance, imagine that you are talking to one of your good
clients who is pleased with your services.
|You ask her, "Mary, you're a member of the Women's Financial Planning Association
here in Chicago right?"
||Mary responds, "Yes, I am."
|You ask, "Do you go to their meetings on a regular basis?"
||Mary says, "Yes, most of the time."
|You pop the question, "Is there anyone in your association that you
believe could benefit from my services? Maybe one or two people you've known in the group
for awhile or sit next to regularly?"
- Did you see the difference? You gave Mary a narrow frame of reference from which to
think about. It allowed her to "see" the potential referrals in her mind. This
may be limiting the number of potential people that your associates might know, but it is
far more effective than opening up the ocean of people that Mary may know, but can't
remember. Your request will also stay in Mary's mind long after you've asked it because
she visualized your services with much greater intensity.
|Two Types of Referral Programs
- Basically, there are two sources for referrals, your current customers (people who have
done business with you) and other influential people. You should have an active referral
system for both types of people.
- Your customers are perhaps your most enthusiastic referrers because they have
experienced your product. But, you may in fact, get more referrals from other influential
people who have never tried your product.
- Develop a system for obtaining referrals first from your customers and second from other
influential people or "Centers of Influence."
|Customer Referral Program
|Receiving referrals from customers starts with giving great customer service. Without
going into much detail about the ins and outs of customer service I'd like to share with
you eight "Moments of Truth" that provide opportunities for you create a loyal
customer for life.
Pay close attention to watch out for these seven moments of truth and
if you go the extra mile at the right time, bang, you have a lifetime customer.
|Moment of Truth # 1
||The moment your customer complains.
|Moment of Truth # 2
||The moment one of your new customers comes back to place a second order.
|Moment of Truth # 3
||The moment a customer has thanked you.
|Moment of Truth # 4
||The moment one of your customers has been through a hard time because of a foul up on
your (or their) part.
|Moment of Truth # 5
||The moment a customer needs a favor from you.
|Moment of Truth # 6
||The moment you see your customer in public.
|Moment of Truth # 7
||The moment your customer brings in a referral.
- Take these moments of truth seriously. Teach them in your customer service training. Put
them on a wall for employees to review. Make a small card with the moments of truth on
them. Plasticize the cards and distribute them to each employee.
- Sponsor an employee competition for the "Best Moment of Truth" by having your
employees record the moment of truth and what they did to capitalize on it. Think of
creative ways to reward your employees for recognizing a moment of truth and taking
advantage of it and it will revolutionize your small business.
|Centers of Influence and the 80/20 Rule
- Your best referrers are your customers. The people who have experience with you and can
vouch first hand for your product and service. However, there are many other people and
organizations that you must include in your referral prospecting system. These individuals
are people who know and mingle with many other influential people. These people are often
known as, "Centers of Influence."
- Centers of Influence can multiply your marketing efforts ten-fold. They turn your
marketing efforts from one-to-one to one-to-many. They are the heavy hitters that can have
a profound multiplying effect on your business. A smart small business owner will spend
the majority of his referral prospecting time with the 20% of their Centers of Influence
that will produce 80% of the results.
|Tier 1 and Tier 2 Centers of Influence
- Your Tier 1 Centers of Influence are people that are directly related in some way to
your industry or profession. Tier 1 Centers of Influence have a connection to your
industry because they provide complimentary products and services. Referrals coming from
your Tier 1 Centers of Influence can be very powerful.
- For example, suppose you are a chiropractor. Tier 1 Centers of Influence for you would
be orthopedic doctors, massage therapists, physical therapists, family physicians, local
gym owners and managers, outpatient placement coordinators etc. All these occupations deal
with people who may be in need of chiropractics.
|What is Your Goal with Tier 1 Referral Givers?
- Your goal with Tier 1 referral givers is to be the first person on their minds when
someone asks them about purchasing a spa or pool. With this in mind, you should sit down
with your staff and come up with ideas about how to be the first person standing in line
in the minds of your Tier 1 referrers.
- Here are a few ideas to start you off:
|Idea # 1.
- Be their number one referrer.
- Make sure that you also have a referral mindset.
- Before you get you must give, which means that in order to get lots of referrals from
these people you must be giving them referrals.
|Idea # 2. .
- Sponsor networking events or social gatherings for them.
- Make sure you try not to invite competitors. Have a good cross section.
- You might hold several of these parties throughout the year so that you can invite
several different potential referrers from the same industry.
|Idea # 3. .
- Put each one of them on your newsletter list.
- Give them helpful information that they can use to make their sales go up.
- Give them marketing advice and information on new developments in your industry in which
they should be aware.
|Idea # 4. .
- Invite them to an all-expense paid marketing association luncheon that has a great
- Rent a limo to pick them up, serve them wine or fine drinks, and treat them like stars.
(I know a mortgage broker that does this with real estate agents and makes a fortune in
|Idea # 5. .
- Purchase an information product about marketing in their business and give it to them as
a free gift.
- They will thank you for your interest in wanting to help them grow their business
|Idea # 6.
- If its a big potential referrer, send them a Harry and David (www.harryanddavid.com) year round gift that they
will receive every month.
- This will keep you in their minds all year long. Not long ago someone did this for me
and my wife and I glow when we receive our fruit basket each month.
- If you dont have the time or inclination to develop a relationship with your Tier
1 Centers of Influence then dont even try. If you're a chiropractor, it's better to
choose only one local family physician and become close friends with him then trying to be
friends with 10 physicians haphazardly.
|Educate Your Tier 1 Centers of Influence with Special Reports
- Arm your Tier 1 Centers of Influence with tools to help them to help their customers
(and your prospects). You may consider giving your Tier 1 Center of Influence a supply of
special reports that you have developed.
- Again, if you're a chiropractor and someone inquires about chiropractics to your Center
of Influence they can give them a special report that will answer some of their questions.
This will make your Center of Influence look good and it will also be an effective method
of referring you.
- Another idea is to purchase a best selling book-on-tape that you think they might be
interested in and give it to them as a gift to let them know you were thinking about them.
Information products about that teach your Center of Influence how to grow their business
are always welcome and will let them know that you are interested in growing your
|Tier 2 Centers of Influence
|Tier 2 Centers of Influence are people whom you come in contact with on a regular
basis in your personal life but aren't connected to your industry. These are people who
come in contact with a large number of other people. They too can multiply your marketing
Your Tier two Centers of Influence include but are not limited to the
- Small business owners
- Corporate business executives
- Financial planners
- Pest control people
- Your Tier 2 Centers of Influence are people that may have no idea what it is that you
do. Take the time to clearly explain to them not only what it is you do but the importance
of referrals for your business.
- Go one step farther by inviting them to after-hours socials. Tell them stories about
some results that your customers have experienced as a result of your product or
service. Get them excited about what you do. Get to know what they do by asking them
questions. Now each of you can get excited when you give valuable referrals, which in turn
will be transferred to the new prospect.
|The Power of Cross-Promotions
- Perhaps the single most powerful referral program is a cross-promotion using
endorsements from other well-respected people. It's a simple idea, an associate sends an
endorsement letter about you and your product or service to their customer list and you,
in turn, do the same to your customer list. It's a win-win.
- The reason endorsement letters are so powerful is because people will buy from people
they know and respect. How many times have you asked a personal friend, "Do you know
a good place to buy __________?" Or "Do you know a good ____________ that I can
go to see about getting _____________ done?" You trust their opinion so you feel
comfortable buying from them.
- You can make it a one-way cross-promotion in which you have someone send out a letter to
their customer list and you give them a referral fee for those people who buy your
service. Or you can make it a two-way cross-promotion in which both of your send letters
to your customers about each other's products and services.
- The are some examples of complimentary products or services businesses that can take
advantage of this powerful strategy:
- Pizza place and video rental store
- Accountant and financial planner
- Toy store and fast food restaurant
- Dry cleaner and clothing store
- Paint store and tile business
- Jewelry store and wedding supply
- The possibilities are endless. Brainstorm with people in your network to come up with
potential promotions that you can do together. The payoff can be tremendous.
|Ten Questions to Help You Become a Networking Pro
|In my earlier years when I was naive I thought that my success would increase in
proportion to the number of business cards I handed out. I handed them out in droves. But
I couldn't figure out why I wasn't getting any business. After a few years of experience
under my belt I realized that it wasn't the numbers that count, but the quality of
relationships that I nurtured. To be a great networker you must become "you"
centered rather than "me" centered.
Recognize that people want to talk
about themselves more than anything. They are their own favorite subjects. Take advantage
of that and learn these 10 questions that will make people feel warm, appreciated, and
Zig Ziglar, the famous sales trainer once said, "You can get everything in life
you want if you just help enough other people get what they want." This is so true.
Thanks Mr. Ziglar.
The following are ten questions that Bob Burg, author of the book, "Endless
Referrals" gives to help you get to know potential referrers and leave a lasting
||How did you get your start in the widget business?
|People like to be the "movie of the week" in someone else's mind. Let them
share their story with you while you actively listen
||What do you enjoy most about your profession?
|This question elicits a positive response and good feelings.
||What separates you and your company from the competition?
|This question gives them permission to brag about their business.
||What advice would you give someone just starting in the widget
|This question makes them feel superior and allows them to do some mentoring.
||What one thing would you do with your business if you knew you could
|This question allows your friend to fantasize and they will be thankful that you cared
enough to ask.
||What significant changes have you seen take place in your profession
through the years?
|Asking people who are a little bit more mature in years can be perfect because it
allows them to reminisce about the good ole days.
||What do you see as the coming trends in the widget business?
|This is a speculation question and positions them as an expert in their industry which
makes them feel important.
||What was the strangest or funniest incident you've experienced in your
|People love to share war stories but rarely get a chance to tell anyone about their
||What ways have you found to be the most effective for promoting your
|This question, again, elicits a positive reaction and also gives you an opportunity to
see how they think
||What one sentence would you like people to use in describing the way
you do business?
|You are allowing them to give themselves a compliment. Who doesn't like compliments?
|You'll notice something in common with each of these questions. They all center around
the person you are talking to and allows them an opportunity to talk about themselves.
Don't expect to ask your Center of Influence each of these questions, but do have a few
ready when you talk to others.
|Start (or Join) a Referral Group
|Choose ten people that you think would be good members of your referral group. They
may or may not be your Centers of Influence. Let them know that you are establishing a
referral group and that they were one of the first people to enter them mind because of
their great reputation.
Ask them to educate you on exactly what they do. Tit for tat. No
favors, no begging, no debt, no smiley facing. Just a clean, fair, intriguing and powerful
Have monthly lunches when your group can get together and then perhaps visit one of the
group member's businesses to allow them to explain what they do. Find ways to serve your
group members and educated them on how to grow their own businesses.
You can begin to grow your network slowly and invite other people who you or other
members would feel good about recommending. It's just a matter of expanding your network
to tap into the network of other professionals. Simple, doable, easy. No selling required.
Here are the steps to maximizing your referrals and revenue:
Step 1. Appoint yourself as the host of this network In other words, be their leader.
(No need to tell them, however.)
Step 2. So, now that you are the leader, ask yourself, "What do my constituents
need most that I can provide for them at a very small cost to myself?"
Step 3. The answer? Training in how to build their businesses via referrals,
Step 4. Send a monthly note and update your group about each others businesses. You
need to be consistent with this mailing (or emailing) each month. In effect, the monthly
list/email also works as an effective reminder that you are there!
I have a friend in the financial services industry who sponsors a monthly luncheon.
Members pay a quarterly fee which covers the cost of the lunch. He gets 50 to a 100 people
at his meetings and has literally stopped his advertising efforts all together.
|A Caution About Giving Referral Fees
|Use a referral fee as your last ditch strategy. Money has never bred loyalty.
Friendship, trust, and a positive relationship are what drive loyalty to you and your
business. If you give referral fees you will undoubtedly run into a situation in which the
referrer claims he gave you a referral and you disagree.
Or one of your competitors
starts giving referral fees and you feel the need to continually match them causing a
referral fee war (Ive seen it happen). Another embarrassing situation is when your
customer finds out that a referral fee changed hands which breaks the trust and confidence
It just seems that whenever money enters into the equation and there is no surefire way
to track it, trouble is on its way. Ive seen too many good relationships go sour
because of a referral fee dispute. It breeds everything you dont want in a trusting
|I highly recommend each of these resources to learn more about referral marketing.
|Establishing a referral program with your customers and other influential people is
absolutely critical. Many small business people make the mistake of not institutionalizing
a systematic program for referrals. They confuse word of mouth advertising with a referral
system and, hence, overlook the single most effective advertising for a small business.
make the same mistake. Develop your networking skills and referral programs today and
start receiving an endless stream of new customers.
To your referral success! - David
|Author: David Frey David@MarketingBestPractices.com
Frey is President of Marketing Best Practices Inc., a small business marketing consulting
firm and the editor of the Marketing Best Practices Newsletter, the web's leading free
small business marketing newsletter. Subscribe now at http://www.MarketingBestPractices.com.
© Copyright 2001 David Frey, Marketing Best Practices In