Whether you work in a service or product-based industry, referrals can be a powerful profit driver.
For starters, you’re in control – no relying on weird algorithms (ahem, Facebook) or losing sleep over the next Google update.
Referrals can improve your prospect pool so your sales cycle is shorter and your marketing budget lower.
And they come with trust built in. Someone who they already trust has recommended you as a person to trust. So while you may spend hours, weeks, months and even years building relationships, authority and trust to earn new customers on your own, a referral can turn a prospect into a customer almost instantly.
Since they’re coming through a source they trust, chances are they’ve already asked a dozen questions and have been pre-sold so there’s a lot less overhead when it comes to breaking down someone’s natural resistance to the unknown.
Referrals are also pre-qualified. It’s more likely that they’re actively seeking out the type of service you provide so you don’t have to cross the hurdle of convincing people of why they need what you’re offering.
Here’s the bottom line: you want them!
That’s all well and good, but where do you find these elusive animals? How can you snare a good referral? The good news is that you don’t have to merely wait around for them to peek out from under the bushes. You can lure them in and grab a few if you think smart and act purposefully. Here’s how.
Network With Feeling, Like You Mean It
My web development and marketing business is almost 100% referral-based and has been for 14 years. Long before “online marketing” became a thing and probably long after it’s dead, real-life marketing has existed and has been keeping businesses alive and thriving.
But that doesn’t mean we sit around and wait for people to show up at our doorstep.
It also doesn’t mean we show up to a business card exchange and start hammering away at people about what we do.
If you want to network effectively, you have to treat it as you do the rest of your marketing.
First you need to identity your target audience. The best networking groups are people who fit not only your customer profile but who share your business values and ethics.
The goal of a good networking group should be to help each other. That means you’re responsible for providing referrals to others in your group and to do that you need to be sure they’re people you can trust and stand behind.
This is more than a simple “you refer me and I’ll refer you” model. It’s about building relationships (isn’t everything!) so that you know there’s a group of people out there who have your back. And when someone needs your service, those people are going to recommend you – confidently.
Work? Yes. But consider it an investment in a built-in sales team. Better yet, these are your default advocates – the people that get your prospects to trust you before you ever meet them.
If you can’t find a group that exists then create your own. I bet you have at least one or two people you’d be happy to bring business to. And those people probably have one or two each… and so on. Meet with your group regularly, be informed about their businesses, accept only the best and be sure to give – it’s the only real way to receive.
Give Referrals Unexpectedly
You don’t need to be part of a networking group to send referrals to other businesses that you admire or enjoy.
We’re pretty quick to complain when something goes wrong (think: Twitter wars, snarky Facebook comments and angry emails) but how often do we share the love for a job well done?
It’s great to compliment someone and tell them they’ve done a great job for you – it’s a bigger compliment to send some business their way.
Adopt a mindset that when you work with someone exemplary, you will consciously be aware of opportunities that you can send to them.
When someone sees that you are actively advocating for them, all those feel-good endorphins kick in and it makes people more likely to advocate for you. Which leads to my next point because you must…
If you want people to refer business your way, you must achieve excellence. That means reliable service and fixing problems when they arise. It means worthy products. It means standing behind your business practices and working with integrity.
Nobody wants to be known as “that guy who sent me to a horrible company” (or even just an “ok” one). You can network all you want, send boatloads of business to other people and see zero return if those people don’t trust you enough to send their friends and colleagues your way.
In a perfect example of excellence in action, a friend of mine who had been following the launch of a new product with mild interest was impressed by a fantastic email that she’d received from the company. It was a combination apology (for a delay in the launch of the product), a bit of humor, some helpful information and a “here’s how we’ll fix this mess” conclusion.
It impressed her enough that she decided to buy their product. And she shared the experience with me and her enthusiasm intrigued me so I checked them out – and bought their product!
So a single awesome email netted one new customer and an instant referral.
Proof positive – people will recommend your company if they find you worth recommending, so be worth it.
Hit Up Old Customers
If you’ve been working with someone forever and you’ve never asked for a referral then it’s time to get busy.
Presumably someone that sticks with you does so because you’ve built trust and loyalty. But as much as your customers may love you, that doesn’t mean they’re thinking about you 24 hours a day. Or ever, unless they need something.
We’re all busy. The cat has to go to the vet, the car died, we’re counting the days until vacation, our husbands just yelled at us, the chicken burned and that job that was due two weeks ago is still not done and going very wrong. Who has the time or mental bandwidth to think about referring business to someone else??
Call your best customers and ask whether they know anyone who could use your services. Let them know specifically what you’re looking for and see if they can set up an introductory phone call or meeting.
We’ve found plenty of people who realized their wives were starting a business and needed marketing help or their retired dad wanted to turn a hobby into a new venture or one of their friends just got burned by another developer and needed someone they could trust.
It’s not entirely likely that these things will occur to people naturally so take a little time to ferret them out. Otherwise your customers’ dads and wives and friends will probably find someone else to hire and you’ll never be the wiser – or richer.
Get To Know The Competition
This point was inspired by Tea The Word Chef Silvestre who reminded me that cooperation – and not competition – is the key to some of the most successful ventures.
It might seem counter-intuitive to work with your competition but the alternative is constantly beating your head against them. Here’s a little-admitted truth: there’s plenty of work to go around. You couldn’t possibly do (or WANT to do) all of it. Your job is to find your perfect client and stick to your area of expertise.
So what happens when you find someone who isn’t quite the right fit for you? Or who can’t quite afford your level of “expert” pricing? Or someone who, perhaps, simply doesn’t fit into your busy schedule?
Well, you could overbook and overplay yourself and end up with unhappy people all around. Or you could refer that person to a trusted competitor. Client is happy. Competitor is happy. Good feelings abound and true networking and relationship-building is underway.
Tackle New Customers While They’re In The Honeymoon Phase
Nobody is happier than a newly-happy customer.
Your old customers are used to loving you and you’re kind of like their favorite old sweater – there are some holes but you’ll never get rid of it. Plus see comments above about people being busy.
But your new customers are newly impressed by your awesomeness and can be ripe for referrals – if you ask.
The second you close a job successfully, ask your thrilled customer if she knows anyone else who could benefit from the same type of personal service and dedication that you just gave her.
People in new-love may just go the extra mile to show their appreciation.
Bonus Tip: Beware Referral Incentives
I know people who have run referral incentive programs – you send a referral and you get a free Starbucks coffee or an entry into a sweepstakes or even a discount on your next purchase.
While this may seem like a good idea on the surface, it defeats the purpose of advocacy and capitalizing on all that trust.
You lose the benefit of pre-qualification because people are more likely to refer business to you for the perk rather than because someone is a good fit for your business.
No trust and no pre-qualification means you still have to go through all the phases of customer acquisition that you would have if you’d simply solicited the business yourself. At that point you’d be better off hiring someone to cold-call for you. It would be about as effective.
Plus it diminishes your credibility. If you have to effectively bribe someone to refer business your way, it means you’re missing out on the key elements that go into deserving that referral.
Work on your customer service, your products and your relationships. It’ll pay dividends every time.
Do you rely on referrals for your business? If not, why not?
This post is part of the monthly Word Carnival series of posts. This month, our carnies tackle the topic of business referrals, why you want them, how to get them and everything else you’ll need to know to propel your business forward! Check out more of the Word Carnival series here.
Join the discussion 20 Comments
Absolutely! Ok…I had to say that…I suck at networking, my shy non- aggressive/assertive side disappears when I am face to face with people..at least it did a few years back. Who knows I may be better at it now, I just hate to go somewhere and people try to sell to me, I am the worst one as I worked with sales departments in my corporate life and so immune to it. But I agree, when I refer to others it is because I think they are exemplary. I have been burned though and had people come back and complain, so needless to say that person will never get another referral. I think we have to have conversations with others and get educated about who they are and what their real strengths are and then refer. I agree compensation for referrals can be very ugly, though I did one years ago and did not even know she offered money and I looked up and had a nice little check in the mail!
I think we have turned networking into something it’s not supposed to be – namely handing out business cards and thinking it’s one big sales call. No no no! If you find a networking group that is a GOOD group, it’s not about that at all. It’s just about building relationships with those people so THEY advocate for you when they have friends, colleagues or people they know who need your service. So you don’t have to feel like you’re selling them on anything. I also hate those other types of events where all you do is listen to other people pitch you, then you do your pitch, then you make all these fake promises to call. I would leave those far behind!
Hear, hear! I totally agree with everything you’ve written (as usual).
I just want to add that so-called “competitors” can be fabulous sources of referrals, too. After all, none of us does things exactly the same way. And I love knowing I can refer someone to you for a website (cuz I don’t do those anymore). More reasons to network properly!
Your post made me think about the competitor angle… I may just have to append that here because it’s such a great way to network and so overlooked. GAH! Must add!
I laughed because right after I left my comment, I saw YOUR comment on my post and whaddya know? Great minds think alike.
🙂 I appended my post here just for you! It’s a great point! Couldn’t resist.
Spot on, Carol. I’m a big advocate of putting people before processes; which sometimes gets me in trouble and causes late bedtimes, but I get a slew of really happy customers as a result. Doing something in 15 minutes vs complaining/explaining about it for 5… no brainer.
I’m also a huge advocate of done, not perfect; which can also get me in trouble from time to time. Making sure things are spot-on before launching, not top on my priority list; that’s what the revision phase is for 😀
Advocacy vs Affiliate: very important point. Organic advocates are rare. Paid affiliates are cheap.
We’re always getting ourselves in trouble, aren’t we? Although I do agree that “done for now” is usually “good enough” and that nothing is EVER done. So you just go from one phase to another or else you could get hung up forever in get-it-perfect mode. Alas, that is something it takes time and convincing to educate clients about but if you can get them on board, then you have happy clients and more referrals!
“default advocates” — love that term, Carol Lynn!!
You’ve come at referrals from every angle and I sincerely embrace your viewpoint on networking. I’m guilty of not making much of an effort to attend networking events or meet-ups … so that needs to change. I’ve had two negative experiences (I realize that’s not much to base anything on) at networking events that were blatant pitchfests. YUCK. Not my style. Not my thing. Not my cup of tea. More like a pile of phony baloney. I don’t have time for that kind of crap.
For me, the best idea might be to start my own networking group, as you suggested. Our Word Carnival group is a wonderful role model. I’ve never seen such fine pairs of helping hands. 🙂
Most networking events are pitchfests and I don’t like them. at. all.
I used to go to Chamber of Commerce meetings but it was the same thing. Here’s a business card, hope you buy something, bye!
One group I belong to has it right – it’s all about NETWORKING. Not about selling your stuff. And part of the rules of the group is that you must build your relationships with these people. You can go out to lunch, you can visit their workplace and take a tour, you can do whatever it takes but it has to be more than business. That’s where you really start to earn friends and trust and those people will never “sell” you anything!
It’s funny. I network, but at the moment it’s more about helping others and receiving help than it is about trying to sell something. I think the focus of this will shift, however, as my online business gets more underway.
You have to start in “help” mode before you can really start generating referrals so I think you’ve got the right idea!
Great tips, Carol Lynn. I’ve been lucky enough to work with a great group of writer friends and we started referring extra work to each other before any of us really thought about networking. It works well and has resulted in some great relationships with clients and referrers.
Funny how the best stuff happens “by accident”! It’s great to have a network of reliable people so that even if you can’t provide a service, you can find someone who will.
“that doesn’t mean they’er thinking about you 24 hour a day”…aint that the truth.
I think referral bonuses are a good tactic *IF* you set them up right. It should be significant enough to make people more likely to act than they would otherwise (which really shouldn’t take much) but not to the point where they’re going to be campaigning for you to get a payout.
I think small percentage discounts for businesses with recurring fees, for example, is a good option.
Unfortunately the reality is that most people that would be willing to give a recommendation aren’t going to do it without a little prodding – and even then most won’t 🙂
I think the success of incentives really depends on how you do it and what business you’re in. Those blatant “have a Starbucks card” referrals can be a waste of money (and time when you have to vet a horde of horrible prospects). Discounts on your services could be better since it’s relevant. The key is to make sure you’re getting qualified leads.
That whole show up and throw around business cards for “networking” – UGH. I get invited to groups like that all the time. No thanks. When I make a recommendation I’m telling my client it’s safe to spend money. My whole business is built around helping people understand and effectively use their resources to make a bigger profit. For me, I can only ethically refer people who I know can deliver.
On the referral bonus / incentive I’m truly torn. On the one hand time is money. Why should I expect someone to think about me (their service provider) instead of focusing on their own business? It’s human nature to think first of our own business and bottom line.
On the other hand I agree that there must also be trust. I don’t recommend people or programs because they do (or don’t) pay me money for a sale. Whether or not I get something for a referral it only happens if I believe the person will truly benefit. Plus I always disclose potential earnings from that referral.
I guess I’ve mostly seen incentive referrals done badly so I’m probably biased. I have never done them for our business and probably won’t but I can see where they cold benefit some people. I know that none of our clients (or even friends for that matter!) are sitting around thinking about us all day but if we’re smart about keeping in front of people and keeping our reputations strong, referrals will come on their own. Heck, I’ve build a whole business model on it 🙂
Great and comprehensive post Carol Lynn, You rarely leave a stone unturned which is why your posts are such a pleasure to share. This line resonated, “let them know specifically what you’re looking for”. I think the better you know your ideal client the better you are at asking for a referral. The more specific you can be, the more likely you can ask a client, do you know someone that fits this, if so I would be so grateful if you might put us in touch. ” I have capacity to work with business owners, who do their own marketing, have a complex offer they want to communicate online, have tried and been really disappointed with a whole lot of online marketing solutions and might value a one on one process driven approach etc etc or whatever the ideal client’s situation might be …” Painting such a picture is more likely to trigger a memory in client when they meet someone who fits that description.
Yes, and it’s something we often think people know (especially people who know us) but I wouldn’t count on it! It’s really tough to discern exactly what someone does, especially in a day and age with so many tech positions and so many specialties. And even then, you don’t know who someone’s ideal client is. So if you can educate people, you’ll be much better off in terms of referrals.