How To Get Good Business Referrals In 6 Easy Steps - Project Management for Small Business from Denise O'Berry

How To Get Good Business Referrals In 6 Easy Steps

Why do good business referrals matter?

Think, for a minute, about how you found your last service provider or product you were looking for.

Now if you’re like most people, you more than likely asked your friends or a colleague if they knew of anyone. You might have asked in person or posted the question on your Facebook wall. Or maybe you sent out a tweet or reached out to your LinkedIn connections. Regardless of how you asked, the point is – You Did!

That’s why referrals matter.

You want your business to be the answer when someone goes asking around for referrals to locate a key service or product they absolutely must have.

And here’s why.

  • Referrals can grow your business faster for you.
  • People will trust you more when they’ve been referred by a friend or a colleague.
  • It gives you instant authority in their eyes.
  • And the best part is, they come already pre-qualified.

What’s really cool is that there’s real proof.

trust-referrals

When people were asked how much they trusted recommendations from people they knew, 92 percent said they trusted them either somewhat or completely.

That’s some pretty good motivation for focusing on getting more referrals in your business, right?

Before we go any further, I want to briefly talk about the distinction between a lead and a referral because they are very different.

A lead is typically cold or lukewarm.

Here’s an example of a lead. I got an email from a colleague that said she had heard about a man from a friend who probably needed some help in moving his business along. Then she gave me his contact details. I’m not so sure that I am going to go ahead and contact this guy. He doesn’t know anything about me and the person who gave me his contact information doesn’t know him. I may make one attempt to reach him but I am probably not going to put forth a ton of effort. A lead is just one step away from a cold call. Ugh!?!

So let’s talk about what referral means. Referrals are warm to hot. They are a warm personal introduction. It could come from a common connection between you and another business or directly from a prospect or one of your customers.

Here’s an example of a referral. There was a woman that I knew a few years ago through an organization that I was very involved in. I knew of her and had spoken to her. She had never done any business with me but she did know of me. She called me one afternoon and she had someone in her office with her. Unfortunately, I wasn’t in but she called and left me a message. She said that her friend ran a small business and was really struggling and wanted to talk to me about the potential of working together. When she called, she actually had her friend right there with her and was ready, willing and able to put that friend on the phone with me. The good news is that I followed up with her friend and she did become one of my clients. That is a warm to hot referral and that is what I’ll be talking about today.

Without a referral program in your business, you can only hope referrals will dribble in.Click To Tweet

How To Create Your Business Referral Program In 6 Easy Steps

There are six basic steps to setting up a referral program in your business that will bring you a wealth of referrals. Can you get referrals without having a program in place? Sure. But they will dribble into your business. And you’ll always be hoping for more. With a structured program, you can be assured you are getting the referrals you deserve. Click to get your FREE 6 Step Referral Marketing Process Map.

referral-marketing-process-map

Step #1 Document Your Ideal Prospect Profile

In order to build your business on referrals, it’s important that you know who you’re looking for. If you don’t know who you’re looking for, you can’t describe that prospect to anyone else and if you can’t do that, who can help you by referring other prospects to you? No one.

Each of us has an ideal, perfect prospect that we would most like to do business with. That doesn’t mean these are all of the prospects or customers that we do business with but this is one that we really want to go after so there’s some specific information we want to know about them.

ideal-prospect-profile

  • I’m sure you can think of a great product or service that your prospects could use or that you think they could use but until they decide that it’s something they want or need, you won’t make a dime selling it so it’s important to define their wants and needs.
  • The next thing you want to know is the demographic description of your prospect. How old are they? What is their net worth? Are they married, single or divorced? What do they do for a living? Do they have a specific occupation? What is their employment level? Are they high up in a company, frontline? What are their interests? As you create your ideal prospect profile, think about your current clients. Capture as many descriptive words as you can about your prospect and your current clients.
  • Why do they buy? Of course, it’s because we all have the best products or services, right? Nope. They buy for their own reasons. By now, you should have some idea of why your prospects and clients buy from you. My clients buy from me because I make their business life smoother, help them take action on things they tend to procrastinate on and ultimately add more cash to their bottom line.
  • So where do you find them? You need to know for sure where you find them. You can waste a lot of time networking, advertising and marketing in the wrong places. I’ve done that. It’s important to know exactly where you would find them. Is there a specific organization? Is there a specific part of your city? Is there a specific networking function that they attend? Is there a specific place online where they hang out?

Once you’ve gathered up all the information to create your ideal prospect profile, you should draw a picture of them. And no you don’t have to be an artist to do that. But this picture with help you explain to your referral partners exactly who you’re looking for. That’s really important. If you can’t describe your ideal prospect to a referral partner, how will they know who to send your way?

Just to prove to you that you don’t have to be an artist, I’m going to share with you the drawing of my ideal prospect. Ready?

ideal-prospect-drawing

So there you go. I can hear you laughing out loud at this gorgeous masterpiece! Now you know why I don’t do art for a living. 🙂

But the picture gets the point across. My prospects want to quit tossing all the hats in the air that they are wearing and quit drowning under the weight of all they have to do. They want to make forward progress in their business and just don’t know where to start. My clients buy from me because I make their business life smoother by helping them take action to run their business more efficiently so their life is less hectic and they can achieve the money, freedom and independence they seek. What do your prospects want?

Step #1A Determine Your Prospect’s True Customer Value

Before we close out step 1 of the process, let’s talk about another critical piece of information. That’s called True Customer Value which is the total value of your customer over the lifetime of doing business with you. Knowing this number can be very motivating for you when it comes to referrals.

But before we get into that, I want to tell you a true story about the $5 customer. I overheard a remark as I was browsing through a store. The owner was talking with a friend who was concerned that another customer was being ignored. The owner said, “Oh, that lady. I barely pay attention to her. She comes in twice a week, but only spends about five dollars. What a waste of my time.” Have you had the same thought about any of your customers? Before you dismiss the customer that “only spends five dollars,” take a look at her long-term value.

true-customer-value

  • If this customer visits your business twice a week and spends five dollars each time, her total sales are $520 dollars for one year.
  • If she does this over a ten year period, that’s $5200 dollars. Not a bad sum of money.
  • And it doesn’t stop there. If she’s a happy customer, she’ll more than likely tell a few friends. Let’s be conservative and say she tells ten friends who have the same spending habits she does.
  • Do the math. Over ten years that would amount to $52,000 dollars!

That’s why it’s important to pay attention to the five-dollar customer. In the short run, they may not spend much. Over time, their value can pack a big wallop.

Now is the $5 customer worth it or not? You bet they are!

Your true customer value is an important number for you to know in your business so you know how much you can spend to acquire a new customer and still make a profit.

Step #2 Define Current Contacts

In this step you’ll look at current contacts to determine what your universe of possibilities are.

Your objective is to do an inventory. Don’t worry about how you’re going to work with them or who might be the best possible partners. You’ll do that in the next step. For now, all you want to do is capture who you know.

To complete the step, make lists of each type of contact. You can do this in any sort of file. You can even do it on paper if that works best for you. But the key is to make the list.

Once you’ve completed compiling your list of contacts, step 3 involves turning that stack of people into real life possibilities for referral partnerships

Step #3 Compile Possible Partner List

In my referral system, I categorize contacts according to my Five Point Referral System Star Model. There are five key areas you will get your referrals from.

5-point-referral-star-model

Our five star points are 1) Customers, 2) Joint Ventures, 3) Influencers, 4) Insiders, and 5) Leaders

Don’t get overwhelmed by this model. You won’t have referral partners from every star point. Typically out of these five, you will more than likely focus on just two or three.

  1. First and foremost at the very top of the model is your customers. Those are the very best people to get referrals from. Why is that? They have already done business with you. They are the people who know, like and trust you and know what kind of service you provide. They can provide you with the best referrals possible. Plus, if they are your ideal customer, it is more than likely that they know more people like themselves and they can refer more ideal customers to you.
  2. Going around the star to the right, next are joint ventures. Joint ventures are those people that have a similar customer base but don’t compete with you. For example, if you were a financial planner, your best joint venture partner might be a small business expert like me. It could also be a CPA firm or a banker. There are all sorts of opportunities there. Again, a joint venture involves non-competing businesses with the same customer base.
  3. Then there are the influencers. These are people who have a strong connection to your customer base but typically don’t serve them directly.
  4. At the fourth star point, are the insiders. These are the people who have the inside scoop on everything. These are the folks that have all sorts of people gathered around them at functions. They know everyone and what’s going on everywhere. They know the news before the news hits the news.
  5. Last, are the leaders. These could be your local business leaders, politicians or association or trade group leaders. These are people who can provide go-to information for your industry. You call them up and say, “Who do I go to for this particular advice?” or “Can you give me some ideas of who I could go to to find out what new thing is going on in some organization?”

Your next task is to categorize your list of contacts from step 2 into one of these categories. Once you have everyone in a category, prioritize the contacts within each category on the likelihood of being able to connect with them. The two that I highly recommend that most small business owners focus on are your customers, and joint ventures. Those are the two places where you can get the most bang for your buck.

Step #4 Create Referral Resources

Okay. Let’s move on to step 4 of the process where you will develop tools you can use with your referral partners.

  • What you’ll need to do is prepare emails for contacting partners – these could be outreach emails, process emails, thank you emails or others.
  • Then you want to document the workflow of what steps will transpire during your referral process.
  • And make sure you have templates for those important discussions with your referral partners.

These tools take some time to develop initially, but will save you time and headaches in the long run because you can use them over and over again.

Step #5 Define Your Referral Process Steps

It’s important to define and document the steps you’ll take to work with your referral partners. The purpose for this is 1) so you don’t have to remember it and 2) so you don’t miss vital steps in the process.

So here’s what your process might look like.

process-steps-for-referral-partner-discussion

  • You start by connecting with the potential partner and determine if working together to get referrals might be a good fit.
  • Follow the script that you created in step 4 during this discussion.
  • Educate your partner on exactly who you’re looking for and discuss what tools they might need to do that.
  • Set a follow up to share tools for getting those referrals and have a discussion about methods they’ll use to communicate referrals to you.
  • You’ll get the referrals from them and take it from there.
  • You’ll also want to schedule follow ups with your partner to let them know how the referral process is going, whether you’re getting the right type of referrals and to answer any specific questions or concerns they may have.

Then you start the cycle all over again. Now, this doesn’t have to be your exact process. I developed this to give you an idea of what this step could look like.

Step #6 Create Your Action Plan

So we’ve gotten to the last step in the Referral Marketing Process. And this one is truly the most important. If you don’t set up what you’re going to do and who you’re going to do it with, you’ll have just wasted a lot of time. You must put your hard work into action so you can get the referrals you so deserve in your business. You must take action or nothing will happen.

Referral Marketing Training

About the Author Denise O'Berry

Hello! I'm Denise, Your Project Partner -- I manage your projects and the project team so you can achieve that dream business you've been chasing. Managing the project plan, the deliverables, the timeline, the to-do list, and the team to get it all done are the things that light up my day. I'd love to help you get your projects done. Click here to learn more.

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