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.
What’s really cool is that there’s real proof.
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
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.
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.
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?
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?
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.
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.
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
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.
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.
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.
Okay. Let’s move on to step 4 of the process where you will develop tools you can use 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.
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.
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.
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.
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