"The ideal referral system, based on a strategy that gets people voluntarily talking about your business, can eliminate the need to ever actually ask for referrals again."
I have never been comfortable asking clients for referrals or testimonials, as I’ve always thought if someone felt strongly enough about the quality of my work, they would be inclined to refer someone on their own initiative. According to John Jantsch in The Referral Engine, many business owners would agree with me. Jantsch, author of Duct Tape Marketing and The Commitment Engine, found in his informal survey of several thousand small business owners, that while 63% said over half of their business is generated from referrals, 80% of that same group had no system for it.
Rather than sitting back and waiting for more than half of our customers to walk through the door, we need to establish a system that generates a high level of referrals on a regular basis.
“The lifetime value of a customer is unlimited when you factor in a customer’s ability to make referrals.”
Creating a system for referrals is critical, but first, you’ll need to check that your business is worthy of them.
The Big Idea
Build A Remarkable Business
"Many small businesses actually run, thrive, and grow based on figuring out how to do something better than everyone else in their industry, how to create a richer experience, how to deliver a better bang for the buck."
The referral process starts, not surprisingly, with looking at every aspect of your business to ensure that the products and experiences you are creating are better than those of your competitors. Think about what differentiates your business from the rest, and then “figure out how to communicate the essence of that difference in the simplest way possible.”
Jantsch emphasizes that businesses generating the most buzz tend to be driven by purpose, with leaders who communicate their unique view of the world. If you share your story with your customers and potential customers, they will likely connect with you on a much deeper level than before. Your uniqueness enhances the value you bring, and becomes a powerful differentiating factor for your business.
“You must embrace the true value your organization produces and develop a referral system that allows you to bring the best of your authentic self to every opportunity.”
Now that you have something for people to talk about, you’ll need to build a system and community around it.
Every Business Needs A Marketing System
"Until you start looking at marketing as one of the core systems in your business, it will always feel like a disjointed and disconnected thing that you know you should do when you get around to it."
Regardless of size, every business needs a marketing system. For small businesses, Jantsch encourages looking at lead generation from a different angle, and focus on “being found” rather than finding your potential customers.
Jantsch recommends analyzing every customer touch point, and building a plan for communicating at each stage. Any opportunity to create connections via social media is encouraged, as “the most easily referred companies are naturally social”. These connections need to be tracked and measured against outcomes, in order to determine the most successful channels.
In a search engine optimized world, your unique value and point-of-view needs to come through in your content. Jantsch provides pages of ideas for ways to be more readily found, including through generating content in multiple formats, followed by the creation of spokes, both online and offline, which lead people back to your business.
Once you have a system, you can start to build a community.
Create A Referral Community
"Nothing grows a loyal customer like a connection to something bigger than the product or service you happen to provide."
Creating a community around your business, with your customers, strategic partners and others who may be connected to you, creates opportunities for referral conversations to take place, without you needing to ask. You can provide introductions, industry information, and updates about your activities, which extends the value you deliver and creates a reminder for them of the work you’ve done. Your community forum, whether online or in person, also creates a place for thanking those who have already made referrals on your behalf.
Your referral community also extends to your employees. If employees are passionate about working for your organization, they will become part of your referral network, whether recommending your business to future customers or possibly future employees. Take some time to think about whether the employee experience at your organization is worthy of referrals as well.
The Referral Engine is full of great information, ideas and tips, and Jantsch makes it easy to see how the referral system can be developed in any organization. The book has given me the nudge I needed to be more confident in asking for referrals, by having unique value-added products, content and hopefully existing customers lead the way.
How many referrals do you see generated from the work you’re doing? What do you find motivates you to refer a business to someone you know? Tell us more in the comments below…