If you’re like me, you’ve been barraged with news of colleagues, friends and family losing their jobs, or businesses that are having a tough time weathering the current economic climate. With banks failing, companies shedding jobs, and whole sectors of the economy in chaos, it can be discouraging.
After talking to many of our customers, we’re going to devote our next eLearning Series to “Six Inexpensive Ways to Increase Business In A Tight Economy.” All of these suggestions are tried and true: we’ve either done them for ourselves or for our clients. Let me know if you have additional suggestions, as we’re happy to share tips and techniques with everyone else.
Tip #1: Ask For Referrals The first tip – Asking For Referrals – is a tried and true method that leverages chains of trust. Unlike traditional advertising, word of mouth referrals can be a top way to generate new business. Why? Referrals are based on trust. The highest compliment any customer can give to a vendor is the compliment of saying, “Your company has done so well, I’m willing to risk my personal reputation and recommend you to someone else.”
Because a referral comes with this type of implicit trust, it’s a lot easier for a new prospect to become a paying customer. If someone you know and trust gives you a recommendation, that carries a lot more weight than a glossy print ad or a TV spot. (Not to say those don’t work, too, but they’re not quite as powerful.) One of the most successful things that the winner of the recent US Presidential election did was create a system that asked people to ask their friends to support a candidate and get out and vote. Several hundred million dollars in TV advertising, as well as loads of technology also helped. But it was paid for by contributions raised (in part) using referral-based networking strategies. (Sorry to digress into politics; we did all of the early email marketing for the Howard Dean campaign, when they first started and had a $25-per-month hosted website.)
The greatest example of successful referrals I’ve ever seen was back in the dot-com boom days when I was working for a $47 million venture-backed company. I spoke to one of the investors who put in $12 million in venture capital into the company – based on a referral; he did no due diligence but simply trusted a colleague. (Email me back if you want to know how his investment turned out.)
Before I delve into specifics for creating a successful referral strategy, I’ll first state a couple of quick assumptions. First, I’m going to assume that your company does a reasonably good job at providing a product or service to the majority of your customers. You’ll never be able to please everyone, but as long as most of your customers have a positive experience with your organization, seeking referrals can be extremely effective. If people really don’t like your company, but are forced to buy from you for contractual or monopolistic reasons, you have bigger problems to work on than building a referral network.
Second, I’ll assume that you enjoy a broad client base that spans across several vertical industry categories. If you have a very narrow industry focus, clients could worry that if their competitors use you, they could lose a key competitive advantage. In this case, you should probably focus on expanding your products and services to new markets. So, if your customers like and trust you, and don’t feel competitively threatened if they refer you, here are suggestions to create referrals from your customers:
1. Ask For Referrals. People won’t think to refer others your way unless you let them know that this is important to you. In nearly every email I send out I have a line below my signature that says: We love referrals! Our Referral Promise >> It’s a not-so-subtle reminder to let people know that you’d welcome new clients. In the last 30 days, I’ve personally sent 1,093 emails through Outlook (I just checked), plus many more from my Blackberry. This is in addition to our weekly newsletter. It’s a great way to spread the word.
2. Give People Your Referral Promise. The last thing a person wants to do is refer their friend, only to have them hounded endlessly by a sales person. We put our referral promise on our website, and we stick to it. Here’s what it says: Our Referral Promise: If you refer others to us, you have our heartfelt thanks. One of the highest forms of trust in business is sending friends and colleagues along to us. We know that your trust in us is hard-earned, and we pledge to take care of anyone you send our way. We are happy to set up an initial meeting or phone call, but then it is up to the client to pursue the conversation (we won’t hound them endlessly).
If the referral isn’t a good fit for either party, we’re happy to make additional recommendations that will allow them to accomplish their goals. We promise to do what is in the best interests of a potential client. Metaphorically speaking, we can teach a person to fish, we can act as a seasoned fishing guide to navigate difficult waters, or we can fish for them and prepare a complete meal. We also list the Problems We Solve, as well as list our Typical Client Profile. Visit here to see the page.
3. Reward People Who Refer Business to You. While most people are happy to refer you to others, some people respond to a gentle incentive that’s good for them. It might be 5% off their next purchase or project, a gift certificate to a favorite restaurant, or a set of free movie tickets.