Tuesday, May 29, 2007

Earning Referrals

Ask businesses how they get most of their new leads and best prospects and most will usually reply 'referrals and recommendations'. Ask them what strategy they have to maximise the flow of this new business and many will look at you blankly.

Over the years I have met many business people who will spend time and money developing marketing strategies incorporating PR, advertising, cold calling, exhibiting and other routes to market, yet leave referral generation to chance. The common response is "I let my customers refer me".

In his recent book, Truth or Delusion, Dr. Ivan Misner, founder of BNI, says,

"On several occasions, my coauthors and I discussed the point that I made in my book, The World's Best Known Marketing Secret, about how people were under the delusion that good customer service alone was enough to enable them to build their business through word of mouth. We shared stories about people we'd met over the years who had gone out of business waiting for good word of mouth to rescue them."

Dr. Misner discusses how good customer service is a prerequisite, we expect it. People are far more inclined to talk about bad news than good. Just look at the front pages of the newspapers most days of the week if you don't believe me.

It is not enough just to provide a good service and expect referrals. How many times do you attend a restaurant, eat good food, enjoy good service and then tell all of your friends about it? Compare that to the amount of times you have a bad experience, with poor food and rude service. You want to tell everyone not to go to that restaurant. Don't you?

Good service is expected when we buy something. That doesn't give us something to talk about. The fact is, if we want people to be our Champions, to advocate us to other people, we need to go that bit further.

This chart, used by the CEO expert Roger Harrop during a recent presentation I attended, illustrates this perfectly:

If you fail to meet people's expectations and they are dissatisfied with your product or service, as you would expect, they will leave you. If you meet their expectations and they are satisfied, that is fine but they are still prey to other people making better offer. To keep people buying from you, they either need to be very satisfied or you have to exceed expectations. But to make them Champions, you need to achieve both. Or as I put it, substantially exceed their expectations.

Give people a story to tell and you will win referrals. Just don't expect people to refer you simply because they are happy to buy from you.


  1. Good points, Andy. What about those people who could be your advocates, but who won't necessarily be your customers? It's absolutely vital to give them a story to tell by finding some way of giving them a real taste of what you do.

    Good Networking!

    Dave Clarke

  2. I think this echoes Dave's post - What if your referrers are third parties? Much of my work comes by referral, I'm still building on the past custom basis. It's a challenge to appeal to the third party sufficiently to allow them to have the courage/trust to refer their clients to me.

    I provide case studies, full presentations (stories) and a recognition/thank you (reward scheme) set up - however I have to trust that the third party believes strongly enough in the first place.

    The third party therefore, in effect, becomes the customer and although my service isn't directly 'sold' to them, they do benefit in the long run.

  3. Thanks for your comments Dave and Jackie.

    Alongside a strong referral strategy with existing clients, it is important to develop a strategy for referrals from elsewhere. This is where networking groups, introducer strategies and reward schemes all play their role.