Earlier this week Michael spoke with John Jantsch, author of Referral Flood, who has great advice about how to generate more referrals for your business. I listened to the call and took notes – here they are in point form.
How to generate more referrals for your business
Michael McDerment & Jon Jantsch – free teleseminar
June 15, 2006
- Most small businesses are built by word of mouth.
- Most people are held back from systematically generating word of mouth referrals by fear: fear of seeming rude, of begging.
- People who make referrals a part of their business all have a referral mind-set. They believe the best way to provide value to their clients is to help their clients be successful.
- People who are referred to you make better leads because they usually require less time to get them to understand what you do, since they’ve already been informed by the person who sent them to you.
- The biggest motivation to refer: to look good; to be seen as the resource, the person in the know.
- When setting out to generate referrals, have a very narrow niche target market in mind so you can do a good amount of business with a small amount of clients. Often the first thing John gets his clients to do is to cut their client base down, to focus only on certain areas.
- Find a way that clearly differentiates your business.
- Referral ground rules:
- Expect referrals – your job is to introduce the concept of expecting your users to refer you. (You need to follow up with them, to makesure they are.)
- Look for moments of truth. For example, the night you stayed late and helped a client in a big way. Remind the client of that so theyremember you are worthy of a referral, and they can also use that story when talking to other people about you.
- It’s helpful to be easy to refer, e.g. put a list of firms in front of your client and ask them if they can introduce you to a person at one ofthem; write an introduction letter and ask a client to send the letter to the firms you want.
- Give a lot of referrals (which also helps client relationships).
- Five steps in a referral system:
- Create a referral target market of people or organizations that are valuable to you. These are in two groups:
- Existing client base
- Other organizations that are also aimed at your target market (geographical or subject area), and create strategic marketing partnerships. For example, if you’re a graphic designer, a print shop might know 1,000 other small businesses. Tell the print shop that if they do your business cards for free, each time you design a new logo for someone you will send them to the print shop to get their business cards & stationary printed.In John’s opinion this is a more powerful strategy than using existing client base.
- This is our target market
- Here’s what we do that’s valuable
- Here’s what we do when you give us a referral (call them, give them a free thing, etc.). It’s important to make this clear to the people you’re asking to send you referrals so they know you’re not going to call their friends at dinner time with a sales pitch. This says you have a sophisticated approach to the contact names you gave us.
- Good if you have a new business, have just moved to a new area where no one knows you, or have a small client base. Identify your client group, go to an association that serves your client group, and identify a person in a leadership role. Tell them “This is what we do, we’d like to do a project for you for free. If you’re thrilled with what we do, you endorse us to the association (e.g. write an endorsement letter)”. (You’d be surprised how many of your clients would be thrilled to write you an endorsement letter – ask them.)
- This is a strategy an accountant firm uses: the 100% refund strategy. Would you like your fee to be 100% refunded? Give your customer 4 cards. For each of the cards that come back, the customer gets 25% off, up to 100%. The firm is now known as the “100% refund guys” – what was a referral strategy has also become their marketing strategy.
- Partner with worthy causes. When you try this, 10% of your fee will be donated to that. This might also be a motivator for the charity to use your organization.
- A graphic designer creates a copy shop’s logo and the copy shop refers the designer to other small businesses looking for design work.
- Who else serves your market? Imagine it’s banks and accounting firms. Go to an accounting firm and say you’ll do a seminar for their clients for free. Now go to a banking firm and say you’ll do the same seminar for their clients for free. Now you’ve got your target market – accounting and banking clients – at the same seminar, and it’s also a marketing/networking/opportunity event for them.
- Have a powerful benefit statement to answer the question “What do you do for a living?” E.g. not “I work for a company that creates software for billing”, but “I save people time”.
- Have something that you can give them (not a business card), like a card that sends them to a landing page that talks about referrals orgives them something for free.
- John uses ACT, CRM software. Build activities into your system/processes that remind you to, for example, send referral letter number four outtoday.
- How do I sell my story to the press? To generate positive press, become a resource for media sources. E.g. drip-feed them information from ablog/article you found, before you ever request they write about you.