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The Referral Engine: Teaching Your Business to Market Itself

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The Referral Engine: Teaching Your Business to Market Itself

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Highlights & Notes

Reality #1: People make referrals because they need to

We rate and refer as a form of survival.

We refer to connect with other people.

We refer to build our own form of social currency.

Reality #2: All business involves risk

It’s not enough to have a good solution. Buzzed-about businesses have a good solution draped in a total experience that excites, delights, or surprises the customer and motivates them to voluntarily talk about their experience.

Reality #3: Nobody talks about boring businesses

Reality #4: Consistency builds trust

Reality #5: Marketing is a system

In the business of referrals, trust is the most important reason a recommendation is made and, conversely, lack of trust the single greatest reason referrals don’t happen. There are countless ways that companies build and break trust with their customers, but most can be summed up with the term “honesty.”

When you have trust—earned by keeping your promises—you can make mistakes, own up to them, and correct them without loss. One of the hallmarks of a highly referred business is that they work as hard on fixing mistakes as on any other aspect of their business.

“Trust,” he stated, “always impacts speed and cost. When you have high trust everything can move faster and costs less, it’s like creating a trust investment; of course, the opposite is true of a low-trust environment, or a kind trust tax. This is what makes trust more than a nice social asset; it’s a hard-edge business asset as well.”

Your employees probably treat your customers about the same way you treat your employees.

They used this research to conclude that if a company can’t satisfy an employee’s basic needs first, it can never expect that employee to deliver stellar performance. The research indicated that a productive employee’s basic needs are: knowing what is expected at work; having the equipment and support to do the work right; and receiving appropriate praise and feedback for work accomplished.

Companies create buzz with great follow-up, T-shirts and other promotional merchandise, free events, outrageous acts of kindness—anything that contributes to an overall culture of buzz.

The most effective long-term cultural shift for most organizations comes when the focus is put on making the total customer experience something worth talking about on a case-by-case basis.

The Law of Value states: “Your true worth is determined by how much more you give in value than you take in payment.” The Law of Compensation states: “Your income is determined by how many people you serve and how well you serve them.”

If you truly believe that your products and services offer world-class solutions, then you are doing your customers a disservice by not making it very easy for them to introduce these benefits to their friends.

services. Remarkable companies always ask for referrals, not simply as a way to acquire new business, but also as a way to help the most people get the results they are after.

When your business comes highly recommended by a friend, the role of risk is minimized, and that fact alone moves the significance of price comparison down the list. In fact, when introduced to a company by a friend as the best possible choice, prospects often anticipate paying a premium for your products or services, and do so willingly once some measure of social proof has been factored in. I have yet to find a business that relies heavily on referrals and low-price leadership as shared strategies.

When your business grows, you must replace your successful habits with successful systems in order to continue to deliver the highest level of service.

A system can create a negative customer experience if the person operating it doesn’t have the flexibility to make decisions on the fly that are obviously in the best interest of the customer—even if they don’t always follow the documented path.

A referral strategy is a lead strategy, it’s a customer service strategy, it’s a process strategy, it’s a competitive strategy, it’s a management strategy, it’s a people strategy, and it’s a financial strategy. But most of all, it’s a strategy designed to satisfy the logical and emotional needs of every prospect and customer.

In the age of the customer, the 4 Cs are the keys to business success: content, context, connection, and community.

Authentic content that educates or is otherwise seen as valuable to the consumer is the new currency of marketing.

In the wired world, community is free to form around shared ideas, common interests, and strategic relationships unbound by distance.

For the converged, high-tech, high-touch business, the primary decision filter for every marketing process, customer touch point, and tactic is how technology can make the customer experience more fun, more convenient, more engaging, and more frequent.

One of the best ways to ensure that every customer relationship evolves into a referral relationship is to create a way for your customers to sample your business and in turn give your business the opportunity to sample the customer. The purest path to referral momentum is one that leads every prospect to determine, beyond the shadow of a doubt, whether your company has the answer or, and this is equally important, whether it does not—an educated yes or no is the answer we are after.

When someone buys your product or service, commit to teaching them the proper way to get the most from it. You can teach them over time how to do this. You can teach them how to move up to the next level of your product or service. You can teach them the secret hacks, the under-the-hood tips, and you can even expose them to the best practices of your other customers.

(For an example of a customer touch point map, go to www.referralenginebook.com.)

Core talkable difference The first step in the design of your referral system is to unearth the simple, remarkable difference that is your chief competitive advantage. It’s not enough to offer a nice feature, something your competition doesn’t; this must be something so special that people can’t help talking about your business.

“There are no cover bands in the Rock and Roll Hall of Fame.” Talkable differences must be original, real, and compelling.

Better to innovate around a proven market, borrow genius from an unrelated industry, or discover an unmet need in a mature market crying for a solution.

The ideal referral customer Not every prospect is an ideal fit for your business. Until you accept the notion that you must keep your market focus tight, you will constrict your organization’s ability to grow. It’s ironic, but by acknowledging whom you don’t want to attract as a customer, you open greater opportunities for customer growth by way of referral.

“We know you are going to be so satisfied with what we’ve agreed upon today that after the project is completed, we are going to schedule a meeting to make certain you received the results promised, and at that time we’ll ask you if you would introduce us to three others that you know need these same results.”

There are three ingredients necessary for a rewarding and successful business experience: You must enjoy what you do and feel a sense of purpose; you must be good at what you do; and you must be able to convince other people to pay you for what you do.

What perception, perhaps even one word, do you want your customers to hold when they think of your business?

But in my experience, the innovation that matters most is usually a small improvement in an established product or service category, executed elegantly.

Whether you install HVAC systems, offer legal services, or create hand-painted greeting cards, at the end of the day your ideal customers should achieve some variation of the same five things: 1. Make money 2. Save time 3. Save energy 4. Save or not lose money today and in the future 5. Feel better about themselves

but you’re not looking for every potential customer; you’re looking for ideal customers who appreciate the extra care and attention you bring to every project.

The key to delegation and systems thinking is to employ technology married to a checklist mentality.

book by Stack and coauthor Bo Burlingham known as The Great Game of Business.

While some firms may choose to provide full financial details, the real power of any open book management strategy is in giving employees the key measures of business success and teaching them to understand those measures and to use them to improve their performance. It’s about fully engaging employees by helping them understand how their specific function plays a role in the overall success of the organization.

I find that many business owners aren’t that hot at tracking and measuring the important indicators of success. When you are just starting out, perhaps you can get away with this, but as your business grows, analyzing key success indicators can mean the difference between smart growth and chaos.

Keep it simple and build elegant processes to extract and monitor just a handful of key indicators.

It’s generally much easier to increase your revenue through additional sales to existing customers than to go out and find new ones. You can do this one of two ways: increase the perceived value of your offerings and raise your prices or consider supplementing your core offering with products and services that meet additional needs.

The White Paper Marketing Handbook by Bob Bly and Michael Stelzner’s Writing White Papers.

Beyond your core white paper, there can be e-books, free reports, how-to guides, case studies, tip sheets, trend reports, and more.

CEOs are searching for answers, VPs are searching for answers, and interns are searching for answers. By writing blog posts, creating white papers, and offering Web conferences that address the needs and concerns of all three, you can move past the gatekeepers and make the sale. Just another form of inbound lead generation!

Referrals happen most naturally when two people are talking and one of the parties expresses their current pain in the neck. If the other party just had her pain in the neck fixed, she may very well say something like, “You have just gotta call Bob, he’s the best pain-in-the-neck fixer on the planet.”

Your advertising’s call to action should be one of permission—permission to teach. Effective online ads, once designed solely to attempt to divert attention away from content, have morphed into dynamically generated editorial content. The most successful ads are those that engage a viewer with an offer of valuable content from a trusted resource. Sending a prospect to get content that addresses a specific problem or want is the most logical way to allow them to sell themselves on your eventual solution.

For a much deeper dive into the ever evolving world of Facebook consider All Facebook (www.allfacebook.com) and Mari Smith’s Why Facebook (whyfacebook.com).

Make sure you also read Cliff Atkinson’s awesome book, Beyond Bullet Points. It’s one of the best on helping structure and create presentations that keep people interested and engaged.

Any attempt to garner positive search results for your primary Web site hub must be accompanied by a strategy to optimize your entire Web presence through the effective use of social media.

His free e-book, Let Me Ask Ya This … : 55 Questions to Ask Someone You Just Met (www.hellomynameisscott.com/lmayt.pdf), is a real winner, and quite frankly also includes some gems to ask people you already know—your existing clients.

Using social networking sites effectively begins with finding ways to discover potential relationships easily. In my opinion this is done following a multipronged approach: 1. Publish content and links to things such as your blog posts and webinars on sites such as Facebook and Twitter, so that participants in these networks can find you by way of your content. 2. Amplify other people’s content on social networks and in your own blog posts as a way to build relationships. 3. Make a habit of sharing great content from trusted sources you discover from your own research through your RSS reader and other social bookmarking sites such as Delicious or Digg. 4. Ask and answer questions on LinkedIn, Twitter, and Facebook as a way of engaging prospects and getting feedback. 5. Be authentic and human when you participate and let your educational content hub do all the selling.

Tools such as Wordtracker (freekeywords.wordtracker.com), SEO Book (tools.seobook.com), and Google Search-based Keyword Tool (www.google.com/sktool) can help you better understand the actual phrases people use when they turn to search engines looking for answers.

This may not be an issue if you don’t receive many listens and downloads, but I like to use a service called Libsyn (www.libsyn.com), because it’s very inexpensive and streams thousands of plays effortlessly.

For more tips and tutorials on the use of video in marketing, visit ReelSEO (www.reelseo.com)—a great online video marketing resource.

The quickest route to a healthy business and serious referral momentum is a customer, or what I also like to call a “direct network member,” who is beyond satisfied and willing to voluntarily tell the world all about your business.

I can tell you that the relative health and success of most businesses can be gauged by this simple factor—how many clients refer friends, neighbors, and colleagues.

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You might find some of the resources found at Reichheld’s Net Promoter site (netpromoter.com) helpful as you wrestle with the idea of creating and improving your referral number.

Could you find influencers among your customer base and employ them to try your products and services with the understanding that they use their influence to actively promote your business, not because they received something for free, but because they were able to realize substantial value without risk?

You can also grab a free supplement to the book: Testify! How Remarkable Organizations are Creating Customer Evangelists (www.creatingcustomerevangelists.com). This e-book features interviews with companies focused on creating customer evangelists.

So here are some common places to look for friction in your business. Ask yourself, is your business easy: ➧ to communicate with? Can people contact you or your staff in a number of ways, such as voice mail, e-mail, contact-us page, IM, click to call, click to chat? ➧ to understand? Do you consistently communicate the description of your narrowly defined market and plaster your simple core message of value on every marketing asset? ➧ to listen to? Do you have two or three well-developed sales and workshop-type presentations on message? ➧ to network with? Do you have a give-to-get mentality, do you have a plan to get in front of people online and off-line, do you focus on building strategic relationships? ➧ to trust? Do you consistently produce high-quality, education-based content? Do you keep your promises, do you return phone calls promptly? ➧ to buy from? Is there a smooth transition once someone agrees to make a purchase? Do you have a delivery and follow-up process, a new customer orientation kit? ➧ to work with? Engaging experience, results-driven? ➧ to refer? Tools that teach how to refer, give partners a way to refer, workshops?

their results as well. Your customer kit bill of rights should contain the following information: ➧ What to expect from your organization next ➧ How to contact anyone in your organization with questions ➧ How to get the most from your new product/service ➧ What’s needed from you to get started ➧ What was agreed upon today ➧ How you will be invoiced for work or expected to pay ➧ How to resolve problems ➧ Your referral expectations ➧ Any guarantees ➧ What they can expect if you don’t perform as promised

I love it when I buy a product and the first thing I receive is a “getting started” guide, followed by a full tutorial, followed by daily “have you tried this?” e-mails. Every business, product, or service can do the same. Here are some ideas to get you started: ➧ Create a getting-started guide for your product, company, or service ➧ Create a series of how-to videos and promote the links to them in your new customer kit or packing slip ➧ Create an automated e-mail series that teaches lessons and tips ➧ Create an online or off-line tutorial session and hold it every Monday at 10:00 A.M. for all new customers. (Make sure everyone in the company can conduct these!) ➧ Create a follow-up phone consultation session as part of your product

In his fabulous book Predictably Irrational, Dan Ariely conducts numerous experiments around the idea of social versus market norms that shed some very tangible light on this idea.

That factor is the participation of the referral source. The more engaged your referral source is in the process of making a referral, the more likely it is that the lead will become a customer. The logic is simple: When someone refers a friend to your business, you are ultimately borrowing the know, like, and trust they have built with the referred party. The more engaged they are, the more trust they lend.

Peer-to-peer education—Current clients are probably more prepared to explain the value of your service to a prospect, including the limitations. Hold focus groups made up of several existing clients and several prospects. Let the current clients explain, in a nonselling environment, what your service has meant to them, what could be better, and how to get more from it. Sit back and learn.

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In simplest terms, this is a group of business owners who share your description of an ideal customer. In other words, businesses that sell to your customers and prospects. This network quite often can possess far greater referral opportunities if for no other reason than sheer numbers. A happy customer might know three or four ideal referrals, but a large, indirect network partner may have the trust of several hundred.

Ask yourself: How could referring your business make your client’s life better? That’s the proper way to think about referrals.

In my experience you should be ready to ask for a referral under the following conditions: ➧ A customer voluntarily suggests that your product or service is “incredible” ➧ When a customer sends an unsolicited testimonial ➧ When a customer refers someone—that’s right, now is the time to ask for more ➧ When a customer admits you’ve saved their rear end ➧ When a strategic partner tells you about an association they’ve joined ➧ When you complete a project with a customer

When someone goes to the trouble to refer a friend or colleague, there is a good chance they have a reason you should hear about. So, ask already: What makes you want to refer us? What do we do that’s unique? What do people say that makes you think of telling them about us?

➧ Acknowledge that you are working with a special lead. Tell the lead, on first contact, either in person or by way of an automated technical follow-up path, that they were referred by X. ➧ Let them know that because they were referred you have something unique for them. This can be free information, an evaluation, a book, a box of chocolates—to some degree what it is is not as important as the fact that you are affording your lead a special status due to their relationship with your referral source.

The very first thing your referral sources need to know is that you respect the trust they are loaning you and that you never intend to break that trust through aggressive selling or poor service.

Find ways to help your customers do good and spread the word about your product at the same time, and you’ve got a winner for all involved.

What if you took this tool and designed a page on your Web site just for referrals? In other words, create a page that you would share with your clients and strategic partners that they could use as a tool to refer your business. Instead of telling a potential referral to check out your Web site, your referral sources would tell them to go to a specific page set up to personally greet them and acknowledge their status as someone who has been referred.

Offering previous users an opportunity to mentor others helps shape the product experience while catering to the self-interest of the individual.

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