Businesses run on referrals. Just ask any business owner or salesperson what their No. 1 source of new business is, and you’re likely to hear some variation on the theme of referrals.

But ask that same business owner, salesperson, or marketer what they do to consistently generate referrals, and you won’t hear much.

I’ve always struggled with this idea. It’s like knowing that your car needs gas, runs way better on gas, but then heading out on a long trip without any idea if there are any gas stations along your route.

The fact that most referrals happen by accident leaves many businesses to conclude that the only way to get referrals is to sit and wait for them.

If you deserve referrals — because nothing I’m writing about here will change that reality if you don’t — then you have every reason to make systematic referral generation a core marketing strategy. Here’s how to make it happen:

Know thyself. The first step in referral generation — heck, in marketing — is to have a very clear understanding of what and who actually makes an ideal referral. If you don’t have a crystal clear understanding of this, how are you going to explain to your referral sources how they might spot the perfect referral? This is the biggest referral killer out there. If you can explain in sharp detail what a great referral looks like, it’s more likely that I’ll conjure up a list of several people who fit that exact picture, so help me do that!

Educate. Take the time to teach your best referral sources how to talk about your business in ways that spark interest and spell out the value of doing business with you. Single out every business that has ever referred a prospect; ask to meet with them to teach them the value they’ve received, and to explain how and why to refer your business. Give them the actual words to use to describe what you do that wows clients. Create marketing materials and tools for them to put into a referred prospect’s hands, and show them exactly how you treat a referred lead when you get one.

Motivate creatively. You may find that offering cash rewards for referrals gets people motivated. But more often than not, your customers, the ones who know your magic best, will be more motivated by a creative promotion that turns your referral program into a game for them, allows them to earn something worth more to them than cash (such as free services or special perks), or acknowledges their contributions through charitable donations.

Reward champions. Every business has those referral zealots. They can’t stop talking about your business to everyone they meet. Take those folks and give them a big hug; they are gold. Find ways to make them part of your team. Bring them into marketing conversations, put them on an informal advisory board, and create special events for them. You will get more referrals from rewarding this group than from any other effort you might enact.

Attract partners. The greatest overlooked referral opportunity lies in the development of a strategic referral network. Some companies have a business here or there with which they may trade leads or collaborate on a pitch, but I’m talking about something far more integrated than that. Think in terms of building an entire team of best-in-class providers for every need your clients may have. The idea here is to turn yourself into the go-to source for anything your clients need. Do you think that could make you more valuable to them?

The trick is to attract the right partners. This starts by asking your existing clients what other businesses should be on your team. Once you combine this information with your own observations, you can reach out to these businesses and ask them to teach you the best way to introduce them to your clients. I guarantee this will get their attention.

Ignite your network. Once you get the attention of a handful of partners, show them opportunities to benefit just by association. Interview them and place the video on your website; allow them to submit a guest blog post; offer them e-books you’ve produced, and allow them to cobrand the content and distribute it; offer to do a free educational workshop on a hot topic for their clients; and create logical ways to introduce them to your clients.

When you make these kinds of opportunities readily available to your partners, you stand a far greater chance of gaining their trust and attention — just the kind of thing that will get you and your business intentionally referred to their entire customer community.

John Jantsch is a marketing consultant and author of Duct Tape Marketing and The Referral Engine.

(Originally posted on allbusiness.com by John Jantsch)

3 Responses

  • Great Article. I recently realized this in my business and had to change what I was doing once my sales started dropping. I did a quick analysis of all of my BEST customers – and 90% of them were referrals.

    I am now using a SAAS called vouchfor.com to get my clients to vouch for us through their networks using rewards. I realized that if I was going to launch a referral campaign – that I needed a platform to do it through Social Media!

  • Just a few questions:

    1. Which are the professions / type of businesses which get a high number of new customers from personal referrals?
    2. Looking from the opposite side, which are the professions, where referral fee is a significant percentage of their total revenue?
    3. Are there cases where paying for referral is illegal?

    Thank you,

    M

  • Hola, espero que todo funcione muy bien por tu sitio.
    Yo también escribo un blog de crítica cinematográfica y me agradaría
    tratar ciertos puntos de vista contigo. Creo que estaría super que me mandaras un mail!

    Suerte!!



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