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I get asked the question above plenty. The answer is really easy: People refer people, products, services and companies because they like to, it makes them feel good, it’s just human nature.
The problem with this question and its answer from a business building standpoint is that it’s not that helpful.
The far better question is “who do people refer?” Answer that question and you will be more prepared to take advantage of this powerful marketing tactic.
People make referral decisions about the same way they make purchasing decisions. People decide something is the right price, fits, addresses their need - the logical part, and then, they determine they will look good, have more life, impress their friends - the emotional part.
Here’s the tough part - they usually do it in reverse order - they get hooked emotionally and back it up with logic.
So, in order to have your business considered as someone worthy of a referral, you need to tap the logic and emotion formula - maybe in equal parts. In other words, people have to believe you can help, have a great price, and will show up as promised (logic), but, they must also feel good about helping you, trust that their friend will be treated well, and like the experience of doing business with you (emotion.) It’s not enough to have a good solution. The firms that get lots of referrals have a good solution mixed with a fun or unique solution.
That’s why money offerings alone for referrals are poor motivators. (In fact,cash may only motivate less than ideal referral sources ) Far better to work on making your business more likable, more referable, more energetic before you go out their and start offering any kind of incentive for referrals.
If you are not getting referrals naturally, you may need to focus a great deal of attention on cracking the logic and emotion code for your clients.
Now, you may be saying, this is a serious business, there’s nothing fun about this business, well, then think of the ways that your serious business can make a genuine emotional connection with your clients and make that one of core elements of your business.
Once you have these logic and emotion parts down, then make sure it’s easy to refer you - create tools, education, and follow-up systems and you are ready to rock the referral world.
Comments
This entry was posted on Monday, May 28th, 2007 at May 28, 07 | 5:27 pm and is filed under Referral Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Your recent podcast guest Seth Godin and his continually use of the word “remarkable” comes to mind.
Our sales team is finding that if we ask a new customer for a “two phone call favor to open up the door” in other locations, they are literally going through their Rolodex and giving us 5+ (sometimes 15 or 20) referrals… and this is happening very consistently with most of our clients. And that’s just right after the sale takes place.
Our theory on why people want to refer us so avidly is that they find what we’re offering so remarkable that they’ll look like a hero for introducing us to their counterparts in other locations/companies. There is no financial reward for them… it’s a referral with pure intentions.
I believe you’re right on the money that the emotional part of the equation is huge when figuring out how to get others to refer you. Afterall, they are not giving you a referral. They are giving you their name.
As McDonald’s says “I’m loving it”.
~ mel
Melvin Ram
CEO, Volcanic Internet Marketing
Direct: 916 743 9369
Email: melvin@volcanicmarketing.com
Why?
Hi John, you’re so right - I have never first referred someone for money - it’s always been because I want to bring two people or businesses together. Sure, at times there’s referral money but that comes second. Why? I never to “BAD” refers.
Ramon - http://www.smallbiztechnology.com
Referrals seem such a mystery to some. But you are right, and it is so easy to do. Get people in the positionto want to refer your business by helping them feel good about you and what you do
This reminds me of the feeling I get when I bring a friend to a great restaurant or art gallery I have discovered. Even though I am not making the food or creating the artwork, I feel I have been a part of the pleasure they provide my friend. When someone refers your product they not only bring you a potential new customer, they also invest themselves further in the brand.
It also seems that taking the time to personally thank your referrers for their role in your business will further solidify that investment and result in even more referrals. Customers are the best salespeople.
Nic - http://www.marketingneophyte.com
This is a great example of one of the benefits of a strong brand: word of mouth. The intellectual and emotional connection a customer has with your business/product/whatever is essentially the core of your brand. Identifying that connection is the process of branding. Communicating that promise is marketing and living that promise is integrated branding. Some of those that come to mind as having done it well are Apple, Trader Joes and Target. Any others you refer people to?
This goes right to the heart of why so many businesses fail. They don’t make the investment in their brand, and in turn, create something worth referring. Branding helps shape word-of-mouth advertising by creating the message to communicate. If done authentically, your brand is an extension of what makes you worth talking about.
John and Jen get it.
Unfortunately, too many people think that strong WOM and referrals are things that just happen.
Jon,
We have created a way to have no-pressure referrals. It works great for a couple of reasons.
The first one is that people are not pressured or even asked. We just have a form with the information to refer other people and if they do it, great! If not, no big deal. Secondly, it’s at the end of the sales process when they understand the service very well and are excited about it. It’s fresh on their mind with all the benefits.
Here’s a post I did a little back about how we successfully generated referrals.
http://www.lazyowner.com/this-form-generated-27-client-referrals-last-month/
Let me add to the mix a concept that I strongly believe in. That concept is that you have to give first to get. Being likeable and providing a good product or service is a given in my thinking. What I find useful in building the relationship is providing other valued input which shows that you really care. This could be articles about their industry and help/information in any number of ways. As an example, suppose they mentioned that their child was considering a college major in sports management and you happened to know a recent grad with the same profile. What a nice gesture to offer to introduce the two.
Robert,
Right on - to that’s a given - I suppose on one hand I can’t a imagine too many likable people who don’t get that.
Jim,
Most often the simple system is the one that works the best - simple on both ends the user and you.
I absolutely agree. Giving is very important when it comes to getting referrals.
One thing I have noticed is that many companies, especially small business, serve their customers really really well. They give a lot, both in time, energy & kindness. The thing that holds many of them back however, is that they don’t ask for referrals.
I learned from Keith Ferrazzi that you have to be as eager to receive as you are to give. Most business owners are great people so they give, give, give but they don’t ask as much from others (at least in my experience.)
Jim, I like your form. It’s easy to fill out and fax in. You might also try mentioning the referral form while speaking with them so they know you are asking THEM, and not just including it with all new client packets.
There was a research done (I don’t remember the specifics) on the topic of responsibility dilution. Basically it said: If there was a car wreck and Person X thought she was the only one who had seen the wreck, she would take full responsibility for taking the right actions. But if they thought 10 other people had seen the same wreck, she would probably mentally delegate the responsibility to others… thinking that someone else will do what needs to be done… and nobody ends up doing anything.
Summary: Treat ‘em right… then ask for referrals… and you shall receive.
Relationships is the common denominator between successful branding and generating referral business. I would add one word, though: Authentic.
Ferrazzi masterfully develops the idea of building relationships on authentic levels. Melvin is right about giving to get, but it has to be done outside of a you-scratch-my-back-and-I’ll-scratch-yours mentality.
Piggybacking on what John and Nic said: Authentic relationships are key, and people will try to give when they receive or make them look good. But when you’ve truly delivered value and assistance, your clients are happy to refer you because they know how much you’ve helped them, and are anxious to pass along something that can help or please their friends or colleagues as well.
[...] But what would your clients and customers say about your business? Is it clear what problems you can help them solve? Not just clear to you, but clear to them. And clear enough so they’d have no problem explaining what you do to someone else? [...]
How often does asking for referrals have negative effects? Is there a sitution where asking for a referral could hurt your business more than it helps?