Referral Generation Requires Both Strategy and Tactics

Referral Engine BookIn my book The Referral Engine I point out that referral generation must be a foundational mindset that runs throughout your marketing plan and your marketing implementation. To become a widely referred organization everyone in your business must think about referrals at the strategic level and and at the everyday tactical level.

It’s this point of view that drives organizations to get better, so they deserve more referrals, while also getting clearer about how they receive more referrals. The combined strategy and tactics approach is the catalyst that truly revs the referral engine.

Recently, one of my readers sent me a note that I think illustrates this strategy and tactics frame of mind in a simple, yet powerful manner. I run his note here to help bring this point to light in the real world.

Hello John,

A lot of business advice we hear makes a lot of sense in theory and is then left to us to adapt and implement. It doesn’t mean it’s not valuable, just that it takes more work and creativity on our part to get it to work in a practical sense. In reading “The Referral Engine,” I became really excited by the concept of using referrals as both a strategy and a tactic at the same time – which is pretty unusual. It’s a strategy because it sets up a goal with each customer to exceed expectations in a way that will cause them to tell others. As a solopreneur, if you adopt that strategy it forces a level of intellectual honesty that helps you make lots of decisions along the way by asking yourself, “Is this good enough that my client would want to tell a friend?” But it’s using this concept as a tactic that made the biggest difference for me.

I outlined this passage in your book: “…your lead-conversion process must contain referral generation as part of the deal: ‘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.” That seemed like a really powerful sales tactic to me. It’s better than a money back guarantee, which puts the focus on failure. This approach demonstrates to the customer that you have a goal that is beyond siphoning money from them.

And so I immediately put that to use last September. I’ve just launched a new inbound marketing consulting business, which means that I didn’t really have any reference-able accounts at the time (just some non-profit volunteer work). As I sat in a meeting with the company’s leadership I was open with the fact that I was just getting this business started and while they appreciated the candor, they were also obviously concerned. That’s when I told them that my primary goal in this project wasn’t to collect a paycheck; it was to exceed expectations to a point where they would be happy to introduce me to three others who would like to achieve the same results. I wish the meeting was being recorded because I immediately detected an emotional shift in the room from concern to genuine excitement. The COO quickly replied, “Oh yeah, I can think of five clients right off the top of my head that we could refer to you. Nothing would make me happier!” I’m convinced that was one of two key tactics that landed me the account.

Your book contained lots of other great tactics that I’m also trying to implement but this one, in my opinion, had the biggest “bang for the buck.” So thanks!

Best Regards,
Jon DiPietro

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John Jantsch

John Jantsch is a marketing consultant, speaker and author of Duct Tape Marketing, Duct Tape Selling, The Commitment Engine and The Referral Engine and the founder of the Duct Tape Marketing Consultant Network.
  • David Lelong

    I completely agree. The more you can incorporate asking for referrals into your business development process, the more successful you will be. Referrals must be both a strategy and a tactic that are embraced by as many people in the organization as possible.

    • ducttape

      Asking become 2nd nature when the experience has people talking anyway.

  • Linda Coles @ Blue Banana 20

    It is a fantastic book and my copy has been passed around so much, I don’t know where it is any more. Give it back would you!

    • ducttape

      Hey Linda, sounds like you need to get the Kindle version too!

  • Tisa

    Like this idea!

  • Chris Bma

    Hi John – I am on my second listen to the T.R.E. audio book – love it. I took this blog post and like your subject, created a tactic. As of a few minutes ago, my CRM will now email/fax/mail this message 5 days after I close a sales, in a very large font…

    RE: results worth sharing

    Hi first_name – I want earning your REFERRALS to be a part of our successful relationship.

    I find that the goal of…providing service and results that are so good that you will want to refer BMA to your peers…motivates me to ask myself each day…

    “Is this good enough that my client would want to tell a friend?”

    Based on the success and feedback from our clients (shared here: ) I believe that you are going to be so satisfied with our service that after the project is complete and we have confirmed you received excellent results, you’ll be willing to share your success and introduce me to three other non-competing business that you know who might need the kind of results you experienced.

    Thanks and please think about who you might refer when you experience great results.

    Thanks for the inspiration!

  • Chris Cranston

    John, I’m an independent contractor for many years with a large direct selling company that manufactures high value, consumer products. Like every other company in the industry, newbies start out with the tried and “not so true anymore” strategy of making a list of 100 people from friends, family and associates. Then they get on the phone, and ask for appointments to present the products and in some cases get involved in their business. You told us in TRE, that this outbound marketing approach is pretty much the approach that 90% of all insurance companies use. As far as I know, it’s also the approach that 100% of direct selling companies use.

    I’m not sure how big the offline insurance business is in the United States. I know it has to be huge. And according to the Direct Selling Association as recently as 2009, direct selling companies did over $28 billion in sales with 16 million people involved. That’s just in the U.s! So this isn’t some little niche industry. And again, everybody starts with their list.

    You also told us how a large insurance carrier hired you as a consultant to help design a marketing system for their new agents, “My advice for this company was this. Have your new agents make the same list. But instead of pitching them on insurance, introduce them to other businesses, services, and opportunities. In fact, I suggested that they spend the first six months of this new program doing nothing but connecting their friends family, and network members in ways that helped them get more of what they were lacking – no selling allowed… focus simply on making referrals, but do it and people will find you”.

    I can tell you I won’t be able to change the established training system of the company I work with. New recruits are still going be making calls to their warm market looking for customers and business partners when they start. But for those prospects that say no to the products and opportunity on the first go-around, I don’t see why I can’t tweak the strategy, which is pretty much non-existent at that point, and teach putting them into a drip system introducing them to other “businesses, services, and opportunities” in the local area. Same for cold prospects, why not put them into a system that lowers sales resistance by establishing trust and demonstrates expertise first? Focus on deepening the relationships and earning referrals. A big added benefit: Think about what it would do for customer retention once a customer, satisfied with the products and services, also started receiving the love.

    So I think the old outbound “churn em and burn em” strategy could definitely use some tweaking. But it’s the tactics that baffle me.I’ve read your TRE book and even listened to the Amazon Audible version. No I haven’t read the Kindle version. Although my son has a Kindle, maybe he’ll lend it to me.

    First of all the system has to be s.i.m.p.l.e., low cost and duplicable. In the direct selling arena, we work with people that want to make an extra $1,000 a month. Some want to make a lot more but the system has to be designed for the part-timer. And it has to be cookie cutter. Think mini-franchise.

    I’m thinking about teaching everyone how to set up a simple blog to use with the social media sites, and to use an autoresponder like Constant Contact or an autoresponder with direct mail capability like SendPepper. I would also set up a private, member’s only training and social media site for business partners to teach and share marketing information, and strengthen relationships.

    However, I’m confused about the content that gets sent out to prospects and customers? I certainly don’t want to be in the selling mode, and we can’t use any of our company’s brand names anyway. (It’s their way of protecting themselves.)

    You mention introducing prospects to “other businesses, services and opportunities” to deepen relationships. That makes total sense. But how is anyone supposed to know which content will interest prospects, which local businesses, services and opportunities? How do we know what the prospects are lacking? Where do we get this content? Could we keep an eye out for consumer deals like those offered by Groupon? I’m thinking a little survey with categories of interest that prospects can check off?

    I’m sure that if more people in the direct selling industry read your book, there are potentially many, many people like me who would need answers to these questions.

    • ducttape

      Chris I do hear from a lot of folks in the direct selling business that have found the book helpful. I think the inbound approach is very powerful, but as you mention part time makes it harder to work. One challenge that marketers in your industry will continue to face, making the slower education route even more work, is the notion that direct selling companies have a reputation that turns both buyers and would be distributors off.

      • Chris Cranston

        I know, and unfortunately in many cases that reputation is deserved. My company tries to distance themselves from that and they do a pretty good job. It can be a battle, but they have had positive growth through the years for over 20 years even during the recession, so they’re doing something right. Given that, what about the issue of content to send to prospects and customers?