One of the reasons I wrote The Referral Engine is because some opinions and perceptions from business owners and marketers about referrals in business didn’t make sense to me – and they still don’t really.

I conducted a poll of my readers consisting of six questions that I think are relevant in the consideration of referral strategies and tactics and I find the answers both confusing and dripping with opportunity.

Here are the questions and my observations

1) What percentage of your leads would you estimate comes by way of word of mouth or referral?

Over 55% said that more than 50% of their business came by this method. Not surprising really as this is what I’ve heard for years and speaks to the power of referrals as a business building strategy. 15.2% said over 90% of their business was through referral. So, what about you? Where does your business come from? Do you do anything to actively create referral opportunities?

2) Do you use any method to educate your referral sources about your business?

Less than half answered yes to this question. The only complaint I ever hear from people on this subject is that they often receive the wrong kind of referrals when they ask. First you’ve got to understand what the right kind of referral, ideal referral, is for your business and then you’ve got to help your referral sources understand how they would spot your ideal customer – and a few other things as well.

3) How many referrals have you personally made in the last 30 days?

70% of respondents claimed they had made 1-5 referrals. 5% had made over 10 referrals in the last 30 days. Making referrals is simply the flip side of receiving them and if you’re not actively making referrals you are probably limiting your ability to grow your business through referrals. One of the things that every business needs to do is build a dream team of “best of class” providers so that when their customers need products and services beyond what they sell, they can refer a member of their select team. This is how you become the go to person for your clients and it’s the first step in building a referral network platform. (See my Make a Referral Monday idea.)

4) What’s the number one consideration you make when giving a referral?

I had a list of 5-6 answers for people to choose from but “I trust they will do a good job” came in with 66% and “they provided me with a great experience” gobbled up the rest. Trust is always the most significant factor in a person’s willingness to refer, but a great experience is what gets them talking – you’ve got to have both.

5) Has social media use changed the way you generate referrals?

Only 28% said yes definitely social media changed referral generation and 21% said not at all. I think this is an area of great opportunity. So many people still look at social tools and social behavior as a way to get in front of more prospects. I think the first place to install a set of socially charged processes is with your existing customers and network. Do that and you will build deeper relationships and create engagement with those you meet much quicker than relying solely on offline methods. The next time your meet someone at an event connect with them online too.

6) Do you actively seek strategic referral partnerships with other businesses?

Only 14% said they had a formal partner program while 44% said not at all or wish we did more. In my mind this is one of the most exciting opportunities going for marketers. If you “get it” – you’re producing content that educates, you’re using social media to get closer to your customers and you’re fusing online and offline tools to create a better customer experience, then recruit your team of providers and start showing them how you can market each other. Do this and you’ll never have to lead generate again. (This idea is covered in great detail in The Referral Engine.)

So, what about you? Where do you fall in this list of questions?

The first step to getting more referrals is to be more referable. No matter what you do to motivate your referral sources if they don’t trust you’ll do a good job, game over. But, even if you are highly referable there are things you can do to motivate your customers to willingly participate in your referral system more fully by simply adding a few creative ideas that spark their participation.

Over the years I’ve seen hundreds of ways that businesses from all industries have approached this idea and, a bit like a squirrel collects nuts, I’ve collected dozens of them and put them in my new book The Referral Engine – Teaching Your Business to Market Itself. Below are a few of those nuggets.

Heating and air conditioning contractor—During the sales process they used testimonial letters from satisfied clients and then asked the clients if they would be willing to provide a similar letter if everything worked out as promised. The customers and technician agreed on a quoted price, the technician completed the work, and then before collecting payment, offered an additional fifty-dollar referral fee if the clients wrote a letter on the spot. It worked every time.

Financial planner—Created his very own referral and lead network by sending a letter to ten other professionals whom he had worked with and felt comfortable referring business to. This letter informed them that he was creating a unique referral network of one hundred of the area’s top professional services providers and was inviting them to become a member, but that he needed them to recommend ten others who should belong to this exclusive group. He then created a resource directory and Web site that featured all one hundred professionals. The entire group promoted the directory and Web site and referred business to each other. As a result, other professionals begged to be allowed into the group. The strategy was so powerful that many of network members did no other form of marketing.

Software training company—Partnered with complementary businesses to provide training classes. A local print shop received all kinds of very poorly designed business cards, brochures, letterhead, etc. It partnered with a computer training company to offer its customers graphic design classes. Eventually they expanded it to marketing, Web design, and specific software applications. The key is to look for businesses where you can offer a natural extension of their product or service.

Attorney—Sponsored online teleseminars and invited well-known authors and speakers by allowing them to pitch their books or other products. Targeted clients lined up to hear the prominent speaker and provided their names and e-mail addresses to get on the free call. The teleseminars became so popular that the attorney recorded each call and created an entire library of products that he used for other marketing efforts. By sponsoring the well-known authors, the attorney created a very high-profile referral network.

Remodeling contractor—After this upper-end remodeling contractor finished a project, he offered to throw an open house party for friends and neighbors. The homeowner invited everyone to “come see what all the fuss was about” and see the new home. The remodeling contractor made a very small presentation and then passed out cards. This worked particularly well when he added a cigar tasting, a wine tasting, and a golf demonstration to the event. Of course, he also took photos of the homeowners enjoying their new home addition and mailed it around the neighborhood.

What creative referral ideas have you witnessed or participated in yourself?

Image credit: AchimH

My new book, The Referral Engine – Teaching Your Business to Market Itself, ships next week so I thought I would share some of the key points via a slide show. Hope you grab something tweetable and, well, consider buying the book too – links to buy – Barnes & Noble, Amazon, 800-CEO-READ or Indie Bound

Lots of info at referralenginebook.com – and thanks.