Every business needs referrals or networking to allow their business / service / product to grow into a profitable endeavour, but how do you know who will be a good referral? This article discusses the importance of referrals as well building trust in business relationships and a small section on managing referrals on social media.
- The powerful thing when looking at referrals is the Advocacy Components (essentially when someone is talking about you in glowing terms, someone else is talking you or your business up which is way more powerful than if you were to recommend your business personally)
- In typical marketing, you can get results with a success rate of anywhere from 0 to 10% when doing general marketing, advertising and SEO
- Whereas when looking at referrals and word of mouth the success rate is somewhere between 50 and 80% so that’s why referral marketing is just magic
- Another thing to note with the emergence and growth of social media in the last ten years it is a lot easier to be able to put a face out into the e-commerce world which could be designed to look like anything, you don’t know whether a slick website or a slick sort of an email campaign or whatever, really has the credibility behind it you can trust.
- Because of this referral marketing gets stronger and stronger because people want to know who they are dealing with and that they’ve delivered a good experience for other people.
- They want to make fast decisions to do a transaction and they can only make fast decisions when they know the person can be trusted to deliver
- One of the problems associated with not using referrals is exactly this, doing the research to find a reliable business is very time consuming, so by using referrals the whole transaction process is accelerated from the consumers point of view.
- 98% of businesses rely on referrals to generate new business, while only 3% of businesses have a referral strategy in place
What referrals are important for Professional and Personal Services
- The problem with Professional and Personal services is that there is a lot of intangible nature in their product or service
- Its not like a car when you see what the colour is like and feel the quality of the car
- You need to go and engage a professional service person or tradesperson or whatever in the hope that they are going to walk their walk and deliver on what it is that you want. So basically it all comes down to reputation and you trusting that reputation, rather than taking a punt on a slick website or a good-looking business brochure – that’s why referrals are critical to these types of businesses.
Social Media and Referrals
- People will often these days post on Facebook does anyone know a good electrician? Or does anyone know a good gardener?
- Bob noticed that even in his own area there’s a local Facebook group named after his post code with roughly two hundred thousand members and anybody in the community will put up there, I need a good lawnmower person, I need a housekeeper or whatever service they are seeking
- Referrals are important but as Bob said, you’ve got to start with that TRUST base. So, how do you start with that trust base?
- You have to be able to walk the walk, One thing that Bob has discovered through his decades of experience is that he has always honoured his word, delivered on his promises and been completely transparent even in some scenarios where it costed him
- At some points of his career Bob questioned whether living with his core values of being honest and transparent, was really serving him in the long term.
- Bob stuck with his convictions and as he has gotten older he has realised that was a fantastic investment because being able to build your reputation and integrity is at the foundation for building trust
- You can’t long term build trust on a weak foundation. An important thing Bob notes is that young people should pay close attention to this look after your reputation and integrity
- There is a risk when you refer someone to a referral partner – what happens if the referral partner doesn’t follow through or lets the person you referred down?
- One of the best things you can do to manage exposure is to make sure you are doing enough one to one meeting withy your referral partners so you really get to know people.
- Some clues that Bob looks for – if people let you down on their appointments, if they aren’t prepared for their appointments. If they cancel on short notice, if they don’t follow up on their commitments that they have made at the one to one level then they are red flags and they are telling you that’s their default behaviour at a low level, it’s probably going to get worse as the stakes go higher
- So, as an example say Bob is contacting somebody to see if they’d like to come to a BNI meeting because we have an open category. Bob has contacted them or let’s say they’ve already expressed interest to come and they don’t return his phone call. They may not respond on email and this might have gone on three of four times. Then Bob is pretty much done at the end of that because they haven’t shown that they are prepared to acknowledge they are not interested.
- If they demonstrate that sort of behaviour from the outset, Bob has pretty much already determined as to what their reliability is going to be.
- So essentially sit back and observe and see how they behave when they’ve got the choice about how they step up within their integrity. So that’s probably from the other persons point of view.
- If you drop the ball in those little things, you will be pretty much guaranteeing that person is not going to take too much of a risk on you
- So that’s the first step, making sure you’re doing all those little things right and sometimes, not sometimes a lot of times Bob meets people that just don’t understand how significant those little things are.
Four things you need before joining a structured referral network
- You must want to grow your business
- You must be able to grow your business
- You must be referable
- You must be prepared to make the commitment to invest in other people
General Referral Tips
- It all comes down to fundamentals as well, when you say you are going to do something you do it.
- When somebody gives you a referral they are taking a risk for their own reputation when they refer you to a prospect, because if they don’t deliver then you get put into the same kind of rating of the person who doesn’t deliver
- One of the things we have to do is manage the risk because what happens is that when you’re actually developing a referral network, you’re actually taking the combined pool of all of the reputations that you have developed in your referral network and you’re using all of these reputations to leverage your business into another stratosphere if you like in terms of the amount of business you can get as a person versus doing it on your own
- So, if you have ten people who are new in your referral network and each had ten years of experience in business and that was all good experience, they’ve got one hundred years of combined reputation from which you can leverage your business provided you are doing what you say you do and you follow up and enhance their reputation in doing so
- If at any stage you damage that process, you’ve just lost that one hundred years of leverage and you’ve damaged the one hundred years of credibility that they have worked hard to accumulate
- So, it’s a two-edged sword, you need to be very careful about how you actually get into a referral relationship or referral network and how you manage your exposure because it does go both ways
- One of the first things Bob tells new members is if you are going to do a one to one with somebody and the goal is to build your referral relationship, make sure it’s at their place of work to get a gauge of how well they run their operation
- Bob recalls an early experience he had in a BNI chapter few years ago and Bob was doing a one to one with a travel agent at that time it was Bobs first one to one so he wanted to go and see where the prospect did business so he was invited to the agents house, So Bob goes to the house and it was an absolute mess; he was doing renovations, he had painting canvases everywhere, he was in shorts and a paint covered t-shirt, had an office set up out on the back deck with pavements everywhere and Bob was thinking to himself there is no way this is going to work.
- A referral as BNI defines it is when a member has identified somebody who has a need for a particular product or service. They have been able to through their one to ones understand that somebody they’re connected with office’s solution with matches the need and they’ve got permission from the person with the need to be contacted by the person with the solution
- These are the three elements that need to be present before Bob defines it as a referral. Most people actually refer to referrals as leads but BNI doesn’t encourage this though sometimes leads can turn into referrals they don’t bother with them often
- BNI as often looking for people to be aware or understand what sort of needs they are looking for and matching the up with a solution that is often within their referral network.
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