Entries from March 2009 ↓

In my small business referral seminars, I sometimes ask the participants of their opinion about the best way to increase the number of referrals they get in their business. Invariably, there are some business owners in the audience who say that they “just need to do a good job” and the positive word of mouth will take care of itself.

Alas, nothing can be further from the truth.

Every successful business that I have studied and that generates a lot of referrals, has a systematic, well-thought-out referral process in place. Referrals don’t “just happen”! No matter how great a job you do as a business or a professional, it is never enough to attract a sufficient number of quality referrals.

The sad truth is, people take good service and good experience for granted. They are much more likely to tell their friends about their bad experience than good experience.

There is a psychological reason for that: Most of us humans are preoccupied with negative thoughts. We all like to vent. And given a chance, we do.

Which is confirmed by a customer behavior research company called TARP, based in Arlington, Virginia. Here’s what TARP research has to say on this:

• A happy customer may share their experience with just a few friends;
• These friends will not remember much and will not share that information with anyone at all.

And that’s it. The message stops there (unless you use deliberately designed referral tools to carry it down the channel) and you get no new business.

Now let’s imagine you messed up. Here’s what’s going to happen to you, according to TARP:

• A disgruntled customer will share their bad experience with the average of 12 other people;
• Each of those 12 people will in turn mention it to 6 others

Let’s do the math: We are talking about (1 person who has had bad experience) + (12 people that person has talked to) + (12 groups * 6 people they have contacted) = 85 people will no longer think very highly of your business or service just because of a little mess-up!

Bad news certainly travels fast.

Here’s what this all means to you and your business:

• Doing a good job is still important (as they say, “you can’t brand crap”). However, it’s not enough to attract a reliable stream of referrals.
• To get more referrals, you need to build and implement a referral system that you can control and rely on (the type of the system we teach at the Small Business Referral Seminar).
• When you make a mistake, you need to go out of your way to admit your mistake, apologize, and make it right again for customer. For example, you can send a nice “apology” greeting card to them, possibly with a small gift. Chances are, this person will become one of the most loyal of your customers (sometimes they will become a bigger supporter of your business than those customers who have never seen you make a mistake).

So doing a good job is important to avoid the negative word of mouth. However, doing a good job is never enough to get all the referrals that you need and that you can handle. That task is only accomplished by creating a systematic referral process.

To some people, the “Swap & Drop” referral method described in the previous article may have read like a lesson in shameless manipulation. After all, it looks like what I am doing is this: Asking people to call me back because I might have a referral for them and proceeding to sell them my services.

Did you think that was a little manipulative?

C’mon, admit it! Did you?

If so, you completely missed the point.

If you were to try to manipulate your contacts using this Swap & Drop approach (”swap” your business cards with them, then “drop” a special kind of a greeting card in the mail), you wouldn’t be able to get far. People are quite savvy and can see your plot right through.

The reason this method worked for me was because of what I call The Referral Intent. Simply put, I really did want to find out more about them and find a way to help them.

Zig Ziglar says that you can have anything you want in life as long as you can figure out a way to help other people get what they want.

Well, that is absolutely true.

Business owners and professionals attending networking meetings want referrals. This is obvious: They all do. That’s why they invest their time and money to go there. And most of them leave these networking meetings disappointed by the lack of results.

If you can find a way to plug them into your own network — however small that network may be at the moment — you will start building a relationship of trust, which will eventually result in more referrals for you. And how can you refer them if you don’t know that much about them or their business? That’s why it’s critical that you meet with them in person or on the phone and get to know them.

Alas, the technique that I gave you last time can be used to manipulate people. And some lowly life form of a salesperson may try that only to discover that this approach backfires and ruins their business — and rightly so.

I suggest you use it to add value to your network.

It’s your intent that defines the outcome.

I gave you the tool. Now it’s up to you to decide how you are going to apply it.