Are You Referral Ready?

Most companies can tell you who their top salespeople are, how much they sold, and how they ranked when compared to the others. Referrals from your customers can be harder to track, but it doesn’t take a sophisticated spreadsheet to identify and celebrate the customers that have contributed the most to your overall growth. Thanking customers is one thing; promoting them is thanks in action.

For years “customer service” has been used to describe something given TO the customer by the company. Very few describe customer service as something that gets done FOR the customer by the company. This subtle yet dynamic shift is more powerful than profit, and companies that ignore it stand to lose market share to those that embrace and apply it as policy.

Identify your top three referral-generating customers. Brainstorm ways in which you can promote or support their efforts, such as contributing to their favorite charity, featuring them in your newsletter, or hanging their picture in the “hall of fame” in the lobby. Seek out and celebrate other top producers as a regular part of your marketing strategy.

Your top-referring customers have a name, a face, and an appreciation for a long-term relationship. By honoring that relationship, you inherently strengthen their loyalty and build social capital. When you make the effort to reach out and acknowledge people, a little goodwill goes all the way to the bottom line.

Customer loyalty expert Fred Reichheld uses what he calls the “net promoter score” to measure the difference between customers who promote or detract from company growth via word of mouth. The core of his work challenges companies to ask the customers one simple question: “Would you recommend us to a friend?” How much more profitable would your company be if your net promoter score was the highest in the industry?

Bad profit is earned at the expense of customer relationships, such as whenever a customer feels misled, when companies save money by delivering a lousy customer experience, or when salespeople push overpriced or inappropriate products. Bad profit does not show up as such on a balance sheet, but it has a dramatic negative effect on company growth.

Choose six random customers: a 1-month customer, a 3-month customer, a 6-month customer, a 9-month customer, a 1-year customer, and a more than 1-year customer. Offer an incentive for the customer to respond in writing (either online or via snail mail) to the question: “Would you recommend us to a friend?” Create a schedule for maintaining regular contact with current and future customers.

By making customer loyalty a priority, referrals and repeat sales and profit take care of themselves. When you have a mechanism for differentiating between and measuring good profit from bad, you are building a foundation for the kind of growth that the bottom line alone will not fully reveal.

Your referral sources are a marketing team that may or may not be doing business with each other. If they are, you are building a virtual company of connected resources to drive consistent referral business to each other. Together, your ability to recruit new team members should benefit everyone as the links to related product and services are added to the chain.

Any time you refer related business to someone who is not officially on the team, you are missing an important piece of the puzzle. Their products and services might allow you to serve your clients better, but you do not gain the benefit of sharing networks and resources like you would if a more formal arrangement were in place. Even if his or her ability to refer to you is minimal, someone else on the team could benefit.

List your referral sources and analyze what other types of businesses would be great additions based either on their ability to refer or be referred to other members of the team. Discuss the options with your current referral sources and be very selective about who you invite to an informal meeting. Explain to them how you like to do business by referral, and evaluate how they might be able to contribute to the team. Pay special attention to non-competitive businesses that tend to be serving the same types of clients that you do.

Teamwork has been said to divide the effort while multiplying the rewards. When you introduce a new team member, you also introduce that team member’s set of contacts and the clients they servce. If they serve the same kind of clients as you, you have captured a whole new audience while also expanding the extent to which you can serve your own.

If the purpose of networking is to serve other people, then that includes customers as well. They come to you for a specific product or service, but obviously they have other needs and things going on in their lives. The more you know about their situation, the greater position you are in to help.

You don’t want to sell one product to one customer one time…you want to sell to them again and again, and have them refer other people as well. You are selling a car to a customer, but that customer is largely responsible for whether you get the opportunity to sell a car to his wife, his brother, his sister, his children, his neighbor, and so on. Relationship selling is built on human connections, not financial transactions.

Make a list of three questions you can ask each of your next 10 customers. The questions can be anything you want, but the answer has to let you know whether they might need the services of someone in your network. Rather than reveal your contact up front, make a follow-up call or send a letter with your contact’s business card.

When you network effectively, you build a team of trusted service providers that you can confidently refer at any time. When you ask questions and learn about your customers, you find out how your network can best serve their needs. When you do both, you position yourself as a well-connected business resource above and beyond whatever you do for a living.

Communicating with your referral sources doesn’t always have to be about referrals. They can serve as true business partners if you ask for their feedback about your products or services, and that feedback can drive any improvements or subsequent promotional programs. A relationship fueled by trust can serve both parties in ways that have nothing to do with referrals.

Referral sources enjoy being insiders to your business and feeling like they can be trusted with privileged information. When you involve them in the strategic decision making process of your business, that trust is increased. During those times when you can’t feed the relationship with referrals, you can strive to feed it with the stuff that referrals made of–trust and shared experience.

Design a brief customer survey and include among its distribution 3-5 of your best referral sources. Schedule time to sit down with each one and review their responses, positive or negative. Use the negative responses to improve the product or service, and use the positive responses as part of a print or web-based marketing campaign. Let the referral source know how the information was used and thank them for their participation.

 When you solicit feedback from your referral sources, several positive things happen. Trusted voices are heard, business partnerships are strengthened, product or service delivery is improved, marketing efforts gain authentic support, and problems are identified and solved before they even start. What looks like a situation that benefits only you really boosts the credibility of your referral sources as well.

Wines for Humanity is a company that offers in-home wine testing parties. They are dedicated to “educating people about the joy of fine wines while raising funds for charity”.  This combination supports consumer research that reports 78% of adults said they’d be more likely to buy a product associated with a cause they care about, and 66% said they’d switch brands to support a cause.

People support causes they think make them better people. It doesn’t have to be a charity. Southwest Airlines rallies their entire company around the idea of  “freedom”. The default cause for any business is profit. Only a deliberate effort will change the emphasis from profit or shareholder value to a cause-driven strategy that consumers can embrace.

What societal issues have the greatest impact on your target customers? Does it make sense for your company to consider teaming up with a local charity to enhance its perception in the community? Which causes are you ready, willing, and able to support for the long-term?  Brainstorm ideas how your company can do a better job of integrating social issues with business strategy. Put one plan into action in the next 90 days.

One of the best ways to win the hearts of customers and build stronger emotional connections with them is through long-term support of a social cause. In the true spirit of  “givers gain”, people who believe in your cause will share your vision and recruit new advocates as well.

A mentor can be part of a valuable source of support for you and your business. Having several mentors is even better. And if you can formalize your mentor team to create a personal Board of Directors, you gain insight that you would not get alone while building outside referral sources who have a vested interest in your success.

 Entrepreneurial types are self-driven to overcome obstacles and business challenges. That drive is important, but groups tend to generate more alternatives and better decisions than individuals can on their own. It is important to know when to enlist outside help, who to ask, and how to stand accountable for working “on” your business as well as “in” your business.

 Identify 3-5 business people who are accomplished in their respective fields. Invite each one to meet once a quarter as a group for lunch. Select people from a cross-section of different industries whose interests do not conflict with yours and whose relationship with you is more defined by professional reputation than friendship. Make sure each meeting is focused on a specific business challenge.

 Rather than waste time struggling with problems outside of your expertise, you can build what some people call a “mastermind group” to help you generate outside points of view and connect you with additional resources. As a byproduct of this arrangement, you are also building a trusted circle of professionals who will hold you accountable, thrive on your success, and refer business to one another.

Everyday the business landscape is shaped by mergers and acquisitions. When a company acquires another company, one of the most valuable assets is the immediate acquisition of new customers. You can create this same dynamic with your referral sources by sharing people in your network who could be of service to them in the future.

 Part of your value as a businessperson is your social capital–who you know and what those people say or do to promote you, your business, your brand, or your reputation. Referral sources thrive on the exchange of that value. When they lose touch with that value, they begin to question the trust and credibility that your relationship was built on.

 Plan a one-on-one meeting with a referral source you hold in particularly high esteem. Ask the referral source to bring along the names of the five most influential people in their network, and agree to do the same. As you review the names, brainstorm how you each might benefit from a personal introduction and the best way to facilitate that introduction.

 What you can do singularly to support a referral source pales in comparison to what you and your network together can accomplish. When you position yourself as a connected business professional, people seek you out as someone who consistently brings value to relationships and leverages social capital to the benefit of those you encounter.

It is not always possible to know where your referrals come from. But when you do, never underestimate the power of saying “Thank you” to reinforce behaviors you want repeated.

Sometimes we take referrals for granted and have the best intentions to thank the referral source as soon as possible. Then another day goes by, and another, and another. Passionate customers might tell you they don’t expect to be rewarded or recognized, but you can never go wrong by acknowledging the gracious act of a referral.

 Make a list of customers that you know have referred business to you over the years. A thank-you in the form of a handwritten card, small personalized gifts, restaurant gift cards, and sometimes even money deepens the emotional connection with your customer. Decide how you are going to thank the people on your list, and make it a point to actually follow through.

 Referrals are presents. Just as it is appropriate to thank someone for a present, it is appropriate to thank the people who put enough trust in you to service other people they care about. When you schedule time to make “thank you” a regular part of the process, you maintain a positive balance of deposits and withdrawals that you can draw upon another day.

Your vendors and suppliers are an important part of your business. You rely on them for specific products and services that keep your operation running smoothly from day to day. They are also an important and often overlooked part of your network.

• If you treat your vendors and suppliers as employees, you get one result. If you treat vendors and suppliers as customers, you get another result. But if you treat vendors and suppliers like the strategic partners that they are, you win an advocate for your business because they know that they stand to gain as your bottom line improves.

In the next week, talk to a few vendors and make sure they know how much you value what they provide. When the time is right, have a meeting with each one to brainstorm ideas on how you can improve your business.

If you build a strategic relationship with your key vendors and suppliers, they will understand that it is in their best interest to help you grow. Now you can benefit from their network and whatever other value they can offer. Working in partnership with others multiplies the effect while minimizing the effort for everyone involved.