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Referrals: You’ve got to have a System

Introduction

Ian Brodie

Ian Brodie

Ian Brodie teaches consultants, coaches and other professionals to attract and win their ideal clients by becoming seen as authorities in their field.


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Business Development Strategy

Referrals: You’ve got to have a System

on .

Referral PartnershipsWe all know that referrals can be the most powerful and profitable source of new clients. Yet most of us find that we’re simply not generating enough referrals of a high enough quality to reach our practice growth objectives.

What's the problem here? Are we mistaken in our assumption that referrals are such an effective business development method? Or is it an execution issue – we're simply not going about it in the right way?

For most professionals it's a bit of both.

While all the evidence highlights that our clients rely on referrals as their most trusted source of information on new suppliers; we've got to remember that not all referrals are created equal.

Unfortunately, some referrals can be little better than random cold calls. You get the name and number of someone who may or may not need our services, may or may not be able to afford them, and may or may not see the referrer as a credible and trusted source.

So it's our ability as professionals to work with our clients and partners to deliver the quality – not just the quantity – of referrals that will make all the difference to our success with them.

Do Referrals Work?

“Referrals from Colleagues” and “Referrals from Other Service Providers” were identified as the #1 and #2 method used by buyers of professional services to identify and learn more about providers in the 2009 RainToday.com Benchmarking Study “How Clients Buy”.

Because of the complex and intangible nature of professional services, buyers look for help to assess two critical criteria for selection:

  • “Can the provider do the job?”, and
  • “Can I work with them?”

They take clues from their personal interactions with the providers (at seminars, presentations and sales meetings) and from the experiences of people they know and trust.

And despite the increasing prevalence of online “relationships”, the people they turn to for recommendations are their colleagues and other service providers they have worked closely with. In other words: people whose judgement they respect.

For infrequent or “distress” purchases which are bought because of an immediate or unexpected need (for example, many legal and consulting services) the reliance on trusted third parties is even bigger.

Buyers won't invest in building a relationship up front with a provider of services they don't know they'll ever need. So instead, they rely heavily on the opinions of those they trust with experience themselves.

So do referrals work? The answer is a resounding “Yes” – if done correctly.

You've Got to Have a System

In his classic work Creating Rainmakers, Ford Harding highlights that although successful business developers are very diverse in terms of background, personality, style and approach – they all share one common factor: <u>they all have a “system” for generating business</u>.

That system may be hugely different between Rainmakers, with one relying on networking, another on cold calling, another on writing and speaking.

But all of the successful Rainmakers had developed a method which <u>worked for them</u> which they could employ repeatedly and effectively without having to think from scratch of what to do.

When needed, they were able to “switch on” their system and carry out the steps which would bring them more business.

In contrast, less effective business developers either tried to “wing it”, or had to spend so much time reinventing a system – gathering contact details, developing a script, identifying networking meetings, or writing an article – that the opportunity was lost.

It's the same with referrals. Although we all know how powerful referrals can be, how many of us take a systematic approach to generating them?

Not many in my experience.

Professional firms wouldn't dream of investing marketing budgets and non-billable time into advertising, speaking campaigns, seminars, website development or thought leadership without a thorough analysis and plan for how that investment would pay off.

Good marketing plans identify target clients for each approach, refine the firm's positioning and specify the messaging to be used.

They identify clear objectives for each area and the sequence of activities and critical success factors necessary to achieve those objectives. They carefully allocate non-billable hours and budget to each activity to try to maximise the overall returns.

Yet when it comes to referrals – potentially the most powerful approach of all – most firms simply leave it to chance.

At best, they encourage and remind partners to “ask for referrals”. But no thought is put into which clients to ask, how to ask, what to ask for, how to “earn” a referral, etc. At worst referrals are simply not mentioned at all.

These firms are hoping that their good work will result in positive word of mouth and spontaneous referrals. Sadly, research by TARP in the US has highlighted that referrals simply don't happen spontaneously.

When it comes to dissatisfaction:

  • An unhappy customer will share their bad experience with an average of 12 other people (in my case, when it comes to bad customer service at John Lewis, I share it with thousands via this blog)
  • Each of those 12 people will in turn mention it to 6 others.

Unfortunately, when it comes to a satisfied customer:

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

Essentially, without further proactive work from the service provider, positive “word of mouth” ends with a few friends and colleagues of the satisfied customer.

So professionals and their firms who want to get more from referrals need to get serious in their approach.

They need to develop and implement a plan to proactively address all the key elements which influence both the number and the quality of referrals received.

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Comments

Ian Brodie

Ian Brodie

http://www.ianbrodie.com

Ian Brodie teaches consultants, coaches and other professionals to attract and win their ideal clients by becoming seen as authorities in their field.

Comments
  • user

    AUTHOR Liz

    Posted on 5:26 am June 18, 2009.

    This is something I find quite odd in our culture. Our reluctance to spread the word!

    Whenever, I have a great experience, I want the world to know about it and especially when this involves someone or people. I will tell anyone that listens. However, I have become a bit more selective recently and tend to play the waiting game just to be sure that before I refer or write about someone on my blog, that I have done lots of research and I really trust the individual who's services or brand I'm referring on.

    Thank you for your informative and very helpful blog Ian.

    Kind regards & Many blessings

    always
    Liz.x
    :-)

    Word of mouth is by far the best kind of referral.

  • user

    AUTHOR Sonja Jefferson

    Posted on 1:26 pm June 18, 2009.

    Hi Ian,

    Good article. I like the idea of a system.

    Any ideas what kind of systems you can put in place to generate more referrals?

    Ideas that come into my head are:
    – proactively asking for referrals when you ask your clients for feedback on each project
    – sending content such as whitepapers or relevant articles to your contacts and asking them to send it on and refer you

    Are these the kind of systems you are referring to? Would love to hear your view.

    Sonja

  • user

    AUTHOR ianbrodie

    Posted on 12:28 pm June 18, 2009.

    Many thanks for your thoughtful comment Liz,

    I do think it's really important as you say to make sure you really trust a person you refer. After all, it's your reputation that's on the line. That's why if you want a referral you must abosutely convice the referrer that you'll do a great job for the person they're referrign to. Sometimes we worry about how we should “motivate” them to refer us – but the primary issue is – “how can we ensure they trust us to do a good job?”

    Ian

  • user

    AUTHOR ianbrodie

    Posted on 4:12 pm June 18, 2009.

    Indeed – that's the kind of thing I'm thinking about Sonja.

    I'll be posting more ideas soon, but the basic principle is that you need something you've already thought through and planned. Rather than the route most people take of asking for referrals ad hoc, you need to think through the factors that will make it more likely for you to get a strong referral and put those things in place. Then you need to “systematise” those things so that you can do them regularly and repeatedly without having to invent things from scratch each time.

    Ian

  • user

    AUTHOR Emily

    Posted on 7:03 am May 13, 2012.

    I agree with these points, but what do you recommend when you ask for a referral from someone who has had a positive experience with your product but does not give one? This is really common with a place like Facebook, people have to remember to post the comments.

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