Why You Might Suck at Referrals – And it’s Costing You Big Bucks!
Hands down, referrals are the fastest, cheapest, and easiest way to grow your business. The sales cycle is shorter, prospects show up ready to buy, and you don’t have to convince someone that you are credible. The referrer has graciously done all of this work for you. Referrals are the foundation of your growth and expansion. However, if you are not a good receiver of referrals, this source of effortless business leads will dry up like a lawn in late August.
When I was in the corporate world working for IBM as a consultant (pre-Keurig days), there was a sign in the break room of one of my clients. It read …’There are two types of people in this world – those that Make Coffee and those that Take Coffee. Which are you?’
You were either the person who took the last cup of coffee and made another pot, or the person who realized there was no coffee, walked out of the room with an empty cup, and planned to return after someone else made more coffee. No one ever switched teams – kind of like high school where the jocks never hung out with the geeks.
Referrals are like coffee - You are either a Maker or a Taker
I absolutely love giving referrals that connect people and leads to new business for them. It feels good to facilitate introductions and help someone grow his company with qualified leads. I’m such a believer in the power of referrals that I’ve allocated 80% of my marketing budget to referral marketing activities this year. (Yes, I feel all of you social media experts giving me the stink eye and cringing right now. But, read on…).
Since the first of this year, I provided 8 business owners with referrals which resulted in over $17,500 combined new revenue for these companies. Not bad for just one month. (Hmm, I bet you are thinking about becoming part of my network right now, huh). I’m thrilled to see the results of these connections since it’s a win-win for everyone. The prospect finds the ideal company to fix his problem quickly, and a company gets a new client with virtually no effort or expense. Bam!
Here’s the sucky part. Only 2, just 2, of those eight business owners reached out to thank me for making the introduction. These 2 wonderful business owners took the time to follow up, share how the referral was progressing, and express their gratitude and appreciation that I thought of them for this business. Did I mention it was just 2? The rest of the business owners never showed any appreciation. Unfortunately, this is too often the norm.
When I was in BNI, a group where you are supposed to refer business, I called up someone in my group with a referral. The lifetime value of this potential client was well over $5,000. His response? ‘Okay’. Just one word – okay. No ‘thank you’. No ‘I’ll let you know how this turns out’. No ‘and who is a good referral for you, Nancy?’ After the ‘okay’, I never heard from him again.
Think I ever sent that person another referral? Never. Week after week I’d see him at the BNI meetings, yet I gave my next two referrals to someone else who was over the top grateful.
Wonder if he realized that ‘okay’ cost him $10K in potential new business.
Then there’s the woman who I referred two top clients to last year. I didn’t hear from her on how it was going, so I sent a follow-up email to check in. She responded, ‘Things are great, and I have some capacity so you can send more clients to me.” Can we say Coffee Taker? There wasn’t the slightest hint of gratitude or reciprocity. No more referrals for her either.
Getting a referral is a precious gift – like someone handed you a robin-egg-blue gift box from Tiffany’s. You untie the bow knowing that something valuable is inside. You realize and appreciate that someone took the time to hand-select (aka choose YOU) for this business referral present. How would your business results be different if you had a room filled with these Tiffany-like referral gifts?
If you want to be on the receiving end of constant referrals so you can grow your business with ease, you must ensure you are top of mind - and get picked first every single time someone meets a prospect who needs what you offer. You must make it easy and fun for people to refer you. For those of you like me, you probably know at least 5 people in every industry, if not more. Those people also probably know 5 people that do what you do. It’s a very crowded world, so constant referrals are the ultimate game changer.
Here’s my exact system to stand out (and avoid being a sucky referral):
1) Say Thank You
Seems obvious, right? Yet, this is so often overlooked in business. We get busy, time goes by, and we forgot. There’s no statute of limitation on telling someone thank you. Sending a simple email works, but mailing a handwritten thank you card is even better. Hint: add comments to the contact’s record in your CRM so you can track who introduced you. Sometimes people don’t buy immediately, so it’s good to have detailed notes in your CRM so you can thank the referrer down the road when his referral invests with you.
2) Keep the Referrer in the Loop
Take a moment to tell your referrer how things are progressing with their referral (if allowed in your industry). Did you set up a coffee, send a proposal, or sign the deal? A short email status is greatly appreciated. This lets the referrer know you are on top of things and treating the referral well. If the referral is not a fit, tell the referrer so she can adjust and send more qualified people next time. Don’t make the referrer wonder what’s going on – that’s just not cool.
3) Be Excellent at What You Do
When someone refers business your way, he is also putting his own reputation on the line. When you do well, he looks good. When you mess up and drop the ball, it reflects poorly on him. I’ve sent business to people before who never followed up with my referral. Or they met with the prospect, committed to sending a proposal, and never did. When this gets back to me, it’s embarrassing and hurts my credibility. I’ve crossed numerous people off my referral list because they are sloppy, disorganized, or didn’t follow through. Now, I only send referrals to people who are excellent at what they do.
4) Send THEM a Referral
Once again, so obvious, right? While referring isn’t solely about reciprocity – I’ll only send you business if you send me business – it’s great to make this a win-win when possible. Reciprocity is easier when you surround yourself with Coffee Makers, not Coffee Takers. The best referrers want to help you because you helped them. The easiest way to generate lots of referrals is by building a circle of Power Partners who serve your same clientele, but in a non-competing way. Astute Power Powers will quickly see gaps in their client’s business that can be solved by your product – and then proactively make the referral introduction to you.
5) Teach People How to Easily Refer You
If something is time consuming or complicated, people don’t do it. Referring you should be easy and take very little time and effort. I recently created a simple Referral Guide based on a template I received from a friend. In a few pages, I describe who is an ideal client for me, and what to watch, listen, and say to determine if someone might be a good referral for me. There’s also a short overview of What I Do and Why Me. The guide includes a short email introduction which can be sent to my referee’s prospect in seconds. This guide has dramatically increased the number of people who are referred to me because I made it simple and easy.
6) Bonus Tip
One of my mentors once told me, if someone sends you a referral that leads to new business, spend some money to thank them. The gift can be simple, inexpensive, and relevant to the size and number of referrals. Flower, chocolates, or even a gift card are perfect. Sending a small token of your appreciation will make you stand out as a true professional (and keep you top of mind for future referrals.)
Everything in business, including getting a constant stream of qualified referrals, is a system. When a proven process is followed, the results are predictable and consistent. If you are struggling to manage rapid growth due to lack of systems, let’s have a conversation to see if/how I can assist. I help a lot of people add systems in 30 days or less, so they can regain up to 10 weeks of free time a year. (Yes, I track that metric and have the case studies to back up that stat!) You can reach me at (303) 697-0736 or [email protected].
Please share and leave a comment about these ideas.