Growth By Referrals

Almost every business owner I meet has the same (or similar) answer to the question of what is their best marketing strategy?  In other words, where do most of their leads come from?  They all say some version of Referrals or “Word of Mouth”.  This is a great answer, yet for most of them, they are barely tapping into the power of referral strategies. One of the biggest opportunities when it comes to referrals is that creating a system for them can increase both the quantity and the quality of your referrals, and the conversion rate from lead to client can be improved as well!

The other benefit of using formal referral strategies is that referral marketing is great in any economy, so with all of the uncertainty right now, getting great at your referral systems is a game changer.  While there are eleven formal types of referral approaches that I know of, you only need to master a handful to really grow your business in any economy.  Here are three of my favorite referral strategies.

Strategic Alliances

This is where two or more businesses come together to accomplish more for each other than either could do on their own.  These relationships take time to develop, yet are often the most profitable relationships you will ever have.  It all starts with knowing who your target market is, with as much detail as possible. Knowing this is key to the success of ALL of your marketing efforts, so it is worth spending the time. 

Some examples of target market are: client type (B2B or B2C), location, age, income/revenue size, number of employees (for B2B), industry and mindset (are they in growth mode or just maintaining).

The next step is to identify the other businesses that you know or believe to serve the same target market.  Once you have this list, now apply a couple of additional criteria to narrow down who you need to meet.  First, do you believe that you can refer business to them – do you have something to offer them?  Second, are they actively growing their businesses to the same extent you are growing yours?  You can probably think of many seemingly ideal sources of referrals, but if they don’t want anything from you, if they aren’t also in growth mode, they will have little incentive to take the risk of referring to you. 

This is not a short term strategy, it takes time to develop a deep enough relationship where you Know, Like and Trust each other before the quality referrals start flowing.  Put in the time to earn the right to ask for introductions.  Then you will have to teach each other how to introduce the other to their client base.

Open and Closed Networking Groups

There are dozens of different networking groups out there, from the Chambers to the many BNI chapters in the world to the social business networks that are often a mix of business and social networks.  They all work differently, and they all work for anyone willing to work them.  Remember – this is netWORKING, not netDRINKing or netSOCIALIZING if it is referrals you want. 

The first key to maximizing networking groups is to understand the nature of the group you are in.  You have to know if it is open (anyone can attend, including multiple people in the same industry) or closed (only one business per classification to participate).  They are both valuable, but they might require a different level of participation. 

Closed networking groups like BNI are very powerful, if you are willing to do the work to earn peoples referrals.  Even though you might be the only painter in the group, the members might all know and refer to other painters that they have used before they met you.  You need to take the time to meet every member, learn about their business and how you can help them.  You need to educate them on how you are different, why they should refer to you rather than every other painter in town.  Never assume referrals, do the work to earn them.

Open networking groups like Chambers and many other self-run groups that don’t like the limits of Closed groups can also be very powerful.  The keys to these are similar to the keys to closed groups, and just might take a little more time due to your competition being in the room and the fact that there might be different attendees every meeting.

The last key to Networking groups to make them work is to realize that you don’t need 100% of the members/attendees to refer business to you.  Try to find the 3-5 people who are the most likely (they serve or know the same target market as you) and put in the time building relationships with them.  They will need to Know, Like, and Trust you in order to be comfortable referring to you.

Host Beneficiaries

This referral strategy is where you deliver a service of high value to your partners client base.  Your partner markets your services directly to their base and introduce you as a valued business partner.  For example, you offer a high value training workshop to your banker’s clients, which they market directly to their client base as a value-added service for being loyal clients of the bank. 

One of the biggest benefits in addition to the obvious introductions, is that you are presented to your partner’s client base as the “outside expert”, which always implies a high value and high trust.  Think of what you could offer to the clients of other businesses in your target market that directly benefit their clients and makes your partner look good.  This win-win approach is vital to making Host Bens effective for your partner and their clients.

In Conclusion – as you can see, there are common threads between Know, Like, and Trust and earning the right to ask for referrals. One other tip for successful referrals is to have a complete system for tracking them, communicating with your referral partner before and after, and a system to thank your partners for their referrals.

If you’d like to learn more about how to get higher quality referrals for your business, request a strategy session with one of our coaches.  We will help you identify the top 2-3 referral strategies you should be implementing right now based on your goals.   

Author: Mark McNulty, Business Coach in Louisville, KY

Growth By Referrals