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The Soft White Underbelly of Referral Marketing

This post is a special Make a Referral Week guest post featuring education on the subject of referrals and word of mouth marketing and making 1000 referrals to 1000 small businesses – check it out at Make a Referral Week 2010

Not that I want to be a wet blanket during referral week, but sometimes there’s room for reminders when things are not necessarily all that rosy. I love referrals and referral marketing, and I believe in the cause of referral week. Still, it’s good to keep the full spectrum in the picture. There are some dangers there.

1. Don’t recommend without knowing who you’re recommending

Back in the early days of Palo Alto Software we included a list of business planning consultants on bplans.com, our free business planning resource. The listing was free for users and consultants, and we certainly had no resources to check and validate the information included. So we offered it as a useful resource to some with some obvious buyer beware and check references advisories.

One day eight years ago I got a call from somebody saying a consultant on that list had taken $3,000 from him and never completed a business plan. He was blaming us for listing the consultant. I knew nothing about him and next to nothing about the consultant. Although we had put everything we could on the site to make it clear we were listing, rather than recommending, how do you think I felt? How satisfied do you think our customer was to be told that using somebody on our list was his fault, not ours? Technically, we were right. Commercially, we lost a customer. And we didn’t know the people on the list. Bad move. Business mistake.

Another time I got a similar call from a different customer making almost the same complaint about a different consultant. That second time, unlike the first, I knew that consultant. He had done business planning for an old college friend of mine, and my friend was very happy with the results. He was involved with getting several of our bplans.com sample companies financed. He was a good professional consultant.

So this second time, I called the accused consultant. And he said he’d been trying to give the client back the initial money because he couldn’t stand working with him. The client, my friend said, had been exaggerating the truth in the plan, had “sketchy ethics,” and, in a nutshell, wasn’t somebody he wanted to work with. But the client wouldn’t take the money back, because he wanted the consultant to get him financed, not to give him the money back.

The second story was better than the first, but neither is much fun. We pulled the consultant listings off of bplans.com as a result.

2. Don’t risk dollars for nickels and dimes

The saving grace for us in both of the two stories above was that we weren’t taking any money. That makes a huge difference. When things go bad (and sometimes they do) your situation is way worse if you’ve been taking money for referrals. In that case, maybe you have legal language like disclaimers and all, so you might not be legally liable (I’m not an attorney, I don’t know).

I’m always amazed when I see experts whose time is worth hundreds of dollars per hour getting involved with small shares of add-on products worth a few extra dollars. Does it make sense to stake your professional reputation on what amounts to as much as a free lunch every so often? I don’t think so. I say recommend cleanly, without financial interest, to preserve your credibility as an expert.

3. Don’t call revenue sharing or comarketing referral business

I think this is basic ethics, and doesn’t need saying. Still, especially during referral week, let’s agree that when you get a cut or a commission that’s not a referral. That’s a revenue share or a sale. And it’s not fair to pretend you’re just recommending somebody out of good will or generosity.

Tim is the president and founder of Palo Alto Software, founder of bplans.com, and a co-founder of Borland International.

14 How To Use Surprise To Generate Word Of Mouth

This post is a special Make a Referral Week guest post featuring education on the subject of referrals and word of mouth marketing and making 1000 referrals to 1000 small businesses – check it out at Make a Referral Week 2010

Your customers live their life in a routine. I mean, we all do. We wake up at the same time; start our day off completing the same rituals; and then take the same route to work, switching on autopilot as soon as we get there. We’re creatures of habit. Our job as marketers is to both use and break these habits, replacing bad ones (not being our customer) with good ones (being our customer). But to do that, we first have to get their attention. We have to find a way to wake our customers from their zombie slumber and make them see us. We have to disrupt their routine.

And that’s where surprise marketing comes in.

Surprise breeds word of mouth by attacking the “been there, done that” mentality of customers and shattering it with something designed to cause a reaction. Because, the only thing to give the person who has everything is something they’ve never seen or thought of before.

How Surprise Breeds Worth Of Mouth

It’s said a lot that if you want people to talk about your business that you need to give them something to talk about. Well, that’s pretty much what surprise marketing does. It breaks up your customer’s every day and it gives them something new – tangible or not – to remember and hold on to. It ties you to an experience. As a small business owner, surprise marketing is perfectly suited for your business because it requires that you really know the people that you’re targeting. No one knows their audience as well as someone who lives in it every day. And once you know what they’re expecting, it’s your job to give them what they’re not.

Oprah utilized surprise marketing when she gave away 276 Pontiac G6s and offered Pontiac “immediate recognition as the feel-good automaker”. But in the real world (as opposed to Oprah-vision), surprise marketing doesn’t have to mean big dollars. It means creativity.

Surprise marketing works by giving someone something they needed at a time they weren’t expecting it. It’s chilled milk and cookies after a long day at Disney. It’s a person hiding in the Coke machine to hand deliver you and your friends a soda. It’s the bottle of water you’re handed by the hotel when you come back from a run.

It’s about creating experiences that people are going to want to share with their friends.

How To Surprise Your Customers

You surprise customers when you create something that is both personal and valuable to them. Decide what feeling you’re trying to inspire (awe, joy, excitement, disbelief, horror, etc) and then get creative about how you can deliver that. And when you’re doing it, think small. Don’t go for the elaborate plan. Go as small as you can with it, because it’s the little things done better than someone would ever expect that create the biggest buzz. That’s how you get people talking about you and inspire someone to make that referral – you tie an emotional response to what you’re doing.

How can a small business owner incorporate surprise marketing to inspire referrals from customers?

Show Up Where They Don’t Expert: When you drove to work today, there were certain things you expected to encounter– traffic, the usual landmarks, your same parking spot. You weren’t expecting to see, say, a 27-foot-long hot dog parked outside your building. And if you did, it would take a pack of wild dogs to stop you from talking about it. . And that’s exactly why Oscar Mayer created the Wienermobile and why they park it in random cities across the country. Because while you may have heard about it, you’d never expect it to show up in your hometown. And when it does, you talk about it.

Go Further Than You Have To: Go that extra step to create a WOW moment. Zappos does this by offering surprise overnight shipping so that customers unexpectedly receive their order just hours after they placed it. It creates an experience of “awe” when exactly what they wanted shows up when they weren’t expected it. Virgin America created its own WOW moment, rescuing 15 Chihuahuas from California. They did more than was required or expected and people talked.

Give Them Something Different: Lots of businesses offer free gifts along with a purchase. It’s the coupon slipped into the bag at the register, the free makeup brush someone gets with their purchase, a trial of a new scent, etc. What about giving them something they wouldn’t expect you to? Like chocolate-covered grasshoppers, perhaps. You don’t have to get pricey to surprise someone, you just have to deliver something they weren’t expecting.

Listen When They Think You’re Not: A young woman was sitting in a P.F. Chang twittering about how much she loves P.F.Chang’s chicken lettuce wraps – a pretty normal occurrence in today’s social media-heavy world, right? What she didn’t know was that an employee in the P.F. Chang’s Corporate Office saw the tweet, figured out what restaurant the customer was at and tracked her down to her specific table with the help of onsite staff. P.F. Chang’s then purchased the woman’s dinner for her and bought her dessert to say “thanks for visiting”. The Twitterer was shocked that the restaurant was listening so closely to customers and the story is now legend. Pretty cool, and not that difficult to pull off.

Make The Little Things, Big Things: Disneyworld left milk and cookies in Scott Stratten’s hotel room when he was there with his son so they could have a snack to enjoy together. The Westin Long Beach hands out water bottles to guests who walk into the hotel after a run. By getting those tiny, personal gestures correct you set up those moments that your customers will take home and want to brag about later. You create an experience and a memory by making the little things big things in your organization.

Obviously there are many other ways to surprise and capture the attention of your audience, but those will help get you started. Perhaps it’s the child in me, but I love using surprise marketing as a way to spread word of mouth and bring in referrals. It challenges you to look inward to change the course of someone’s day in a way that they’ll remember and positively associate with your brand. Not every profession is in the habit of creating memories. It’s the power of the unexpected and it doesn’t get much better than that.

Lisa Barone is Co-Founder and Chief Branding Officer at Outspoken Media, Inc., an Internet marketing company that specializes in providing clients with online reputation management, social media services and other Internet services. When she’s not blogging daily over at the Outspoken Media blog, you can find her guestposting on popular blogs like Search Engine Land, BlogWorldExpo, Sugarrae and a host of others.

8 Build Your Brand So People Will Refer You

This post is a special Make a Referral Week guest post featuring education on the subject of referrals and word of mouth marketing and making 1000 referrals to 1000 small businesses – check it out at Make a Referral Week 2010

As part of John Jantsch’s Referral Week, I’d like to focus on personal branding, as a way to become someone that people want to refer to others. I agree with John that the best way to grow a business is to get referrals because of how powerful word-of-mouth is. These days, it’s become more and more obvious that referrals can help you substantially build your brand presence, your web properties and your cash flow. The reason is because of the viral nature of the web, and how one video review of your service can morph into seven blog posts, six hundred tweets and a front page story on BusinessWeek.com within twenty-four hours. Five years ago, this line of events was impossible, but today it happens all of the time.

Here are some ways to become a brand that people want to refer:

Be interesting: People, who are interested in you, as a person, are more inclined to connect with you, do business with you and refer you to their own personal network. Your personal brand is not only defined by your job or company, but also by the activities you participate outside of the office and your hobbies. It might be hard to connect with someone on a professional level, but you might be able to bridge the relationship by talking about your golf game or the last season of Lost.

Be valuable: There’s no question that experts are judged based on hard and soft results. It’s not just being valuable though, because all of your competitors can do that. You need to be unique and offer something your competitors don’t and compete on prestige and quality, rather than price. Online, if you’re seen as a valuable resource, the press will call on you, customers will be to work with you, and when all is said and done, and people will refer you to even their third degree network.

Be generous: It’s rare that people share others products and services before they receive a sample for free. “Free” builds trust, authority and generates attention. If you want to be referred by others, then you’re going to have to give before you receive. The more generous you are with your network, by providing them with resources, helpful links, reports and advice, the more you will get back in return.

Be enabled: How are people going to refer you to their network, unless you enable them to do so. By providing your email address on your web page and by allowing people to share your content through Facebook, Digg, Twitter, Google Buzz and others, people can find you. If you don’t enable your network and empower them to refer you, without much effort, then you won’t get as many referrals.

Be networking: The more people you meet, the larger network you have and thus, the more people that can refer you to others. Meeting people is quite easy now due to the connectivity of the internet. Try and locate people that you’re actually interested in and can benefit from your services, instead of someone random you see on Twitter.

Dan Schawbel is the bestselling author of Me 2.0: Build a Powerful Brand to Achieve Career Success, an award winning blogger at Personal Branding Blog, the publisher of Personal Branding Magazine, a national speaker and consultant on branding and a BusinessWeek columnist. He’s been called a “Personal Branding Guru” by The New York Times and has been featured in over 150 media outlets.

4 5 Ways to Make Your Business Easier to Recommend

This post is a special Make a Referral Week guest post featuring education on the subject of referrals and word of mouth marketing and making 1000 referrals to 1000 small businesses – check it out at Make a Referral Week 2010

If I were to ask you what the secret was to getting someone to recommend and refer your business, what would you say? Perhaps you might focus on the experience that you provide. Or you might believe that this is a behaviour that you should focus on illiciting from only your best customers. Now what if I told you that the single biggest reason someone chooses whether or not to refer your business has very little to do with their experience with you? That seems counter intuitive. Yet if this were false, then everyone who had a positive experience would share it with someone else. And everyone who had a negative one would do the same.

The point is, people don’t inherently share positive or negative experiences – they need an incentive to do it. The main problem is that anger or frustration IS an incentive. That’s why you hear the often repeated adage that it is much easier to get a customer to post a negative review than it is to post a positive one. Satisfaction, apparently, is not as powerful of a motivator as dissatisfaction. Yet despite this behaviour, there are ways to stack the odds in your favor. You probably already know that online opinions make a difference for your business. So the question you need to ask yourself (especially for Referral Week) is how you can make YOUR business easier for someone to share with a friend, family member or colleague. In other words, you need to be easier to recommend!

Here are 5 tips you should consider to help you achieve that:

Ask at the right moment. There is one moment when your customer is likely to be happiest of all, and that is the moment right after they buy something. The decision has been made, and anticipation is likely to follow. Why not ask them to share their experience with a friend right in that moment? Use a post-purchase survey online or encourage your customer to write a review or even take some extra business cards with them as they walk out of your retail location. The more you can do to get someone to recommend your business right after purchase, the more referrals you can generate.

Create different levels. It is tempting to think of recommendations and referrals in strict terms. Say online review, and your mind probably goes straight to the sort of review you might find on Amazon or TripAdvisor. In reality, there are many different levels of engagement when it comes to online reviews, and hand written experiences are the most extreme. A much simpler style is what you may have seen on Facebook … the simple thumbs up or thumbs down. Star ratings are another easy method. The lesson is simple … to create more likely situations where people will share their opinion, try to accommodate for different levels of effort and complexity.

Let them save your details. The magnet for your fridge that your real estate agent always gives you is the prime example of this idea. The opposing idea to #1, the philosophy behind letting your customers save your details easily is that you want to be there in the moment when they do get asked by someone to refer a business or service. Aside from fridge magnets, for the growing digital savvy customer, another way you may be able to stand out is to always include important keywords in your email communications (and always send email receipts). Then your customer can search their email account and even if they don’t remember your business name or have your card handy, you’re just a simple email search away.

Have a personality. The basic fact is that people don’t generally remember businesses, they remember other people. For this reason, having a personality is of paramount importance. When you can foster a personal connections with your business, you give them a reason to remember and recommend you to others. This is the power of word of mouth referrals, that we will remember working with someone who we respected and will be more likely to actively recommend that person and their business in any relevant situation.

Admit failure. This last tip will seem like an odd addition to the list. After all, we are generally taught to hide (or at least never admit) our failures for fear that it may make us or our businesses appear vulnerable. The surprising fact is that admitting a mistake can be one of the unintentionally best ways to humanize your business. We all make mistakes, but how you deal with them is the real question. Nothing can endear your business more to a customer than making a mistake an going overboard to correct it (and not making the same mistake again, of course). So the next time you or one of your employees makes a mistake, own up to it and actively fix it. You may find that in the process you converted an unhappy customer into a brand evangelist for life.

Rohit Bhargava is a founding member of the 360 Digital Influence group at Ogilvy and author of the award winning new marketing book Personality Not Included, an entertaining and useful guide for companies on how to use their personality to stand out. He is also a popular keynote speaker on marketing and business strategy and believes in being approachable

2 Author of Book Yourself Solid Visits Referral Week

This post is a special Make a Referral Week guest podcast featuring education on the subject of referrals and word of mouth marketing and making 1000 referrals to 1000 small businesses – check it out at Make a Referral Week 2010

Marketing podcast with Michael Port (Click to listen, right click and Save As to download – subscribe now via iTunes

Michael PortToday’s special guest interview for the Duct Tape Marketing podcast is Michael Port. Michael Port has provided coaching and consulting services to over 20,000 business owners. He is the author of Book Yourself Solid, Beyond Booked Solid and The Contrarian Effect: Why It Pays (BIG) To Take Typical Sales Advice and Do The Opposite and the soon to be released The Think Big Manifesto.

In this episode Michael and I talked about the new ways in which smart marketers are building their expertise and tapping into networks, both on and offline to build marketing momentum.

4 Why Word of Mouth Doesn't Happen

This post is a special Make a Referral Week guest post featuring education on the subject of referrals and word of mouth marketing and making 1000 referrals to 1000 small businesses – check it out at Make a Referral Week 2010

Sometimes, what you do is done as well as it can be done. It’s a service that people truly love, or a product they can’t live without. You’re doing everything right, but it’s not remarkable, at least not in the sense of “worth making a remark about.”

What’s up with that?

Here’s a smörgåsbord of reasons:

  1. It’s embarrassing to talk about. That’s why VD screening, no matter how well done, rarely turns into a viral [ahem] success.
  2. There’s no easy way to bring it up. This is similar to number 1, but involves opportunity. It’s easy to bring up, “hey, where’d you get that ring tone?” because the ring tone just interrupted everyone. It’s a lot harder to bring up the fact that you just got a massage.
  3. It might not feel cutting edge enough for your crowd. So, it’s not the thing that’s embarrassing, it’s the fact they you just found out about it. Don’t bring up your brand new Tivo with your friends from MIT. They’ll sneer at you.
  4. On a related front, it might feel too popular to profitably sneeze about. Sometimes bloggers hesitate to post on a popular source or topic because they worry they’ll seem lazy.
  5. You might like the exclusivity. If you have no trouble getting into a great restaurant or a wonderful club, perhaps you won’t tell the masses because you’re selfish…
  6. You might want to keep worlds from colliding. Some kids, for example, like the idea of being the only kid from their school at the summer camp they go to. They get to have two personalities, be two people, keep things separate.
  7. You might feel manipulated. Plenty of hip kids were happy to talk about Converse, but once big, bad Nike got involved, it felt different. Almost like they were being used.
  8. You might worry about your taste. Recommending a wine really strongly takes guts, because maybe, just maybe, your friends will hate the wine and think you tasteless.
  9. There are probably ten other big reasons, but they all lead to the same conclusions:

First, understand that people talk about you (or not talk about you) because of how it makes them feel, not how it makes you feel.

Second, if you’re going to build a business around word of mouth, better not have these things working against you.

Third, if you do, it may be a smart strategy to work directly to overcome them. That probably means changing the fundamental DNA of your experience and the story you tell to your users. “If you like us, tell your friends,” might feel like a fine start, but it’s certainly not going to get you there.

What will change the game is actually changing the game. Changing the experience of talking about you so fundamentally that people will choose to do it.

Seth Godin is author of ten books that have been bestsellers around the world. His most recent titles include The Dip and Linchpin. His books have been bestsellers around the world and changed the way people think about marketing, change and work.

11 17 Terrific Tactics to Inspire Customer Love (and Get New Business)

This post is a special Make a Referral Week guest post featuring education on the subject of referrals and word of mouth marketing and making 1000 referrals to 1000 small businesses – check it out at Make a Referral Week 2010

There are two fundamental approaches to generate more business: The first is to focus on making your existing customers insanely happy, so that they want to tell others about how much they love you; the second is to simply be a resource, or be helpful, to those who aren’t customers yet.

Specifically, here are 17 tactics:

1. Have a goal. Set a clear goal with a specific timeline – for example, you want an x increase in referrals over the next six months. You know that old adage about how you can’t get there if you don’t know where you’re going? It’s true.

2. Monitor the web and primary social channels (Twitter, Facebook, LinkedIn) for people talking about you or your company. Say thank you (if they are saying nice things). Reach out and ask how you can help (if they aren’t).

3. And if they aren’t, BTW: Apologize for mistakes and solve problems fast. Speed is your ally.

4. Monitor the web and social channels (Twitter, Facebook, LinkedIn) for specific keywords relevant to your business. Be approachable, conversational, and helpful there. Engage, don’t sell.

5. Join LinkedIn groups relevant to your expertise or industry, and build conversations with relevant individuals. Chime in when you have something to contribute, and be helpful with your advice, suggestions, opinions. Again: It’s about engaging, not selling. (This bears repeating.)

6. Create a blog with content that helps your customers with a problem, or gives advice on a difficult situation, or walks them through a hard decision, or just takes the customer’s point of view, generally. Be a resource, and don’t simply toot your own horn.

7. When someone comments on your blog, respond. Talk back. Thank them for participating with a follow-up email. This is a dead-simple thing, and something a lot of people don’t do.

8. Read other relevant blogs in your industry, or by your customers, or would-be clients. Comment there, too. How? I almost want to repeat that bit about engaging-not-selling again, but I know you get it.

9. Put something on your front door (if you have one) that reminds people to tell their friends about you. (This is an idea from my friend Andy Sernovitz.

10. Put a “tell-a-friend” form on every page of your website. (Another idea from Andy.)

11. Put a special offer in easily forward-able mail.

12. Add a small gift and a word of mouth tool to every package you sell. Do something unexpected. (Andy once sent me a few packets of Bacon Salt with a copy of his new book, for example, which inspired me to blog and tweet about it.

13. Create a mechanism to keep in touch with existing customers or clients, even if they aren’t in buying mode. Perhaps you publish and “insider’s” newsletter, guest-blog on their blogs, or pick up the telephone and call every once in a while, just to say hello.

14. Be generous in your business practices. Go the extra mile. Offer extra service or follow-up support as a routine way of doing business.

15. Be generous with your own referrals.

16. Say thank you. Someone refers new business to you? Send them a note. An especially nice touch in this digital age is a handwritten card. The kind that arrives in the mail.

17. Be nice. Does this sound lame? It’s not. People refer people who treat them well, are approachable, and likeable. Be that person.

Your turn. How else do you generate referrals, or inspire positive word-of-mouth?

Ann Handley is the Chief Content Officer of MarketingProfs, the world’s largest community of marketers. Follow her on Twitter at @marketingprofs

8 Bake a Referral Engine Into Your Business Model

This post is a special Make a Referral Week guest post featuring education on the subject of referrals and word of mouth marketing and making 1000 referrals to 1000 small businesses – check it out at Make a Referral Week 2010

Have you ever squirmed when a seasoned businessperson asked you “what sets you apart from your competition?” or “what are you truly great at, that no one else in your market can do better than you?”

You are not alone.

Many new entrepreneurs get uncomfortable with the notion that they have to be an expert in their field to have a successful business. This is because they think that they have to know every last thing about the market in order to be considered an expert.

Here is the good news: one of your unique differentiators can be your ability to refer your clients to fantastic people who compliment your work. You don’t have to know everything. You just have to know people who do.

I have designed my business this way. I feel exceptionally competent helping corporate employees figure out which business to start. I can wrestle their snarling fears with confidence. I can help them with branding and marketing plans, and teach them how to grow their network using social media.
But if they ask what kind of business structure will protect their assets, I draw a blank. That is why I have tax attorney and business process guru Kyle Durand on speed dial. If they are creating a new software product and want to know how to wade through IP laws and trademarks, I send them to Jill Hubbard Bowman.

If they have no idea which shopping cart to use on their website, I send them to research maven Crystal Williams, otherwise known as Big Bright Bulb.

If they want killer branding design with great copy, I send them to Reese and Kelly Parkinson.

If they know what to do but get paralyzed by procrastination, overwhelm and creative blocks, I send them to Charlie Gilkey.

If they decide they don’t want to start a business after all and want to get a job, I send them to the best career coach I know, Michele Woodward.

And if they are incredibly difficult to work with, I send them to John Jantsch. (Just kidding John! J)

Knowing I have world-class business partners who will not only deliver excellent service to my clients but will also be fun and easy to work with allows me sell my strengths and refer the rest. My clients are happy, I am happy, and my circle of partners is happy. Our combined networks generate lots of new business, and many opportunities to collaborate on programs, products and services.

How can you bake a great referral network into your business model?

  • Define the problem your clients are trying to solve. Are they trying to start a business? Make more money? Simplify their life? Build a product?
    Break down all the knowledge and support they will need to solve the problem. Think about which tools they may need, which decisions they have to make and what skills and competencies they require.
  • Identify your strengths. As you examine all that’s needed to solve their problem, think about what you love to do, what interests you, and where people say you excel.
  • Structure your services around your strengths. If you love doing big picture strategy and get bored with implementation, don’t offer that service. By focusing only on what you do best, you will set yourself apart from so many others who struggle to provide everything to everyone.
  • Identify ethical, competent people who are great at solving the rest of the problem. Use your personal networks, social networks and research to find excellent referral partners. Watch closely the first few times you send a client their way. Make sure they deliver great results and make your clients happy. After awhile, you will send them business with your eyes closed. And they will do the same for you.

Baking referrals into your business model will not only grow your business, it will make your brand shine. As Miguel de Cervantes said in Don Quixote:
“Tell me what company you keep and I’ll tell you what you are.”

Pamela Slim is a business coach and author of the award-winning book Escape from Cubicle Nation. Find her at www.escapefromcubiclenation.com and follow her on Twitter @pamslim

22 A Simple Way to Increase Referrals 300%

This post is a special Make a Referral Week guest post featuring education on the subject of referrals and word of mouth marketing and making 1000 referrals to 1000 small businesses – check it out at Make a Referral Week 2010

I’m always amazed at how much is written about sales and marketing and how little is written on the nuts and bolts of driving business through referrals. Which is why I’m so excited for The Referral Engine to finally hit the street!

Over the last 12 years, I’ve built a number of small businesses and online brands. The small businesses were brick and mortar, serving very local markets. And, despite the fact that I knew each was considered a “word of mouth” business, I spent a lot of money and time throwing nearly every marketing idea I could conjure out there.

What I discovered was, driving people into the businesses was easy. There are a million ways to do that. But, that’s not the challenge. The real challenge is driving new customers who will spend many times what it cost you to acquire them.

Getting 100 new customers who spend $100 each is a recipe for ruin when it costs you $110 to bring those customers through your doors or to your website.

So, what we’re really looking for as small business owners and marketers are the business strategies that yield the greatest return on our efforts. We want to know that for every dollar we spend, it comes back to us in the form of new business many times over.

Which is where the referrals comes in. Hands down, they’re the most cost-effective way to generate new leads and clients. Even if you need to incentivize them in some creative way.

But, what I discovered over the years, both on and offline, is there are two small steps you can take that dramatically increase the likelihood of referrals.

1. Find Your Organic Referral Window –

Those who love you may well always love you, but there’s an energy connected with the “new-ness” of experiencing your product or service that creates a near-palpable drive to evangelize in the beginning. The honeymoon phase. So, you almost always have a short window where the likelihood of referrals and verve of those referrals is substantially higher.

In the fitness and lifestyle world, where I operated, that window is about 4 to 6 weeks. Because the commitment is still there, the product has been used long enough to generate results and the “shiny new” energy is still there.

Question is, what is the optimal organic referral window for your business?

Take a look at your business’ history and see if you can determine where the intersection is between:

  • Tapping the “new-ness” energy and
  • Allowing enough time for substantial results to fuel delight.

Then test a number of different windows and let the results tell you what works best.

2. Facilitate Referrals With Tangible Prompts –

Scenario 1: A group of women are having lunch. One arrives late and as she approaches the table, all jaws drop. The group hasn’t seen her in a few months and she’s lost 30 pounds and become ultra-fit. Of course, the first question, once she’s settled, is “what did you do?”

She reveals how she’s been working with a new fitness and nutrition center and she loves them. A few minutes pass and the conversation moves on to the next topic. An hour later the lunch ends and everyone goes their separate ways.

Scenario 2:

A group of women are having lunch. One arrives late and as she approaches the table, all jaws drop. The group hasn’t seen her in a few months and she’s lost 30 pounds and become ultra-fit. Of course, the first question, once she’s settled, is “what did you do?”  She reveals how she’s been working with a new fitness and nutrition center and she loves them.  

Then, she remembers the center has given her a beautiful card-case with 10 VIP Referral Invites that expire in the next 6 weeks. She hands one to each person and says, “these guys will change your life.”

A few minutes pass and the conversation moves on to the next topic. An hour later the lunch ends and everyone goes their separate ways.

If you’re the fitness and nutrition center, which scenario do you think generates more leads for your business? Scenario number 2. And, the difference can be huge if you do a really good job of matching the incentives and timing with your ultimate client persona. Now multiply that by hundreds or thousands of “card-carrying” evangelists…and smile.

So, yes, referrals are great, but creating a tangible prompt, a physical tool that can be used to share referral information serves a strong reminder for the recipient of the referral that (a) a referral was made, (b) action needs to be taken, and (c) the contact information is “right there.”

This same strategy can be used for both online and offline businesses, with or without incentives.

Indeed, combining the effects of asking for/encouraging referrals within the optimal window and offering tangible referral prompts generated a nearly 300% increase in referral-generated leads for my businesses.

I wonder how it might impact your business?

Jonathan Fields writes on entrepreneurship, marketing and lifestyles at JonathanFields.com and is the author of Career Renegade: How to Make a Great Living Doing What You Love. He’s also a twitter heavy-user at @jonathanfields.

12 Author of Word of Mouth Marketing Visits Referral Week

This post is a special Make a Referral Week guest post featuring education on the subject of referrals and word of mouth marketing and making 1000 referrals to 1000 small businesses – check it out at Make a Referral Week 2010

Marketing podcast with Andy Sernovitz (Click to listen, right click and Save As to download – subscribe now via iTunes

Andy SernovitzAndy Sernovitz, founder of the Word of Mouth Marketing Association (WOMMA) and author of Word of Mouth Marketing chatted with me for this special episode of the Duct Tape Marketing Podcast.

    We covered a wide range of topics related to Word of Mouth Marketing such as:

  • The difference between referrals and word of mouth
  • How word of mouth happens
  • How to create word of mouth campaigns
  • Simple examples of small businesses word of mouth success