The Confusing Opportunity of Referral
One of the reasons I wrote The Referral Engine is because some opinions and perceptions from business owners and marketers about referrals in business didn’t make sense to me – and they still don’t really.
I conducted a poll of my readers consisting of six questions that I think are relevant in the consideration of referral strategies and tactics and I find the answers both confusing and dripping with opportunity.
Here are the questions and my observations
1) What percentage of your leads would you estimate comes by way of word of mouth or referral?
Over 55% said that more than 50% of their business came by this method. Not surprising really as this is what I’ve heard for years and speaks to the power of referrals as a business building strategy. 15.2% said over 90% of their business was through referral. So, what about you? Where does your business come from? Do you do anything to actively create referral opportunities?
2) Do you use any method to educate your referral sources about your business?
Less than half answered yes to this question. The only complaint I ever hear from people on this subject is that they often receive the wrong kind of referrals when they ask. First you’ve got to understand what the right kind of referral, ideal referral, is for your business and then you’ve got to help your referral sources understand how they would spot your ideal customer – and a few other things as well.
3) How many referrals have you personally made in the last 30 days?
70% of respondents claimed they had made 1-5 referrals. 5% had made over 10 referrals in the last 30 days. Making referrals is simply the flip side of receiving them and if you’re not actively making referrals you are probably limiting your ability to grow your business through referrals. One of the things that every business needs to do is build a dream team of “best of class” providers so that when their customers need products and services beyond what they sell, they can refer a member of their select team. This is how you become the go to person for your clients and it’s the first step in building a referral network platform. (See my Make a Referral Monday idea.)
4) What’s the number one consideration you make when giving a referral?
I had a list of 5-6 answers for people to choose from but “I trust they will do a good job” came in with 66% and “they provided me with a great experience” gobbled up the rest. Trust is always the most significant factor in a person’s willingness to refer, but a great experience is what gets them talking – you’ve got to have both.
5) Has social media use changed the way you generate referrals?
Only 28% said yes definitely social media changed referral generation and 21% said not at all. I think this is an area of great opportunity. So many people still look at social tools and social behavior as a way to get in front of more prospects. I think the first place to install a set of socially charged processes is with your existing customers and network. Do that and you will build deeper relationships and create engagement with those you meet much quicker than relying solely on offline methods. The next time your meet someone at an event connect with them online too.
6) Do you actively seek strategic referral partnerships with other businesses?
Only 14% said they had a formal partner program while 44% said not at all or wish we did more. In my mind this is one of the most exciting opportunities going for marketers. If you “get it” – you’re producing content that educates, you’re using social media to get closer to your customers and you’re fusing online and offline tools to create a better customer experience, then recruit your team of providers and start showing them how you can market each other. Do this and you’ll never have to lead generate again. (This idea is covered in great detail in The Referral Engine.)
So, what about you? Where do you fall in this list of questions?