Business Referrals

Asking for referrals doesn't work

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

Needless to say I discuss the topic of referrals on a daily basis. I meet with individuals working in service industries mainly- those where close relationships with clients is common and referrals are important to growing their business. And just as I sink into the adjacent chair and initiate conversation I am met with this: “You’re right, I need to be better about asking for them.” At first I wanted to stop the agents, lawyers, advisors, realtors, doctors, (you name it) in their tracks and shout “you don’t need to ask!” But anymore I don’t even wince at this widely held misconception. I simply lean back in my chair and explain that, not only is there no need to ask for referrals - but doing so is remarkably ineffective, and there is research to back it up.

Screen Shot 2014-04-11 at 3.25.06 PMWithout doubt this will turn the notion of referrals upside down for many people. But, the most effective referral strategies are proven to include tactics that do not include asking for referrals. A study by Advisor Impact, which focused on customer loyalty and referrals, surveyed over 1,000 clients and asked the reasons why they referred a service to others. An overwhelming 98% cited reasons that included helping their friends and family. Only 2% of the cases did clients say they referred because the business asked them for a name of a friend. This research proved that by not first identifying customers likely to refer, businesses were asking the wrong people to give a referral. Also, by asking for names, they were not effectively leveraging the reasons why people refer, and thus yielding scanty results.

Avoiding asking for referrals doesn’t mean you should let your referral strategy take care of itself. Doing nothing at all just as ineffective. Unfortunately, customer satisfaction alone doesn’t translate into referrals - it is merely a prerequisite. So, asking for referrals is a no-no, and sitting back relying on happy customers to speak up also doesn’t work. Here’s what you can do to increase referrals, and it doesn’t involve uncomfortably asking your clients for names.

Identify your most loyal & disgruntled clients

By finding your most loyal and engaged customers you are able to refine your communication - making your content more effective, personalized, and cost efficient. Also, by identifying your disgruntled clients will also not only increase customer retention, but converting frowns into smiles is a prime opportunity to capture referrals. For more info on how to gauge customer loyalty see the Net Promoter Score system.

Convey the importance of referrals

Let your clients know that you value referrals. Tell them that you would love to help their friends and family. This is accomplished by developing the referral mindset which I discuss in an earlier post. By doing so you will teach your clients that referring you is not only welcomed, but appreciated.

Coach your referral sources

Provide your most loyal customers with content that will encourage more referrals. In other words, enable your referral sources so that when they are motivated to refer you they know what to say, and to whom. Educate them on who your most ideal customers are. Inform them on the wide breadth of services you offer. Describe the triggers (life events) to look for that indicate a good person to refer. Make it easy to pass on your contact information. Tell stories that so that you are more easily introduced into conversation.

Touch your customers

I’m not asking that you invade their personal space here, just to make use of important touchpoints. Send loyalty cards, birthday cards, anniversary cards, National Pigs-In-A-Blanket Day cards (yes it’s real, and this month!). The goal is to keep you top-of-mind. The more personalized and special the better. I recommend sending handwritten cards. It is also a good idea to have an informative newsletter. Let your customers know that you are here for them and appreciate their loyalty! They will think more of you, and of you more often.

Now, I am glad we cleared up the subject of asking for referrals. Makes me feel warm and fuzzy knowing that perhaps less people will ask for names and start obtaining the referrals they deserve!

Improve content for better touch points

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

People develop their perceptions of businesses based on the overall quality of touchpoints they encounter. As impressions can be both positive and negative - it is the responsibility of a business to consider how their intended message is perceived. After all, not all contact with prospects and clients is constructive. Continually finding ways to put yourself in front of your customers so that you are fresh in their mind is a good thing. But keep in mind this will only strengthen your relationship (and lead to referrals) if the message is well thought out and its delivery fitting.

Some businesses spend more energy on finding ways to reach their audience than the message they are conveying. The result is often communication that is ill-received and does more harm than good. To better illustrate this I have attached a letter a friend of mine received after purchasing a new vehicle. It is clear with the example what the salesman was trying to achieve and where he fell (considerably) short.

In an attempt to reach out to the new customer and potentially reel in some referral business the salesman chose to send a generic thank you message. The first mistake is that it does not reference anything personal but the name of the buyer pulled from a list. The actual content of the letter is confusing and is an obvious attempt at gaining more referrals.

The problem? This is obviously an email template printout sent to a list of people. Keep in mind this letter was received in the mail - not electronically. I don’t believe you can click on links printed on an 8.5 x 11 sheet of paper.

The salesman was thinking touchpoint and follow up. But the recipient was thinking mailmerge and cheap. You see this type of thing often. Newsletters with plastered with advertisements and flimsy content. Noisy pop ups on popular websites. The list goes on.

The alternative is to pay more attention to the content you are sending to your prospects and clients. At Rocket Referrals we believe in sending straightforward handwritten notes for example. People appreciate simplicity with communication. Keep it personal and classy, they will notice. Over time the positive touchpoints will serve as the foundation for your brand and sales will follow.

Inspire referrals with the rule of the few

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

Extensive investigation into human psychology continues to shape the marketing strategies that we are faced with daily. Sure, technology and changing trends in social relationships change the ways in which the messages are spread - yet the same underlying elements in psychology have been used for decades. First published in 1984, Robert Cialdini outlined in his book Influence: The Psychology of Persuasion six principles of influence that are just as effective today. They have, however, been primarily used in traditional marketing tactics that have gradually lost their potency over time. Therefore, I continually think of ways Dr. Cialdini’s principles of influence could be incorporated into referral marketing - in attempt to spice things up a little bit. After all, recent studies show that today people trust recommendations from friends and family seven times more than traditional advertising.

GoldenticketScarcity

Today I am going to expand on Dr. Cialdini’s sixth principle of influence: scarcity. The idea behind this is that something is deemed more attractive when its availability is limited or when we stand to lose the opportunity to acquire it on favorable terms. In traditional marketing we see it daily with items offered in limited quantities or special offers that soon expire. Let’s not kid ourselves, it works. Not all the time, but the thought of losing an exclusive offer leads us to pull the emotional trigger more than you may realize.

As a business you can incorporate “the rule of the few” into your referral strategy with the help of your best clients. It starts by providing a unique offer that your current clients can give away to their friends and family. But here is the trick: it has to have exclusive value, and it must be for a limited time.

Exclusive value and limited time

For the offer to have value for your client to give away it must be exclusive to only one of their friends or family members. You want your client to feel like they are giving something special away - offering it out to all their buddies will belittle their social contribution. The offer must also have some actual value - such as a discount or extended service that they will not find elsewhere. If they can find the same coupon on your website it is not exclusive. Also, an offer for a free quote for a friend or family member is NOT a special offer. If you’re too frugal with the offer it will not be given away, let alone be redeemed by the referred individual. Finally, in honor of the principle of scarcity, the offer should have an expiration date. This will encourage the referred individual to take action.

 

Make it easy for your clients to refer you

MakeiteasyCarl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

The best type of referral is that which finds its way to your doorstep after being screened and prepped by an existing customer. Isn’t it every businesses’ dream to have their phones constantly ringing with prospects verbally nodding yes? If the phone isn’t ringing off the hook the problem may not be that you’re not getting referred - but that the referrals have become lost in transmission. Therefore, as a business, the responsibility ultimately rests on you to make it as easy as possible for your referred customers to contact you.

Referrals emerge from conversation between friends and family. They happen at birthday parties, in parks, coffee shops, ... well, anywhere people talk (perhaps not so much in libraries). After a recommendation for a product or service is made there is a period of time before the prospect will contact the business. After all, people decide to perform business on their own time. This is where many referrals die. There are a couple easy things that you can do to prevent missed opportunities.

Collect email addresses

Regardless of what you sell, you should treat your customers as if they are yours for the long haul. Like any continued service, communication is paramount. But for some reason even today most businesses are not proactive in collecting email addresses. It is the best way to reach your customers for ongoing communication, conduct brief surveys, collect testimonials, and so on. It will give you a direct link to your customers and allow you to perform this next step that simplifies the referral process.

Send an informative introductory email

Immediately after you make a sale or acquire a new customer, send them an introductory email. The content should have the following elements:

  • Briefly thank them for their business and let them know you appreciate them

  • List some of the main services and products you offer

  • Provide a link to your website with additional information regarding your business

  • Include a phone number and email address and encourage them to call

  • Encourage them to forward the email to others that are interested in learning more

  • Recommend that they don’t delete the email so they can reference it later

  • Make sure that the email is from you - so that if replied to you will be able to respond

Having this content residing in customer’s inbox will make it easy for your customers to pick up their smartphone and forward to those they refer to you. It provides all the basics on your products and services, links for those that like to dig deeper, and contact information to find you. What’s more, after it is forwarded it will be conveniently sitting in the prospect’s inbox as a reminder the next day when they are in purchasing mode. So, quit playing broken telephone with your prospects and start capturing some more referral business!

How to use Facebook to get more referrals

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

Social media has become a generic topic. Everywhere you turn there are bits of information stressing the significance of these dynamic platforms to reach audiences and grow your business. OK, so having just written that last sentence I realize that this post also conveys that message, but I promise it isn’t generic. So let’s take a different look at social media, namely Facebook, and explore how it can be used get you more referrals for your business.

Referrals_buttonI am not the expert on all things social media. Hashtags are relatively new for me too (yet I feel compelled to use them). But, I am knowledgeable on #referrals and I understand what type of content resonates with people. According to a study published last December, 71% of adults are using Facebook. People are spending time there, too. And because so many eyes are glued to the website, businesses are fervently combating for the coveted spot on the News Feed. But there is a problem. So many businesses are so fixed on being in the spotlight that they forget to consider how well the actual message will be received by their audience. There is an opportunity for businesses to leverage the obvious connections between their vocal ambassadors and their friends and they #fail to capture it.

People #dislike being sold to

Let’s take a step back and think about why people are on Facebook in the first place. A study by the Pew Research Center published this month lists the top reasons users log onto Facebook. A couple of these include receiving updates and comments and sharing experiences with friends and family. Getting advertised to didn’t make the list. An obvious observation, yet so many companies continue to flood the News Feed with unwanted (and ignored) content. OK, so people don’t drive on the interstate to read billboards or watch TV programs to see commercials (outside of the Super Bowl) either. The point is, whenever a person can easily #ignore an advertisement, they will, and this holds true for misplaced advertisements (sponsored posts) in a user’s Facebook timeline.

This way is much better

Rather than spending time and money advertising on Facebook, find creative ways of getting your vocal promoters to say good things about you via comments. Sure, when people like your Facebook page it is #cool but it doesn’t go very far with the people who have never heard of you. Positive comments, however, reach new audiences with a message that is as close to a positive referral that you will get on social media. It means so much more when a prospect hears how great you are from someone they know. It will significantly dilute the feeling of being advertised to online and transfer trust from your ambassadors directly to their friends and family. Also, considering that half of all Facebook users have more than 200 online friends, the reach of the message has quite the potential.

Ask to be shared and recommended 

An easy way to get started is to add a Share button or Recommend button to your website and ask your happiest customers to provide you with a quick comment online. This allows people to add a personalized message to a link to your website before sharing it on their timeline. An added bonus with the recommend button is every time a user clicks on it you will gain a Facebook like for your page. Just think how much better this message will be received by its intended audience - and unlike sponsored posts coming from you, it’s free! Also, it doesn’t work to simply repost testimonials that you gather from other sources to your personal Facebook page. That comes across as bragging and is #lame. If you are interested in learning more, at Rocket Referrals we have a unique approach to gathering more Facebook likes and comments.

Building referrals begins with developing the right state-of-mind

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.


Referralmindset (1)Just do it. Who can forget Nike’s wildly popular ad campaign created in the late 1980s? Such a simple, yet compelling statement. But in order to ‘do’ there needs to be knowhow - a starting point, a calculated plan. This is especially true in regard to building your business through referrals. At Rocket Referrals I speak with businesses daily that have made the decision to get serious about a referral strategy - but to many, it is just a black hole. Therefore, I felt it appropriate to share a very simple concept that is essentially the starting point to any strategy to gaining more referrals. It begins with a mindset for you - the business - and that of your customers.

The Approach

Finding the right approach to gaining referrals as a business means understanding why it is that your customers refer you to their friends and family. I get it; businesses want more referrals for several reasons - to help others, and to drop more coins in their piggy bank. But customers really do not care about adding mass to your bottom line. They do care, however, about improving the lives of their loved ones. Therefore, as a business, it is paramount that communication with customers regarding referrals focuses on the reason why they refer. In other words, don’t make it sound like they are doing you a favor - rather that you want to do them a favor by providing awe-inspiring service. This is the referral mindset for you, the business.

The Tactics

A quick tip on how to put a positive spin on the language: make your customers feel like they are part of a growing community or family. Keeping it personal and exclusive will ignite their emotional spark plugs and motivate them to actively refer you. An example would be to send a welcome card with a message including “would love to grow our family” and “extend our hand to your friends and family, we will take extra care”.

The next step is to actively develop a referral mindset in the heads of your customers - right from the get go. Using language that conveys the significance of referrals for your business, subtly, yet consistently, will ensure that you are referred when the time is right. In this approach it is very important to do so by only playing on the emotional reasons why people refer (to help others) that I highlighted above. There are a several ways you can engage your customers that will be effective - and it starts right after they sign up.

Send a welcome email with a couple sentences explaining how your business values referrals and that they are important in growth. Emphasize that this growth is important because you love to extend your service to their trusted ones, to extend your family. This will convey the message that you are referred often and therefore must be doing something right. Follow it up by saying you trust they will find reason to refer you in the near future, because you care that much about what they think of you.

Find a reason to follow up with your customers as often as possible. Each time, give them thanks and let them know you are here to help with anything they need. Remind them that you are interested in extending your service to their loved ones. Over time, referring you will become second nature to your best clients.

Great stories make even better referrals

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

People love stories. Okay, not all stories, but the fun, exciting, intriguing, inspiring, or otherwise entertaining variety. Because of the delight people find in passing information to others, storytime happens everywhere. Around water coolers, in barber shops, saunas, bar mitzvahs, you name it. As a business, you want to find yourself slipping into as many of these situations as possible. This happens by having an interesting story yourself. One about you or your business that is worth talking about - something memorable that your promoters will not feel awkward plugging into a conversation.

We already know that superb customer service and excellent products are essential to landing positive referrals. Nobody, in their right mind at least, would recommend a bad experience to others. We got that. But more often than not, your customers’ friends and family are not always in need of your products or services. Therefore, it is important to find a way of popping up in as many conversations as possible with a story that is remembered, so that when the time is right, your phone rings.

Find an interesting aspect about your business or yourself that is worth sharing and reserve it for your customers. Tell it as a story - a narrative with an intriguing plot. This will provide your promoters with more beef when they recommend you to others. Rather than just telling their friends “I have a really good agent, he takes care of me” - how boring - they could boast “My agent really takes care of me, you know, he used to be a pitcher for the Iowa Cubs and chose writing premiums over the big leagues”. With stories told by your promoters, you become memorable and are recalled when your services are needed. You will also pave the way to many more conversations because you are no longer colorless to talk about and linked to different areas of discussion.

For those of you who don’t have a nasty curveball, it’s OK. There are many ways you can tell your story that is noteworthy, you just need to find a creative slant. The truth is, people love doing business with actual humans rather than companies anyway. All great businesses have an interesting history of how they began, so start there.

Another approach could be to create unique experiences for your customers that are not advertised. I remember doing business with an auto shop that specialized in rebuilding transmissions. The owner stood behind his work to the extent of actually signing his name on the transmission itself before handing the keys back to the owner. This was never advertised, just disclosed to the client after the work was finished. This type of behavior is subtle, yet interesting enough to pass on to others. These experiences will fuel your promoters with stories to pass on to their friends and family. After all, you are doing them a favor by giving them something fun to talk about as they refer you to others.

Use the element of surprise to drive referrals

The best companies use surprises as a method of promoting their brand and inspiring customer loyalty. After all, it is hardwired in all of us to pick up on change– and as such, experiencing the unexpected conjures up emotions. Ka-Wham! A ramshackle car just backfired and you feel your ears move slightly and heart rate elevate. If not to startle per se, the most successful companies have discovered ways to invoke the same primal instincts in their customers– but have done so, delightfully. It does seem, however, that the ‘element of surprise’ has been used primarily by retail companies as a way to inspire repeat business. But for companies looking to use this powerful marketing tactic directly to increase referrals, and thus new business, keep reading.

First I would like to explore, just a little deeper, how surprises have such a positive impact on people. Scientists have recently used magnetic resonance imaging to determine that the part of the brain associated with pleasure really cares when you get something unexpected. Positive surprises provide a rush of dopamine and cause the happy center to light up like a Christmas tree. According to the study, Dr. Gregory Berns, professor of psychiatry at Emory University, stated: “If you get a present for your birthday, that’s nice. But you’ll like it a lot more if you get a present and it’s not your birthday.”

Now, it is crystal clear that by offering positive surprises to customers it will make them smile. Here is how it can be used to directly increase referrals. Send an unexpected and shareable gift to your best customers and ask that it is enjoyed with a friend or family member. The positive experience will resonate with your customers and transcend directly to their closest companions. The goal here is to make your already satisfied customers extra happy, and do so in a way that physically brings them in contact with people that trust them. “Oh, and by the way, where did you get that gift card?”

Starbucks_thanks1First identify who your best customers are. In an earlier post I mentioned the effectiveness of the Net Promoter Score survey in discovering your loyal customers. If you have not implemented the NPS you could also target customers that have given you a referral in the past, provided a testimonial, or openly expressed their gratitude for your service. Sending gifts only to those customers likely to refer will yield the highest ROI with this strategy.

So, what do you give them? At Rocket Referrals we have had great success when our clients give away gift cards to coffee shops. Again, the gift needs to be something that can be shared with others. This is the only way to encourage your happy customers to gather with your new potential clients. Besides, the caffeine might induce a little extra feel good– as long as it isn’t enjoyed on a Monday, right?

Even your best customers may not be referring you

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

There is a prevailing theory among businesses that referrals are a natural byproduct of a superior product or service. That by exceeding expectations alone, referrals will make their way to their doorstep in the form of new business. It is true (as common sense would tell us) that positive word of mouth is abundant amid the best companies -- but research tells us that most of your best customers are not referring you. The problem unfortunately rests on the shoulders of the businesses themselves. The majority do not know the best way to turn their happy customers into referral sources. But thankfully there are a couple things you can do right away to start encouraging your best customers to refer you.

Understand the gap

Chances are, if you are a great company, then you are already gaining referrals via your best customers. But the gap between your referral sources and happy customers could be larger than you expected. A 2010 Economics of Loyalty study performed by Advisor Impact and Vanguard found that in the financial services industry 83% of satisfied customers reported a willingness to recommend services to others, but only 29% of customers actually do so. The best place to start in achieving more referrals is understanding that this gap exists, and that there are things you can do to convert the remaining 54% into active spokespeople.

Identify them

Fig1_NPSThe best way to get started is by identifying your best customers -- those that are willing to recommend you. When outlining a referral strategy, these are the people you will be reaching out to, so get to know them. We recommend performing the Net Promoter Score survey. It is easy to implement and from our experience, has a very high response rate. This quick metric is used by many of the nation's top companies including Southwest Airlines, Progressive, and Apple to name a few. It will give you an instant picture of who your promoters are and how you compare as a company to the rest of the industry in customer loyalty.

Make them feel good

Now that you know which customers are willing to recommend you, make an effort to communicate with them. Keep in touch with them in a way that makes them feel good. This can be accomplished as easily as making a phone call telling them you value their business. You could also write a personalized card telling them that you appreciate their loyalty and it has been a pleasure serving them over the years. The goal here is to keep your company in the front of their mind and synonymous with a good feeling, so that when the time comes to recommend you have given them every reason to do so.

Track them

Finally, it is important to stay on top of your referral sources and progress. Like any other area in a business, a referral strategy should be consistent and tracked over time. Keep a list of your customers that are willing to recommend and what efforts you have taken to communicate with them. You will be able to log the success of your strategy and adjust it over time. Most of all, make sure you are recording which customers are sending business your way. Thank your referral sources personally with a personalized card or phone call --they are much more likely to do so again! The best way to ascertain who is referring is by asking all new prospects “who referred you to us?” This alone will greatly enhance your long term strategy of gaining more referrals!

Leverage existing customers for referrals

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers. This is his first blog on IowaBiz.

Having spent a considerable amount of time working in 10 different states and across three continents, I realized that Iowa offers something truly remarkable -- a sense of community like nowhere else. Here, relationships are king.

The heartland ideology is woven into the threads of business as companies understand that in Iowa, perhaps more than anywhere else, the customer matters.

As a consequence, many local businesses excel in customer satisfaction. We get it here. But what most businesses have yet to understand is that for this very reason there is a substantial opportunity for new business via referrals. Therefore, my goal is as an IowaBiz blogger is to explore the topic of referral business for local Iowa companies. I am here to provide some useful information in the topic and to investigate the reasons why people refer, and strategies businesses can implement to actively increase their referral equity.

RR8I am a native of Iowa myself. Growing up in a small town, I began experiencing business through the eyes of a child observing my father’s local retail business. Even at such a young age I was able to understand the importance of word of mouth for a company’s growth. Following my education at Creighton University, I was the head of North American sales for a software company based out of Frankfurt, Germany. My early career took me all over Europe and North America.

At this point, I had a firm grasp of business from a sales and marketing perspective, but I was still missing part of the human aspect that I gained in the military. After several years in software, I served as intelligence officer in Afghanistan for the US Army. It was here that I really began to understand more of the psychology behind people and grasped social network theory. After my term ended in the Army I returned to Iowa to lead Rocket Referrals with my brother and cofounder Torey. We have developed software that automates many of the strategies I will talk through in later posts.

Most of the topics I discuss will be tactics that businesses can apply right away that will lead to an increase in referrals. I will reference personal experiences and research while tying each post into an overall strategy and investigating current trends in referral business.

This site is intended for informational and conversational purposes, not to provide specific legal, investment, or tax advice.  Articles and opinions posted here are those of the author(s). Links to and from other sites are for informational purposes and are not an endorsement by this site’s sponsor.