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Century-old lesson on referrals

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

I am going to assume that, if you are reading this blog post, you have heard of the concept of six degrees of separation. You know, the idea that everyone (and everything) on this planet is separated by at most six steps, by way of introduction.

The theory was popularized in the '90s by a play written by John Guare and a film starring Will Smith,but the origin dates all the way back to 1929, and a Hungarian author named Frigyes Karinthy. It is quite interesting when you compare how someone nearly a century ago predicted the earth’s rapid increase in interconnectedness, or “small world phenomenon” by way of new technology. And this was way before the internet.

It is an obvious topic for a business referral blog, wouldn’t you say? When you consider how connected the entire planet is today it is difficult not to consider how companies can use this to their advantage - to reach new clients. But first, I want to take a step back and shed light on the cradle of this theory. Stick with me here, I bet you learn something new.

InterconnectedIn 1929 Karinthy wrote a short story entitled ‘Chain-Links’ in which he discusses the evolution of the world - quickly shrinking in size due to the “quickening pulse of physical and verbal communication.” Keep in mind that this was during the interwar economy of the Hungarian empire - not long after the Austro-Hungarian Empire was dismantled following WWI. The ripples of the Roaring Twenties through Great Britain and the U.S. was felt across the world. This included great leaps in technology and lifestyles.

But, there still was no internet. (Al Gore hadn’t invented it yet.) Nonetheless, Karinthy challenges that, using no more than five connections, anyone on the planet could find a link to anyone, or anything else. Interestingly enough, he attributes this ability through the global expansion of Europe across the world, and rapid changing technology. This is obvious as he states:

“Was there ever a time in human history when this would have been impossible? Julius Caesar, for instance, was a popular man, but if he had got it into his head to try and contact a priest from one of the Mayan or Aztec tribes that lived in the Americas at that time, he could not have succeeded - not in five steps, not even in three hundred. Europeans in those days knew less about America and its inhabitants than we now know about Mars and its inhabitants.”

This is a powerful observation. Outside of the philosophical viewpoint - it has ramifications in the business world. So often businesses rely on traditional marketing to obtain new clients. Yet frequently they rely on acquiring new blood and forget to leverage their network of clients.

In 1929 there were 1.5 billion people on the planet. Today there are 7.1 billion. Perhaps this poses a new challenge, but more inhabitants means more connections. Consider social media. In 2011 a Facebook study indicated that 99.91 percent of users were interconnected by 69 billion friendship links - with the average distance between any random 2 people was only 4.7 friends. Similarly, Twitter has an average degree of separation of 3.43 between two random users.

When you consider these numbers it is no surprise that the New York Times claims that an average of 65 percent of new business comes from referrals. Also, Nielsen _- a global information company - observed that people are four times more likely to buy when referred.

Simply put, consider how connected we all are, especially today. Referrals are a powerful, and often less expensive, way to acquire new business. When considering your marketing strategy moving forward, I suggest keeping referrals top of mind.

“Pull a thread here and you’ll find it’s attached to the rest of the world.” ― Nadeem Aslam

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Comments

I'm very glad Al Gore saved the day by inventing the internets. ;-)

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