Business Referrals

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.