Why DON’T people refer?

A firm understanding of why people DON’T refer is one of the keys to getting your customers to refer business to you.

There are a host of reasons for not referring.  Maybe your product or service is no good.  Maybe your staff is rude. Maybe your customers literally don’t know any other prospects.

Let’s suppose for a minute that none of the above is true – yet people still don’t refer to you.  Let me suggest that you have not put their FEARS of referring to rest.

Let’s face it.  We are all at least a little anxious about referring friends to most vendors. Unless we’re getting a commission of some kind, most of the time, we have more to lose than to gain by making a referral. Even if we were happy with the product or service we received, the fear of a friend being stalked by a salesperson (or unhappy for some other reason) is often overwhelming.

So what can you do to put your customers’ minds at ease so that they can feel comfortable referring friends to you?

Why not start by telling your customers what will happen when they refer a friend?  The conversation may go something like this:

“Tom, as you know, most of our business comes to us by way of referral.  And we have every expectation that as our relationship unfolds, there will come a time when you feel inclined to refer someone to us. [REMEMBER THE POWER OF EXPECTING REFERRALS]

When you do, I want you to feel comfortable that you know exactly how we will handle your referral.

First let me assure you that I will personally work with anyone who you refer. And if the timing isn’t right for any reason, I will absolutely never harass or pressure them.  We haven’t gotten to this point in our growth by pressuring people, and I don’t intend to start now.

And needless to say, when we do connect with a referral, they will experience the same courtesy and integrity that we have tried to deliver to you.

Lastly, without disclosing anything confidential, I will make it a point to keep you abreast of how my conversations with your referrals are progressing.” [PEOPLE WHO REFER LIKE TO BE INFORMED OF HOW THE REFERRAL IS PROGRESSING.]

This is a pretty simple and generic explanation, but it addresses directly two concerns – the potential that a referral will be pressured, and second, that the referral source will be left in the dark as to the final result.

Clearly, the more detail you can offer on your process for handling referrals and the care you take to ensure a wonderful experience, the better your customers will feel about referring business to you. But the fact that you do this at all will cause you to stand out from the crowd of businesses that invest no thought at all in how to empower and motivate customers to refer.

Who doesn’t want to grow their business through referrals? We’d all rather sell to people who have been referred to us. The sale starts with a level of trust and familiarity that just isn’t produced by other methods of lead generation.

So why are sales people so bad at generating referrals on a consistent basis? I would argue that as sales people and marketers, most of us have over-simplified the concept of referral generation.

As I speak with sales organizations about referrals, the conversation quickly heads in one of two directions:

1. Sales people – remember to ask for referrals; or
2. Marketing people – develop a structured rewards program (MCI Friends & Family) to motivate people to refer.

I would certainly agree – you rarely get what you don’t ask for.  So, asking for a referral is better than doing nothing at all.  And people rarely change their behavior – or invest energy to assist a selling organization without incentive. But I’m convinced that this is a gross over-simplification.

I work with a financial advisory firm. I’m a client of theirs. And they are a client of mine. I was enthusiastically referred to them by an angel investor/business owner in Virginia, and after a number of meetings, I became a client. As the relationship developed (post-sale), I found myself referring friends, family, and business associates to this firm.

I hate when people refer me to financial planners.  They harass you endlessly, and you wind up cursing the bastard that coughed up your name. So why suddenly do I find myself referring people to this firm? I’ll offer five reasons:

1. I like what they offer.  And I like the experience of working with them. But that isn’t nearly enough for me to refer to a financial advisory firm.
2. They aren’t desperate. And they don’t grope me for referrals. There is an EXPECTATION that their clients will refer others, and that is made evident from the beginning of the sales process. We never reached that awkward moment well into the relationship when out of the clear blue sky I got the question, “so, do you have any friends that could benefit from my service?” (More on this in a moment…)
3. They have taken away my fear of referring friends to a financial advisory firm. How? By acknowledging that their industry has a bad reputation for harassing prospects and explaining HOW and WHY they manage referrals differently.  In short, some 70% of their business comes by way of referral, and that doesn’t happen by embarrassing referral sources.  They explained exactly what they do to follow up on referrals – and when they stop if they sense the time isn’t right. I believed them.  And they have lived up to their promise.
4. They have made it easy for me to refer to them, and I truly believe that my referrals are given a first-class experience.
5. I GENUINELY FEEL their SINCERE APPPRECIATION for my help. And it makes me want to help them more. And as I have come to find out, there is in fact a science to this.

I will dissect each of the above in detail in future posts, but for now, I’ll focus on #2. This firm EXPECTS clients to refer. And the expectation is subtly introduced in the FIRST CONVERSATION with this firm.

“The vast majority of our business comes to us by referral.” That statement is pregnant with meaning. But most notably, it suggests that the firm has happy clients. It implies that they know how to handle a referral respectfully. And it indicates that they don’t solicit just anyone and everyone to be a client.  I like it.

By the time I became a client, the subject of referrals had been woven into so many of our conversations, that I clearly understood that it was almost a part of the client culture to support this firm with my referrals.  They never really had to ask.

By contrast, how do you feel when after a few months of working together, your financial advisor asks you out of nowhere for a referral? “Tom, I hope you have enjoyed working together. Who else do you know who might benefit from learning about what I do?”

My reaction is to assume business is bad and he/she is scraping for leads. I wonder if I should look for another advisor…. The LAST thing I think about is who to refer. I have been psychologically groped without any of the requisite foreplay. And I’m revolted.

Are your sales people guilty of groping for referrals?

If you’ve been following this blog for a while, you know my position on the importance of cultivating referrals – particularly for smaller businesses.

This is a realm of marketing that is commonly overlooked… typically botched… and arguably the highest return marketing activity a company can invest in.  Literally… Infinite Return Marketing when executed properly and consistently.

Yesterday I had breakfast with the owner of a small service business.  As is typically the case, he is not only the owner and manager of the business, but the chief client relationship manager and evangelist for the firm.

The topic of referrals came up, and I was struck by a confession he made. So much so that I wanted to quickly offer up this brief post for anyone else who may also be hindered by his fear.

As you may recall from previous posts, I’m a strong believer in enlisting clients as ambassadors for a business… teaching them how to refer others… extinguishing their anxiety over making referrals… rewarding their referring efforts… AND enlisting them in your growth plans.

Until yesterday, no one had ever pointedly confessed to me their fears of discussing growth aspirations with current clients.

His fear was essentially this. “If I share with my clients my aspirations to grow, they will assume that (if I’m successful) my attention will be diluted, and the personal service they now enjoy will erode in the future.”

If your client has enjoyed good service from you to date, this is a baseless fear. If you struggle with this self-consciousness over your growth plans in the company of current clients – stop.

If you’re really worried, include in your description of your growth plans a dedicated effort to maintain or enhance quality as you grow.

But absolutely do not be afraid to enlist your clients in your future growth. Petty jealousy aside, people are generally attracted to others who are growth minded and want to help their cause.

Then they want to be thanked for their help and kept abreast of how their contribution has impacted the business.  Try it.

Business gifts just aren’t the same as the gifts you buy for friends and family.  When shopping for your mom, buy her something she’ll love.  Your focus is on her… her needs… what will make her feel good.

Client gifts are different.  Sure, sometimes a nice thoughtful gift is what you need.  But why not challenge yourself to find a gift that gives back?

I’ve never been a Realtor, but I have done a lot of research on lead generation and the customer experience in that arena.

Recently, I was asked the question – what is a good real estate closing gift? A gift for a client after the purchase of a house…

A lot of Realtors engage in the practice of giving these kinds of gifts.  Some are thoughtful.  A new grill… Some are practical (it’s easy to think of things that new movers can use). A gift card to Home Depot… But today’s challenge was to think of a gift that was classy, thoughtful, and ALSO had the potential to give back.

Let me break the suspense… How about a nicely printed set of “We’ve Moved” cards?  People relocate.  They need to tell their friends and associates how to reach them in their new home.

If you’re in high-end real estate, you could dress it up.  Have a line drawing done of the new house.  The original goes in a frame for the wall, and a miniature version on the front of the “We’ve Moved” card.

On the back (in a classy way) goes the Realtor’s contact information and mention of another successful relocation (or whatever).

You could take the idea a step further and offer to have the cards addressed for the client.  All they have to do is give you the list. See where I’m going with this?

This is a gift with the potential to give back.  It has a viral marketing element.  Your client is using this thoughtful gift to spread your name in a favorable light to all of her friends and family.

You’re probably not a Realtor.  So what?  With a few ounces of creativity, I’ll bet you can find a client gift that gives back.  If you’ve got one, I’d love to hear about it.