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?

A short while ago, I wrote a post discussing one of three key marketing principles discovered and well-documented by the Eureka! Ranch (Overt Benefit). I’ve gotten a lot of feedback since, and thought it would be worthwhile to complete my review of all three principles as we should all have them at the forefront of our minds as we undertake our work.

The second principle speaks to the skepticism that all of us feel when confronted with marketing.  Let’s face it… life experience has taught us to believe little of what we hear from marketers.

For this reason, strong statements of benefits – no matter how compelling – fail to move people to action without the help of REAL reasons to believe what you’re saying.

The benefit is what your offering.  The reason to believe is HOW you’re going to make good on the promise.  We simply have to provide both.

As I watch the marketplace today, I find that this issue – the real reason to believe is the greatest weakness of new business concepts.

To convert the excitement ignited by the overt benefit into actual sales, people demand that we provide persuasive credibility and evidence that we (or our product/service) will perform as promised.  With customer confidence at an all-time low, giving compelling reasons to believe a marketing message is AS IMPORTANT as providing an overt benefit.

When communicating benefits, you may recall that there is a negative correlation between the number of benefits featured and the impact of the message.  More is NOT better.

Not so with providing reasons to believe. In fact, as a rule, more reasons to believe are better than fewer as is evidenced by successful infomercials.  Think about it. The best infomercials (the ones you see over and over) dedicate more than half of their time to reasons to believe (as opposed to communicating features and benefits).

I have mentioned the Proactiv skin care product line before. You lose count of the “unpaid” celebrity testimonials after a while.

How do you communicate your reasons to believe?

According to the research done at the Ranch, there are five proven strategies to communicating real reason to believe.  With one exception they are all equal in their effectiveness:

Strategy

• Kitchen logic     (42% probability of success)
• Personal experience (45% probability of success)
• Pedigree (41% probability of success)
• Testimonial (41% probability of success)
• Guarantee (60% probability of success)

Kitchen logic conveys how the benefit is delivered, using language that people can easily understand and quickly relate to… old-fashioned logic.

Personal experience is about providing customers with an opportunity to see, feel, and experience the product or benefit.  There are three types of personal experience: 1. sampling, 2. demonstration, and 3. sensory feedback.

A demonstration is particularly effective when it is set in a situation that seems nearly hopeless.  They can be done live OR documented and used as evidence in brochures or advertising.  Sensory feedback is about providing people with signals that reinforce your product’s effectiveness.  At its simplest, this means helping them see, feel, smell, taste, or touch the experience.

Pedigree is about providing people confidence by detailing the heritage behind your product or service.  There are three types of pedigrees: 1. development pedigree (providing credibility as a result of the design, creation, formulation, or production process behind your product or service), 2. marketing pedigree (best selling, recommended by 3 of 4 doctors, etc.), and 3. trademark pedigree (using a brand or trademark that has a pedigree of trust – Good Housekeeping).

Testimonials can be provided by customers, experts, or independent third parties. Media quotes can be an outstanding source of independent testimonials.

Guarantees can be the most powerful reason to believe IF the fine print is minimized. The power of a guarantee is directly linked to the level of risk that you appear to be taking. No risk… no marketing benefit.

6 More tips on being the most believable marketer in your industry:

1. The Internet and infomercials are marketing media that carry high levels of consumer skepticism.  If you use these media, you must triple your credibility communications to achieve the same level of impact as classic physical retailers.
2. Score your real reasons to believe versus your competition.
3. Your reasons to believe MUST BE relative to an overt benefit that MUST speak to a target audience. Therein is created a chain reaction in which each piece of your message works together.
4. Anything done during development or production that is unique offers potential as a reason to believe.
5. Beware of offering irrelevant reasons to believe.
6. Beware of following the industry in offering reasons to believe.  The more a strategy is used, the less credible it becomes.  People simply conclude “they always say that.”