The most successful business relationship is usually the result of a personal recommendation.
By Roger Ewing
Case in point. A sales associate in my office, lets call him John, understands the value of referral marketing. John enters into an agreement with a custom house painter who works on new speculative homes, as well as high-end remodels, in the toniest of neighborhoods. Pierre is the painter homeowners love to have on their project and then brag to their friends about the talented craftsman working on their home.
John is an enterprising and very successful real estate broker. He understands the value of referrals and decides to create a mutually beneficial relationship with Pierre the painter. John will refer Pierre’s custom painting business to his clients who are purchasing or selling homes. In return, Pierre will refer any potential buyer’s and seller’s to John that he meets on his painting projects. This symbiotic relationship should result in lots of referral opportunities for both.
John refers several custom painting jobs to Pierre over the course of the next few months. Pierre is delighted, but John has not yet received any referral leads, even though Pierre claims to have handed out every business card John gave him. What’s the problem?
It’s not enough for Pierre to simply hand John’s real estate business card to potential clients who happen to inquire about the home he is painting. That action alone does not qualify as a referral. A successful business referral requires more effort.
I recommended to John that he meet with Pierre the painter and “train” him in the way he should handle his referrals. Here are four helpful ideas to assist you in creating better referral opportunities.
1. Ask permission. Always create an environment where your friends or business partners acknowledge the referral process. “My business is predominantly the result of personal referrals. Would you be willing to help me by passing on potential buyers and sellers to me?” Assuming they say yes, you’re next step is to train them on how to refer you properly.
2. Set the stage. Some individuals will balk at referring a client to you because they worry it may cause problems in their friendship with you. Confirm that you keep your business and personal relationships well separated. Assure your referral source that regardless of the quality or outcome of any referrals they give you, the referral will have no negative impact on your personal or business relationship.
3. Don’t qualify the referral. Your referring source does not need to validate the quality of the referral. I suggest saying something like this. “Please do not evaluate or attempt to determine the quality of a referral you give me. Allow me to do that, it’s my job. Send any lead my way, good, bad, or indifferent.” People may actually not want to give you a referral because they don’t want to disappoint you. Do not allow your referring source to do that.
4. Control the referral process. You must initiate the call to the client, not the other way around. Instruct your referring source to obtain the clients contact information and tell the client you will be calling. This is critical. Taking control of the referral process from the beginning will ensure client contact for you. Leaving this to chance, by waiting for the client to call you, may result in a lost opportunity.
Lastly, the issue of providing an incentive to the referral source is something to consider. When a friend or business associate recommends you, they are taking a leap of faith. Their goal is to do a good deed for the client by giving them the opportunity to work with you.
Personally, I don’t believe in paying cash for a referral that results in a closed transaction weeks later. I want to reward my referral source to initiate referrals, not to close sales.
Therefore, I recommend you provide some small gift to the person who has referred you. This should be done as soon as you receive the referral. That is the behavior you want to reinforce. A coffee house or a restaurant gift card is all that is required. If a referring source wants to make a business of providing referrals to you, then they are referring you for the wrong reason and the quality of the referrals will reflect it.
WOM, word of mouth, is a new internet catch word, that describes a very old concept. People do business with people they know. The best way to expand your business is to train your friends, past clients and business relationships to refer you. The result will be many successful business transactions.
Copyright © by Roger Patrick Ewing, all rights reserved.