Give Referrals to Get Referrals: The Best Leads You’ve Ever Had

Note: This post was part of the “Marketing That Works” Ideas Contest, showcasing 20 of the most innovative marketing ideas from the blogosphere’s up and coming marketers. We’ve since picked a winner – check out this post for the details! :)

agenda bookImagine you’re looking for a house.

You contact a real estate agent and she shows you a few houses. One of them is perfect but it needs renovating. You decide to buy it anyway.

Then the agent gives you a business card of a contractor she trusts with renovations.

How likely are you to use that company? Unless you have serious trust issues, you’re likely to buy their services.

What’s in it for the agent?

She doesn’t get a commission, so nothing, right? Actually giving the referral has great marketing value to her.

In fact there are 5 reasons why you too should give as many referrals as possible…

The three requirements of giving a referral

When you find yourself giving a referral think about these three points first. If even one doesn’t apply, forget the referral. You’ll get the exact opposite result you’re looking for.

  1. The referral has to be relevant. Don’t give referrals just for the sake of giving referrals.
  2. The referral has to deliver. If the referred business screws up, they screw you up too.
  3. It has to feel authentic. The prospect cannot feel you’re giving the referral for your sake.

If all the above requirements are filled, give the referral. And get rewarded for doing so.

Before you can give referrals you need to build trust. You need to be seen as an expert. Or would you trust a vegetarian to recommend a steak restaurant?

1. Create expert status and trust

Expert opinions

To be an expert you need to know your industry. Most people don’t realize this consciously, but when you demonstrate your knowledge they believe you’re an expert.

This works the other way around too; if you don’t know your competitors and other companies in your industry, you’re seen as a beginner.

Even when you’re just talking with friends you can showcase your expertise by noting what some author thinks about the topic. And the one person, who doesn’t recognize the well-known author, loses all credibility in the conversation.

Basically you’re saying, “I know what the other experts think. And because of that I have even more authority than those guys.” If you’d say that out loud you’d be seen as an idiot. But when it’s only implied it’s surprisingly effective.

When you recommend something as an expert, you transfer your credibility. But first you need to be trusted.

Be trusted

How much your customers trust you varies a lot. Real estate agents and used car salesmen are one of the least trusted ones. The expectation is that they’re dishonest to their own benefit, even if they’re experts.

That’s why referrals are so powerful. You don’t trust a used car salesman when he’s selling you a car. But if someone you trust recommended him to you, he seems trustworthier to you.

Unless something decreases his trustworthiness in your eyes, he’s an expert to you. He doesn’t have to work to gain your trust; he can only lose it.

But even if you don’t trust him when he’s selling you a car, you’re likely to trust his recommendation of a car stereo shop. You don’t expect him to benefit from lying. And you do expect him to know cars (and car stereos). The result: you believe with all your soul the car stereo shop is the best around.

How to showcase your expertise and build trust

Refer to related companies and services when you talk with your customers/prospects. Share your knowledge of the different options in the industry. Explain differences between opinions and what applies to the prospect’s situation.

If your competitors are brought up in the conversation, don’t disregard or dish them. That decreases your trustworthiness. Explain why your solution is better to the customer.

There’s a temptation to use professional language to convince the prospect of your expertise. As the Nobel-prize winning psychologist Daniel Kahneman explains, in his book “Thinking, Fast and Slow”, using complex language decreases perceived trustworthiness. So, don’t confuse your customers; it doesn’t make you an expert and it’s not cool to speak with fancy words.

Use professional language as much as the customer easily understands. Don’t underestimate them, don’t oversimplify, and don’t flood them with new information.

Now that you know how to build customer trust and create an expert status for yourself, you can start to give referrals in many ways. And get the rewards for doing so.

2. Increase Your Value to Your Customers

Finding a good tailor, barber, plumber, restaurant, or any other service is valuable. When someone recommends one to you and it turns out great, their value increases in your eyes.

They helped you, so you want to help them. And the most logical and simple way to do that is to refer them to your friends.

This is one of the main reasons giving referrals is so powerful. Whenever you give a referral that pays off, someone feels they owe you.

The human tendency to reciprocate is often used in negotiations; make a concession and wait for your opponent to reciprocate. But it’s often forgotten in other situations.

If it’s likely that your customers are looking for a related product, one that you don’t offer, mention that you can give good referrals. (For example a web hosting company that doesn’t provide email services.) It will put their mind at ease.

Leverage your ability to refer

Your referrals should entice prospects to contact and trust you. And make you a valuable source of information.

There’s a temptation to share your referrals only with buying customers. But you shouldn’t do that.

But you shouldn’t share referrals on your website either. Require contact with you, or you miss out on much of the rewards.

3. Create business relationships

Most business owners will find it hard to resist more customers. If you can provide that with referrals, you’re valuable to them.

There are many types of business relationships related to referrals. I’ve compiled the most important ones here. You need to remember one thing with all of them: never give referrals to companies that don’t deserve them. Even if they could generate more business for you, you’ll lose in the long run if your referrals aren’t trustworthy.

Referrals both ways

The key to getting referrals from the companies you refer to, is to ask for it. You’ll often miss out on referral opportunities just because the other company doesn’t know you.

Other than being noticed by the other company you need to fulfill the first two recommendations for giving referrals: you need to be relevant to their customers and you need to deliver a referral-worthy service.

Shared discounts

If you were the company receiving referrals from another company, you’d like the prospects to turn into customers. Is there a better way to do that than to give a discount?

If you were giving a referral, you’d benefit from the opportunity to offer a discount of the service you referred. It would make you even more valuable to your customers. You could even advertise your ability to get discounts.

If the services are closely related you could also offer package deals. This would add value to the customer and generate more sales for both companies.

Content to your store

This is one of the most obvious and most overlooked possibilities business relationships provide.

You can often get content or products from your business partners. If you had a record store, you could get a CD-player and headphones (for customers’ use) from a hi-fi store. In return you could send some interesting albums to them for demo use.

A note would indicate the source of the products to the customers. You’d both get in front of your potential customers. In some situations you could even get paid for having a product displayed in your store.

How to create a relationship with a company you refer to

Creating a business relationship can be daunting. Contacting someone to ask for a “favor” takes courage. But if you do it well, you’ll almost always negotiate a deal.

Approach first by email, it’s non-intrusive, and then follow-up with a phone call. Here’s what you need to remember when making the first contact:

  1. Offer something first. If you receive an email asking you to do something, do you even read on to see if you could get something in return? Maybe, but it’s more compelling to first offer something for them before you ask for a favor.
  2. Give an example. Don’t expect them to think about how they can benefit from your offer. Do the thinking for them and explain how they will benefit.
  3. Make a call to action. Ask for a small commitment. And make it specific. Don’t give a lot of options, they’re confusing. Ask them to just answer your call the next day, or to think about how you could help them.
  4. Be extremely clear. People don’t like emails that require them to think much. At least not when they’re being asked for something. Spell out what you propose and why.
  5. Make the pitch short. There’s no such thing as a too short pitch.

4. Be remembered as a source of quality referrals

Referrals are memorable. You’re as likely to remember the source of a good referral as the referral itself.

If you can give quality referrals it’s a reason for your prospects to contact you. And that contact can lead to sales for you. For that to happen you need a reputation as a source for referrals.

Giving just one referral won’t do the trick. When you give two, you get closer to it. You need to tell your customers you have the ability to give referrals to all related situations.

If you’d hear from various sources that someone gives good referrals, you’d believe it even if you never met the source.

You should become that source.

How to create a reputation as a source for referrals

As I mentioned earlier you should advertise your knowledge. Sometimes you should give weight for one specific referral (like the web hosting company that doesn’t provide email).

But don’t give the impression that’s the only thing you can refer. You can say, “We can recommend good email services. And if you have other needs, don’t hesitate to ask. We have experience of working with various companies you may find useful.”

The only way you’ll create a reputation, as a source of referrals, is if you give them. Most of your customers are unlikely to ask for them, so give referrals whenever it’s appropriate.

5. Get your best customers

Studies of customer behavior suggest referred prospects are most likely to buy. They’re even easier to sell to then repeat customers. I know it sounds counter intuitive, but it does make sense when you think about it.

When you receive a referral from a source you trust, you transfer your trust of the source to the referred company. The referred company starts to build trust on top of the trust you already transferred to them. So, wouldn’t it be nice to get referrals?

How to get referrals

If you’re wondering how to get referrals, consider giving them. People talk about referrals and who made them.

But there are other things you should do to get more referrals yourself.

First step is to ask for it. Tell your customers you expect them to refer you to their friends and colleagues. You can mention it even before delivering anything. It creates an expectation that you’re great and they’ll want to refer you.

Next you need to give tools for referring you. Twitter, Facebook, LinkedIn, and social bookmarking sites have buttons you can use. There are other ways to give referrals, but the buttons require the least work.

Reward those who refer you. Other than affiliate programs, referring you may not have any obvious benefits to them (unless they’ve read this article).

You can reward people with small gifts. Anything from e-books to discounts and sample products will make it worth their effort. At least send an email where you thank them.

Most effective way to get more referrals is to over deliver. If you surprise people with your product quality, customer quality service, delivery time, or anything else, they’re likely to refer you.

No matter how much you ask for it and how easy you make it for them, people don’t talk about mediocrity.

I’d love to hear what you think about giving referrals. The question I really want you to answer is: Who do you refer people to? What did they do to get your referral? What do you get in return? Leave your answer in the comments below.

Peter Sandeen writes about Company Culture and Referral Marketing at Affect Selling

 

Comments

  1. says

    As an insurance agent for independent agency in Upstate New York referrals are the life blood of our business and have been for over 40 years…

    I find that professionals who are new the game often struggle with referrals because there is so much emphasis on their importance but not a lot of study on how to actually perform this process.

    I really like your point about how the referral has to feel genuine. This can often feel uncomfortable but once you’ve mastered how to get business flowing to your referrals partners watching it flow back in to you will seem easy.

    Great article!!

    Ryan H.

    • says

      Thanks for commenting.

      I’d like to hear how you started your network for referrals? Did you purposefully contact businesses or did you just start giving referrals and then get referrals your way?

      • Ryan | Strategies in Content Creation says

        Peter,

        When I first started out my clients would ask me questions about other industries or ask for the name of professionals in other industries and I didn’t have any because I was so new. So about a year into my career I started seeking out referral partners that I thought had a similar value structure.

        The conversation usually started over a cup of coffee and progressed from there. Some I’ve had for years now and others have gone the way of the Dodo. But the important thing in my mind is being able to provide additional value to my clients with the name of Trustworthy professional.

        Thanks!

        • says

          Hi Ryan,

          You said clients asked for referrals for other industries. Were these industries even close to yours?

          I’ve been surprised by how often people ask for referrals for completely irrelevant industries. It seems people trust you with everything once they trust you with something :)

        • says

          When I started my family law practice years ago, I looked to reciprocal referrals (or as Ryan calls them “referral partners”) as my primary source of business.

          I made it a point to find a specialist in each of the common legal fields (business, criminal, bankruptcy, immigration, real estate, employment, intellectual property, etc.) to whom I could refer business when I am unable to assist the prospective client coming to me for help.

          I would personally visit each of these lawyers in their offices and make a case for how we can build a mutually beneficial relationship. I tell them how I can be a source of consistent referrals for them. And in exchange, ask that they refer their clients to me when what the clients need is beyond their field of expertise.

          • says

            Hi Jeanne,

            There are situations where you should definitely find a trusted source for a referral, rather than blindly trust marketing. A lawyer is definitely one of those services I wouldn’t trust without a recommendation.

            I’d like to hear how well your referral network worked? Did you feel you got back what you gave to the other businesses?

            • says

              Honestly, I didn’t stick around long enough for it to really take hold :-). My practice was only open for about a year before I left for greener pastures (real estate business). After all, some referral networks are built over years of relationship building.

            • says

              So, are you now in real estate business? If so, I’d love to hear whom you’ve chosen to refer? I started the post with an example of a real estate agent and there’s already been some talk about that here.

              So, could you add to that? It would be nice to see if you have other ways to approach referrals as a real estate agent than the ones already discussed.

    • says

      Agree with you Ryan.

      In my experience Real Estate, Insurance Brokers, Mortgage Brokers are one of those industries where people generally don’t trust on marketing. Often people choose through close family and friends word of mouth.

      For example, if you go to a real estate agent highly recommended by your family member, you will listen to his / her recommendation when it comes to select a mortgage broker or buying an insurance for your house.

      I think these are the industries where a big percentage of the new business comes through referrals.

      Referrals are great and there is not doubt that the conversion ration is always high.

      • says

        Hi Rana,

        I guess the higher the stakes (going to court or buying a house for example), the more important referrals become. People avoid risk any way they can, and referrals are one of the best ways to do that…

        And you’re also right about that trust can be transferred forward, as in the example you wrote about the highly recommended real estate agent. And indeed the conversion rates are higher than in any other situation.

        • says

          Hi Jeanne,

          It seems you’ve done quite a bit ;) You’ve probably, along with all the other lessons, met some great people and wonderful businesses you can now refer people to?

  2. Ryan | Strategies in Content Creation says

    Peter,

    That is the deal… Once you’ve established yourself asked a Trust Advisor in your client’s mind they look to you for advice on all types of matters. People assume that if you are very trustworthy then your referral partners will be as well.

    This is a relationship that takes time to build but once you have it this type of relationship you can do very VERY good things for people because they no longer question your advice. The conversation becomes less establishing your credibility and more about solving your clients issues.

    That is where you become the professional you are…

    Thanks!

  3. says

    Hi Ryan,

    I’d only add one aspect to your point of solving your clients’ issues. When you solve their problems, they want to do it back. And I believe you should give them the chance. They could give a testimonial or tell their friends about you.

    You could even ask for a referral from them to a problem you have. Just ask about something they know a lot about, their work or serious hobbies. Avoid difficult questions, as they make people feel stupid…

  4. says

    Fantastic post, Peter!

    You really addressed something important here, that I’ve not seen mentioned very often. I love it.

    To me, authentic referrals is a sign of a mature contributor to the economy. I’ve given these out my whole life, very often with zero clarity of how it would benefit me personally, but aware that it would benefit the world, and indirectly somehow (karma ;) ) me.

    I’m much clearer on it these days, and even more so after your article…

    We have a LOT of people interacting in the world, and anytime we direct one to where they’re most well-suited and appropriate, when we help customers match with who they’re supposed to match, it boosts the economy in a huge way.

    And I think most businesses understand that a booming economy is Very, Very, Helpful.

    :)

    • says

      Hi Jason,

      Thanks for your input, I appreciate it :)

      I too have done my best to give referrals whenever I can. Unfortunately many companies are paranoid about competition and even completely ban talking about competition (yes, I’ve worked in such companies). That in fact was the inspiration behind this post.

      I love to help others. Whether it’s through giving a great referral or just sharing ideas about company culture and referral marketing, I believe the goodwill comes back somehow. And that’s why I write my blog: http://AffectSelling.com

      I can see from your blog you love to help others too. I’ll be sure to refer you if I ever get the chance :)

      • says

        I hear ya…

        …Well if those companies got you to write such an Epic Contest Post… I think we have to thank them ;)

        Oh I LOVE helping others, live and breathe it, everyone wants a little (or a lot) of sexy success in their life.

        I’ll refer you too, culture is key! Ryze Up man!

        • says

          Yeah, you can learn and grow from everything ;) I rather don’t regret things.

          You said “Epic”. Just out of curiosity, do you think the post was too long? Many people only want to read relatively short posts (max 600 words)… I’ve been thinking about the length of posts and in my blog I’ve solved the problem by writing two different types of posts “Daily Ideas” (shorter) and the normal blog articles (usually over 1000 words). But my latest “normal” post is about 3500 words :D (If you think you’re up for it check it out. The link’s below ;) )

          But really, how long is too long? Or is there such a thing? Everybody can chime in here ;)

          • says

            Great questions Peter…!

            Well, language is fluid and flexible, but generally it goes like this:

            Epic as a noun is an extended, legendary tale.
            Epic as an adjective means heroic, extraordinary.

            I meant it as a new 3rd meaning, which is slang on the ‘net, such as “Epic Fail!”

            As for discussions of length, I’m not a huge fan because as you said at the end “Is there such a thing?”

            No such thing; everything that was once seen as excess, eventually becomes acceptable.

            What I find much more interesting and significant is whether the author, is personally comfortable with his creation. Confident and without doubt or question.

            Also, is each individual of an audience happy to enjoy it, or do they wish to “go somewhere else”.

            To me those are the key focuses.

            • says

              Hi Jason,

              Thanks for your thoughts. I did understand that you meant it as the third option. But I do think you wouldn’t have used it unless my post was relatively long. I felt comfortable with it, and I already shortened it by around 600 words to take the jargon away.

              My question was more about your idea about the “best length” for a blog post. But I do understand your point, the length is okay as long as it’s justified.

          • says

            As I said above, “best” is a fluid thing.

            Best is “the length you are comfortable with.”

            Peter Jackson released Lord Of The Rings, 3, four-hour movies, many people would consider this “too long” and the best length for a movie is 1.5 – 2hrs. They were wrong, Peter was happy with the length, and so was his audience.

            I write long articles and short ones, however I feel. People love them. I wrote one on PlanetNaveen here ( http://www.planetnaveen.com/2012/01/what-horrible-things-you-have-been-taught-that-stop-success/ ), and one person said it was “too long” but I pay no attention to him. To me that says:

            “Hey, Jason, Great article. But I feel too busy in my life, and have trouble focusing for more than a few minutes at a time, but I still read to the end of your article and posted this comment.”

            It sounds like you’re happy with the length, it sounds like Danny Iny’s happy with the length, and it sounds like the commenters are happy with the length.

            You rock man, but I’m not gonna come out and give someone a “best length” for a post, it’s different in every circumstance :)

            • says

              Hi Jason,

              Well put. I completely agree with you. It depends on too many factors to give any solid opinion about it. As you said, the length of this post seemed right for me, Danny, and the commenters. But I still worry that some people just didn’t care to read to the end because of the length, and then didn’t leave a comment. I guess that’s their loss ;)

          • says

            I’m always asking myself that question too, Peter – how long is too long? Especially when it comes to blogging. I’m a little with Jason on this one, I’ve found that it really just depends. Depends on your audience, the nature of the blog – plus your own personal writing style, and the type of post (while keeping in mind that the average reader on the net skims, haha).

            I know with myself, I always tend to write on the short side – if it’s more of a solid, action-oriented post then I aim for more length, but if it’s more of a reflective piece, I usually don’t struggle with it too much. Either way, if what’s said is said, then I think it’s a successful post, no matter what the length. :)

            • says

              I remember Brian Clark from copyblogger interviewing Seth Godin. He noted how short Seth’s posts are, and said, it shows talent. He’s posts aren’t that long (in my opinion), but at least in the interview he said, he would write shorter posts if he had more time.

              At the other end you have posts like this one, long and (relatively) comprehensive. And at the other end posts like the ones Seth Godin writes, short but inspiring. He said, he believes it’s better that the reader has to come to the conclusion on his own. That’s a fair point, but I guess these posts serve a different purpose… And that’s why I write both ;)

  5. says

    Hi Peter, I think your point about quality referrals is excellent. If you can give really good referrals you’ll get really good referrals. In terms of networking it’s always useful to ask people what they’re looking for and what they can offer, so you can be the business matchmaker and make those all important referrals.

    Giving referrals gives you credibility too and helps with your “expert” status, which can only help with trust etc. too. So, focus on helping others.

    Good luck in the competition!

    • says

      Hi Cassie,

      You mention asking people what they can offer. That’s so simple, and yet so incredibly powerful! What better way to create the network than to check out the people who you encounter. And as an additional benefit, people usually love to talk about what they do. Showing your interest will definitely help in creating a relationship. Thank you for bringing that up :)

      Do you do that? I mean do you ask the people you encounter, what they have to offer?

  6. says

    Peter,

    I think you’re right that specifically focusing on referrals, or other ways you can help your network is a great strategy for getting more leads coming your way. I think one of the keys that you mention near the end is that “people don’t talk about mediocrity”. We all have to look at ourselves in the mirror and make sure we’re not delivering average service because that’s a critical component of making the whole thing work.

    • says

      Hi Tom,

      I believe that focusing on referrals, leads to doing many things well. For example customer service, which I write a lot about (unfortunately most people don’t seem to see the value of it…), is maybe the best way for getting referrals. But you might not see the value of it, if you didn’t focus on getting referrals.

      So, when you see what would make your company referral-worthy, you will turn your business into something remarkable. Or else your business will fade away…

      I cannot describe how easy it is, to become blind to your own work. You see all the little details of your work, but miss the fact that most people won’t notice those. They experience the broader strokes like customer service, intuitive products, and so on. It’s a wonderful ability to take a step back from your business (or blog, or book, or music, or whatever you do) and see how others see it.

      I guess it’s a bit like the things you describe in your post about Guy Kawasaki’s book promoting. He could see what his audience sees, and then he delivered what the audience wanted. BTW have you created a referral network? I’m asking because I think it’s valuable to see how people actually use this idea.

      • says

        Peter. Thanks for asking. No, I haven’t created a referral network. My wife has been involved in some local, offline ones but has had a mixed experience, mainly because of the time commitment. I’d like to learn more about the type of referral network you recommend though!

        • says

          Hi Tom,

          Offline networking has some benefits that online networking can hardly reproduce. Most importantly the real connection of meeting people. Not to disregard networking meetings etc. but I’d go with a more focused style. There’s two primary ways to do this:

          1. Identify a customer need. If your customers are often asking for something, find out where to refer them to.

          2. You know someone your customers would find valuable. You can sometimes give referrals even without customers asking for them.

          In both situations, you have absolute control over who you “accept” into your network. But of course you can do this in networking parties. It just might be more difficult to find the right people from there. But then again you’d immediately meet the person you’ll refer later. So, I guess both ways have their advantages ;)

          If you’re interested in the idea, I’d love to write more about it. Maybe even a guest post to rightmixmarketing? I didn’t see any guest posts there and I understand if you don’t want guest posts, I can write about it in my blog ;)

  7. Jane says

    This is a very interesting and informative post. Referrals are really great marketing opportunities. Here, the first and foremost point to be noticed is that when we refer someone, the customer will go for the service whom we referring completely based on the trust he had on us. Of course, the customer has to verify the credentials of the service as it will be at his own risk.

    It is a great opportunity to add value to your clients, retain clients and show someone who offers best services that you are not into. Hence, referrals certainly improve your business.

    • says

      Hi Jane,

      Thanks for commenting :)

      As I mentioned in the post, one of the three requirements of giving a referral is that it will be great. If it doesn’t deliver what your customer was looking for, you’re screwed too.

      Something in your post felt like you have some poor experience related to referrals. Did my mind just make that up, or is there something? I believe learning from failures is the most effective way to grow (though you must also learn from successes).

  8. says

    Hi everyone!

    The article outlines the simple principles which people began to forget, while it is time to remember them and implement in life, especially now, when noone knows whom to trust. We live in a community. If you’ll take the position of expert, helping people to make a right choice you’ll get recognition and your businees will grow. The main thing is to love to help people.

    • says

      Hi Alex,

      I appreciate your input.

      It seems companies are so focused on beating their competitors that they forget the benefits of networking. Not just the referrals, but more intimate sharing of marketing resources and other mutually beneficial resources, ideas, and ventures.

      Yes, the main thing really is the love of helping. Unfortunately many companies seem to forget that employees who work with customers, should actually like to help customers. I wrote of a personal experience related to this recently. The link is below…

      • says

        Thanks Peter!

        I’v read your article and this question is very close for me as I work in the plastic card service call center in a bank and know the customer’s needs. In my country low quality service is one of the greatest problems and this all is on the background of high level of competition. It’s paradox. How is it possible in the condition where economic level is low and so much should be done to attract the customer?

        • says

          Hi Alex,

          I know your situation. I believe the same thing is happening all around the world, good customer service is seen as a luxury, which it doesn’t have to be.

          I’ve written a lot about customer service, because I believe it matters a lot. It’s the “human face” of a company. And I totally believe good customer service, if done well, is highly profitable.

          Here’s what I believe you (or the bank you work for) should do. Always provide great quality customer service. Competing on price leads to smaller profits and even more competition. But if you provide exceptional customer service, you’re no longer competing (as much) with price. I do understand the temptation to forget customer service, to save some money, but it’s not necessary. I’m writing a post about efficient customer service (for tomorrow). Maybe I’ll be able to share some ideas there that you’ll be able to use. As I said, customer service can even be profitable.

          But before that, could you tell me what kind of customer service do you provide? Email, phone, personal? The systems you should create differ from one way to another…

          • says

            Peter!

            I provide phone technical support for plastic cards to all departments of my bank in my country. My other responsibility is ti inform customers about our deposit rates, credit interest rates and other information. Sometimes happens that people call me and ask why they don’t receive decision on the loan. They begin to quarrel with me. I know that decision should be adopted much faster, but I can not be confident for the back office to which I have ni reference. Sometimes I get lost in these situations. Sometimes do everything I can. But still, how to protect our interests in the face of customers?

            • says

              Hi Alex,

              It does sound like you can’t fully control the common problems the customers contacting you face. I have (a lot) of experience of similar situations. You probably already handle these situations similarly, but maybe you get something out of my “method”.

              1. When you notice, the customer is asking for something you cannot provide, say something like, “I’m so sorry, but I just don’t have the authority to do that, but I’ll do whatever I can to help you get that.” This hopefully turns you into their ally (in their mind).

              2. If their desire is achievable, tell them exactly what they need to do. Make sure they really understand what they need to do; people are eager to say, “okay” or “yes” way before they actually understand what you said.

              If they ask for something they can’t get, explain why it’s impossible. I’ve noticed generalizations help here. You could say, “The international bank crisis has made banks extremely cautious, and unfortunately this affects your loan application’s schedule.” This implies there’s something much bigger at stake, and that they’re the victim of that (not the fault of your bank specifically).

              Let me know did this help?

            • says

              Peter! Thanks but I know the things you listed me, but I’m not focusing on what I should do. I have coped with this all situations. The idea is not only to say that it is not my authority, but to protect the organization image. Moreover when my organization is not rirght.

            • says

              Sorry Alex, I misunderstood…

              That’s tricky. The reason I started to write about referral marketing and company culture is that I felt the companies I worked for were constantly wrong. They only understood short term results, and customer satisfaction was almost forgotten.

              I know this isn’t much, but here’s what I’ve done. If an issue rises again and again, you can start a conversation about it with your colleagues and bosses. And then hope for something to change. If and when nothing changes start the conversation again with another person, or in some other way (a new perspective). Hopefully something will change eventually.

              A more effective and risky thing to do, is to “recruit the customer” for the cause. Tell them how to contact the people who actually could do the right thing. You could even say that you agree with them (the customer), and that you’re working on this issue. This could strengthen the relationship between the customer and you, and therefor with the company as well. But as I said, this is more risky…

              Did this help at all?

            • says

              Sorry me Peter!

              I shouldn’t begin this topic because this is very long discussion, not referring to this article.

              I gave the link of your article to the guy that wrote about reciprocal links. (If he’ll post my comment, he’ll get it) I found it occasionally but I think it will be interesting for you. I suppose that you will research this topic and write an article about right ways of giving referrals through reciprocal links. May be I’m not clear, but if you’ll read the article you’ll get the linking point between your article and the one that I give you. Here is the link:

              http://www.darrinward.com/blog/seo/reciprocal-links-good-bad

            • says

              I could never believe that gaming business and games like Warfare are so profitable. I considered only online games like EVE or LineAge to be profitable.

              The greatest game product of my country (Ukraine) is S.T.L.K.E.R. This game became very popular even in the US. The game is about stalkers and monsters that captured the territory near Chornobyl, where was famous nuclear catastrophy.

  9. says

    Peter, I love yoour writing style. It’s very factual and no-nonsense.

    Seems like you are speaking to the centrality of reciprocity in the “building connections” process, and I wholly agree. As I’ve noted in another comment, I really like Ivan Misner’s “Givers gain” motto for BNI. I don’t know why more entrepreneurs don’t realize all there is to gain by this “open-handed” policy. Your article lists all the benefits, yet avoids the pitfall of appealing to your readers’ greed, as in, “Give IN ORDER to gain.”

    Thank you for this piece. And success in the contest!

    • says

      Hi Joel,

      Thanks for your thoughts.

      I do believe in the human nature to reciprocate. And I want to believe in people understanding and using the ideas I shared. You wrote, “I don’t know why more entrepreneurs don’t realize all there is to gain by this ‘open-handed’ policy.” Somehow I don’t believe you ;)

      I think that you and everybody else here knows exactly why businesses aren’t open-handed with referrals. I think you, just like me and others, just don’t want to admit the reason: people are greedy. Entrepreneurs want to keep their customers to themselves. They only see the immediate effect of giving a referral, the customer going somewhere else.

      I admit I’ve done the same thing. Not with a business but with my blog. It’s not that I would’ve avoided linking to other blogs. I just haven’t spent as much time thinking about outbound links than I’ve thought about which posts I could link inside my blog, so there hasn’t been all that many outbound links…

      My blog is still quite new so every visitor means a lot to me, so the thought of me providing them an incentive to leave, feels awkward. So, even though I wrote all 2500 words about giving referrals, I haven’t done it. And that’s exactly the reason business people avoid giving referrals.

      I will change that now: I promise I will always think about relevant links to any blog I can think of from now on. I can think of only one major blog that forbids its writers to link to other sites. All other blogs live off of networking.

      Thanks Joel, for bringing that topic up. I think it’s one of those things people avoid, because they don’t want to face the reality. What do you think? Did you mean this, or something else entirely?

      • says

        Good thoughts, Peter. But you give me credit, perhaps, for more insight than I have: Until you pointed out what is, in fact, fairly obvious, I really hadn’t thought about referrals as “sending a customer away.” :-) And I believe you are right.

        Thanks for the undeserved extra credit… :-)

        • says

          I know this sounds like a clishé and it probably is one, but I do think you knew the answer, you just did what most people do. You avoided an unpleasant answer.

          The credit is yours ;)

  10. Ruth Zive says

    I’m part of a business networking group and it’s built entirely on the notion of referral-based business.

    The motto (which is a little cliche) is “givers gain”, and I’ve found that to be true. I refer to those businesses and vendors that I’ve personally found to be exceptional; it’s a win-win. The businesses to whom I refer are grateful, and more inclined to refer back to me. The people I refer are grateful because they can rest assured that they are being put in touch with a quality vendor. And I benefit from the whole dynamic. Win-win-win, actually.

    Great post.

  11. says

    Hi Ruth,

    Thanks for sharing your story.

    I’m obviously a fan of referral networking. So, I’d really like to hear how you choose the businesses you refer to. Do they all operate in the same industry or do you give referrals over industry borders?

    • Ruth Zive says

      Within the business networking group to which I belong, I refer to any of the vendors that i have personally used and found to be exceptional. The group represents all industries – one person from each industry (everything from mortgage broker to plumber to florist to financial planner) – and the notion is that members refer to one another. I’ve taken time to get to know all of the members, and I’ve done work with several, so those referrals are obvious.

      Beyond the group, I refer to partners in my industry (I write copy, and I work, for instance, with several graphic design firms, web developers, marketing strategists) and I align myself with experts to whom I feel comfortable referring.

      I think that the best referrals are borne from our own personal experiences and relationships. I give it a lot of thought – both in terms of how it will advance my own business, and how it will serve the needs of those people to whom I am referring.

      • says

        It seems you take the best aspects of both possibilities. You get the wide range of businesses from the networking group, but you also have partners in your industry.

        Many entrepreneurs I’ve talked with, have completely disregarded networking as “irrelevant” to their business. And yet they go to the world’s end to nurture a few key relationships they have. As if they don’t realize that those relationships are their network. It’s refreshing to hear someone actually thinks about networking :) Really, thanks for sharing.

  12. says

    “I know what the other experts think. And because of that I have even more authority than those guys.” <— Love this, Peter! This has always been my subconscious mindset, and it really does have to come across in subtle ways (otherwise you just end up sounding egotistical, ha). I pride myself on just *knowing* things about the industries I work with, so I can relate.

    Referrals really can be a powerful tool in building trust, I've found some of the best products and had some of the best experiences based on referalls and recommendations. And you're right about the rewards, that really does do the trick. I know I'm much more inclined to keep recommending an author, for example, when they don't hesitate to lob me an ebook copy in exchange for a review. I'm on the other end in this case, so I'm excited to bring it as more of a focus for furthering my own business as well.

    Thanks for a great post! Good stuff here.

    • says

      Hi Tanya,

      The irony of being a special expert because you know what other experts think, is that every expert knows what their colleagues say. Or at least they should. And most experts do what you do, hold the knowledge without bragging about it.

      I think we all have experiences of referrals paying off. And that’s exactly why they are so powerful. You’re accustomed to expect a referral to be valuable, so the source instantly becomes more valuable to you.

      Who do you refer when you do refer someone? Or if you haven’t given a lot of referrals until now, who will you refer and more importantly why?

      • says

        I haven’t had a lot of opportunities yet for making the actual referral, but it’s already an idea I’ve had in the forefront of my mind for a while. One area I’ve been keeping tabs on is writing & editing, for the artists and authors I work with; it’s a strength of mine, but I’m finding I’d much rather focus on primarily marketing/promotions and ideas. I’ve stumbled upon a couple individuals already that I’ve mentally filed away – one runs an editing/consulting business for authors, the other is a writer who works specifically with artists. I’m the kind of person that loves banking on solid (and valuable) teamwork. :) Since most of my online relationships are with artists in all the different arts, there’s so many creative possibilities out there for referrals.

        I’m definitely with you on only referring good, quality people and companies though – and relevant, of course, that was a great point.

        • says

          I’ve worked with some artists too. But on the production side mostly. The one thing in common with all I’ve worked more closely with, has been an irresistible pull to networking. I’m sure you’ll create and strengthen your relationships with the people you work with, when you introduce them to people they can relate and network with.

          And one more idea: Try to think of ways different artists can work together. Maybe a musician needs a photographer for promotion pictures, and a graphic artist to design an album cover. They’re much more likely to create a relationship if you have an idea about what they can actually do for each other. You could even ask the people you work with, what kind of people or work they’re interested in (not all photographers want to take promotion pictures), so your referrals become even more valuable.

          Can you think of a way to introduce two or more of the people you know? I’d love to hear what ideas you get from this :)

          • says

            Those are excellent ideas Peter, I’ve been thinking a lot on that very thing lately – networking between different artists. It’s part of why I love being around a variety of artists, I’m constantly noticing possibilities for collaboration. Now I want to take it one step further.

            Seeking photographers for promotional photos isn’t something I’d thought about before until recently, when a musician friend of mine and I were throwing around ideas, so it’s funny you brought it up! That’s especially an area I want to explore more.

            This is kind of where our two posts for the contest overlap, which I think is so cool. :)

            • says

              You’re right, our posts do overlap here :)

              I’d try to go further than the promo photos. Musicians could play at gallery openings, textile designers could make backdrops for musicians gigs, a magician could go from table to table during the intermission at a theater, etc.

              I’d really like to hear a crazy idea, like having a sketch artist making portraits in the ticket line to a concert… The crazier the idea, the less likely it is to turn into collaboration. But still people and artists especially usually appreciate thinking outside the box ;) Can you think of something like this?

  13. hypnodude says

    Very interesting post Peter. Usually we go around with people similar to us, ethical persons goes around with other ethical ones and scammers follow the same rule. In your example above if the real estate agent is serious and know his or her business he surely goes around with similar people and professionist so probably his referral is a good one. Human beings tend to move in packs with similar attitudes, so to speak.

    Thanks for such a good reading.

    • says

      Hi,

      I think you’re right. The tendency to hang out in similar crowds is a major reason why you can trust a referral from a professional source. But not always unfortunately. I’ve been given a couple of poor referrals, from sources I trusted. You probably guessed, I lost my trust for the sources too because they basically lied to me.

      Thanks for commenting :)

  14. Barry says

    Referrals are great resource to boost one’s business. It is a helping hand to our client when we cannot help him or service him for his requirements. customers will be grateful to get a reference from a reputed businessman.

    • says

      Hi Barry,

      You’re right, customers are grateful for getting a good referral. But they’ll be extremely unsatisfied if you’re unable to give one. So, you can either win credibility or loose big, when you’re asked for a referral for something you cannot provide yourself.

  15. says

    First of all sorry for my terrible english because I am from Spain. I really liked the article, especially the part about the three requirements of giving a referral: has to be relevant, don’t give just for the sake of giving referral and the referral has to deliver.
    I also found your writing very sincere and trying to show the truth like it is.
    Thank you very much for the valuable information shared. I am at your disposal.

    • says

      Hi Paloma,

      Your English is just fine :) I’m glad you noticed the three requirements. I think they’re the most important part of the post. The rest is just explaining why you should give referrals whenever those three requirements are filled.

      And thank you for you kind words about the writing, I really appreciate it :)

  16. Barry D. says

    I find your blog very factual and merits more than one read. Refrerals are valuable, and the life blood of building new traffic, but as you point out the referal like a comment has to be sincere and honet. I have imy carrear been a stock broker and a real estate agent and can confirm 100% the value of referrals. Professional bloging is the same, you traffic will depend upon it,

    • says

      Hi Barry,

      Fortunately bloggers have understood the point of networking. Though not all of them, I know of at least one major blog that forbids its writers from linking to other sites. But then again, even that blog would probably grow larger if it created a “referral” network. And the beginning of that network would obviously be referring to other sites…

      By the way, I used the example of a real estate agent in the post. If you’re worked as a real estate agent I’d love to hear who you’ve referred? And could you relate to my example?

    • says

      I just noticed you mention “my blog”. Do you mean AffectSelling.com, which is my blog? This blog (Firepole Marketing) was founded by Danny Iny and Peter Vogopoulos, and I’m just guest posting here. You probably knew this already, I just wanted to make sure I’m not taking credit for the blog all together ;)

  17. Barry D. says

    HI Peter

    I had a network of referrals, moving company ( one for local and one for natioanl), renovation contractor, Pizza & chinese delvery restaurants in their nieghbourhood,Video rental store, to name a few. I had a small community phamplet I published monthly that had all that neibourhoods vendor and services. I charged most of the retialers a whole $5,00 to cover some of the cost of primting the flyer, I would add my own comments to many to make it more like a referral phamplet than a advertisement piece.

    Barry Dufresne

    • says

      Hi Barry,

      Thanks so much for sharing that.

      I think you used the idea of referrals really well there. Finding all those things would’ve taken some time for people moving in to a new neighborhood. And more importantly knowing some restaurants etc. surely made them feel at home. Not many people/businesses take the time to do that. I think we all can learn from what you did :) If you have more ideas I’d love to hear them.

    • says

      Hi Nicholle,

      Glad to hear you found the article useful.

      I think you could create a profitable relationship with many different businesses. From the top of my mind at least fabric stores and real estate agents would be a good match for a joinery business. If you have other ideas, I’d love to hear them.

  18. says

    The referrals that I’ve sent are always based on trust. If I trust that it will add value to the person being referred, I’ll go ahead and do it.

    I don’t expect compensation in return – what’s more important is the relationship that I’ve helped to enhance.

  19. says

    Hi Sam,

    Trust really is the most important factor. And the fact that you don’t expect reciprocity, may even create more reciprocity. On the other hand, people are more likely to give back referrals, if you tell them of that possibility. This works in other situations too. Like here, I asked for comments, and I’m truly happy to read every one, so people are slightly more likely to comment ;)

    I noticed you have an online fundraising site. You have endless possibilities of who to refer, but could you share any examples of who/what you typically refer to your customers?

  20. says

    I think one of the best mindsets to have when giving referrals is that the genuine type are given without any expectations or wanting/asking for something in return. They are social gestures.

    Referrals are favors for those you’d like to help out. Some of the best business you can get is through word of mouth. The added bonus is that if you go about this in a genuine way it does build your credibility and status (naturally) – never a bad idea in any line of business.

  21. says

    Hi Jason,

    You’re right, a referral has to be genuine to work. As I noted in the 3 requirements of giving a referral, only a genuine referral can create the benefits.

    I do agree with you on that you shouldn’t ask for a reciprocal referral especially. But I do believe you can do it in a way, that has no downsides. Maybe just a “If you liked the service, you can tweet it. Click here…” Encouraging referrals, will most likely create more of them and as long as you don’t break the “rules” (the requirements) you should do okay :)

    Can I ask you, do you give out referrals often?

  22. Chris Nadeau says

    WOW Peter! Awesome post. I think you covered everything and then some! I will definitely “refer” this post. :-)

    I think that is the #1 reason why people refer products/services. You go above and beyond!

    Most referrals I do not get anything in return for them. However, if I gave a referral and I was pleasantly surprised with something that would be cool, but not why I do it.

    That is one thing we try to do with people who refer our business.

    • says

      Hi Chris,

      I tried to write as comprehensively as possible. But there was no way I could’ve written everything there’s to write about referrals. That’s why I write a blog about referral marketing ;)

      You’re in the highly competitive Internet business. What sort of businesses you refer your customers to?

      And a final referral, your latest SEO post is really valuable ;)

  23. says

    Insightful, and broke it down in a very simple way. Nice work.

    I also believe that people tend to hand out referrals too easily, thinking that because they will do so, it will attract some kind of positive return.

    I don’t believe that to be the case. It almost seems . . . desperate. It isn’t authentic.

    I only link to other blogs when I feel that the article they wrote was compelling, insightful, and relevant. I don’t do it because I want brownie points with a popular blogger. I do it because it strengthens my post, and allows the audience to explore various options on the topic.

    But this kind of authentic referral is possible — and effective. Like you said, providing calling, giving a call to action, etc.

    • says

      Hi Paul,

      I’m surprised you think people give too many referrals. My experience is that people would rather avoid it, in business especially. Bloggers do give lots of referrals, and you’re right about the motivation for many of them. But still, if the requirements are met (relevance, value, and authenticity) I don’t mind…

      Have you ever received reciprocal referrals (links), when you have decided to link to someone? This topic is discussed non-stop in the blogosphere, so I’d appreciate your ideas (it seems you actually know something about this ;) ). I’m actually just writing a post about this, so your input would really help me.

  24. Chris Nadeau says

    Peter, I recommend all kinds of things that are business and non business related. I guess it is the people pleasing trait in me. :-)

    If someone has an issue or a problem and I know of a company, product or service, that I think can help, I will definitely let them know about it. Could be a restaurant, a movie, a bookkeeper, an Internet music radio website…you name it.

    However, as you know, the Internet business world is one with plenty affiliate opportunities. I do recommend these, but only if I think it can help the individual I have recommended it to. And I am also upfront that if it is a link I share, it is an affiliate link. The other thing about affiliates, is I only recommend something I have used.

    • says

      Hi Chris,

      It seems we have a lot in common, at least referral-vise.

      I’ve always enjoyed helping, and creating connections has been rewarding (spiritually more than financially). Affiliate links is an interesting form of referring. I’m currently an affiliate for four businesses. I too use all of the services I promote.

      One of the services I “promote” has serious problems. But those issues are problematic only for certain customers, and I write about those problems (a web host with lousy customer service). And now that I think of it, most referrals I give are conditional…

      As I said, you seem to share my ideology about referrals. So, do you too give conditional referrals?

  25. Chris Nadeau says

    Peter, couldn’t you say all referrals are conditional? Since we all look at things through a different piece of stained glass… :-)

    • says

      Hi Chris,

      Yes, I guess you could say so ;) Some more than others… But I do sometimes feel I’m giving a referral where I don’t need to explain anything. I can just say, “They’re what you’re looking for.” and I can be confident there’s nothing more “my” customer would need.

    • says

      Hi Alex,

      Thanks for the link, the idea really was very similar. I’m actually writing a guest post to RightMixMarketing.com where I’ll at least mention this aspect ;)

      BTW I think your website is a great example of how referring works online :) The links are relevant and highly valuable to the visitor. And they definitely make your site more valuable.

  26. says

    Giving away referrals is one way that could help others getting started with their own online business. I’ll only give referrals if the one wants to have referrals should be very serious and committed to the business. I also make sure that these referrals are also not some kind of joke, they have to be serious as well.

    Dan Lew

    • Peter Sandeen says

      Hi Dan,

      You’re right, referrals are maybe the best source of first customers. And it’s also true, that you shouldn’t recommend someone who isn’t serious about their business.

      It feels like you have poor experiences about giving referrals. Has someone you’ve recommended betrayed your trust, or have you heard of such a situation? Or did I just imagine the hole thing? :)

      I’d also like to hear who then do you refer? How do you choose whom to refer?

  27. Joonas says

    Hey Peter, and thank you for a very inspirational post!

    I definitely agree with Joel Orr: you’re writing style is “very factual and no-nonsense”, and I like it! Unfortunately my writing style is more speculative ☺ However, I decided to share some thoughts that were inspired by your post.

    A “referral network”

    Why you should advise the companies, that you have convinced to give referrals to you, to start giving referrals also to each other:

    Like Peter very impressively argued, if you manage to form these kind of “referral relationships” with other companies in the same line of business with you, you will start to get referrals back to your company. Every time a customer is trying to find something you can provide, but they can’t provide in the company you’re having a referral relationship with, they will give a referral to you. But if all of these companies also have referral relationships with each other, this will also increase your chances of getting referrals.

    A certain customer doesn’t always imply that she needs the kind of service your company can provide when she is using the services of one of the companies that you have a referral relationship with. Then of course the other company doesn’t have reason to give a referral to your company. But if the company gives the customer a referral to another company that can offer services that she needs at that moment, she might imply in the second company she’s been advised to visit, that now she needs something your company can offer. In this kind of situation all of these companies should have referral relationships with each other.

    This might of course seem a little far-fetched. But this kind of referral network can form a kind of a “basket” where customers are tempted to stay after they’ve once jumped in it.

    A simplified example:

    If we have companies A1, B1, C1, A2, B2, C2, and A3, B3, C3 – where all of the companies work in the same general field of business (for example car business), but the A-companies compete in the same specific field (for example car garages) only with each other, the B-companies compete only with each other and so on – and A1, B1 and C1 all give referrals to each others while these other companies don’t give referrals to anyone, then there is increased chance that customers will slowly start using the services of the companies that have a referral network over the other companies.

    And why does this happen?

    When a certain customer need’s the services of a certain field of business, he might randomly pick any company that provides them. But if that company doesn’t give any referrals to other companies this customer might as well make his pick randomly also the next time. But the first time he by chance uses the services of a company that is part of this kind of referral network, he will more likely start using only the services of these referred companies in the future and no longer the services of other companies that don’t give nor receive referrals. And like Peter mentioned, he will also get his familiars to use these companies that give and receive referrals.

    But I definitely agree with Peter that these referrals must be relevant, genuine and authentic.

  28. says

    Great example of the law of reciprocation. I find that giving away your best referrals is one of the best things a person can do. I know that when I try to give other people my best, they feel more obligated to me. Partly because they want to “repay”. More so, they are hoping to get more great referrals. At least this has been my experience.

    • says

      Hi Matt,

      Thanks for your input. I believe that too (giving great referrals is hugely rewarding personally).

      Do you have any examples you could share? Examples of who you refer or what you’ve got in return?

      • says

        Hey Peter,
        The best example that I can use is when I was working in the fitness industry. I made it a point that to “partner” with several massage therapists. By sending them great referrals, I generally never had to struggle for new clients. In an industry that is filled with “scarcity” I found an easy way to build a steady business of training clients.

        Now in the online world, this is one of the first marketing concepts that I teach people. It is surprising how many people think that they will wait til others do something for them. As an overall strategy, I find the more I try to help others, the easier it gets.

  29. says

    That’s one of the best examples of creative referral networking I’ve ever heard :D I believe you can succeed in almost anything, if you find the right partners for it.

    Have you found similarly beneficial partners for your current business? Examples would be nice, but rather I’d like to hear how you’ve identified the best people/businesses to network with. We all have our own ways of doing it and yours seems to work well :)

  30. Susan says

    I join different clubs and organizations and promote my self. Most of these people are willing to help you as long as your reliable and trustworthy. Most of my customers come from referrals and has help me survive these tough times.

    • says

      Hi Susan,

      Thanks for sharing your thoughts :) I second your opinion about referrals carrying businesses through tough times, in fact I don’t think there’s any better way to survive difficult economies…

      Do you mean that you introduce yourself to people and they then refer their friends to you? How do you demonstrate your reliability and trustworthiness?

  31. Susan says

    You build your integrity first by being an active member of an organization. I don’t sell anything at first but by being an active member of the organization I gain their respect and later it will not be difficult to make sales through referrals. They will even volunteer to help you out to their friends.

  32. says

    Hi Susan,

    That’s a really good way to get referrals. It’s a shame not that many people have the patience to build their reputations like that. But I’m glad to hear it’s working for you. Thanks for commenting :)

Trackbacks

  1. [...] Give referrals - This comes in two parts: a. If you want customer loyalty to last a lifetime, go out of your way to give them referrals or help their businesses. This may not work in every scenario, but even B2C businesses should apply this practice. This will give you a reason to find out more about your customers and offer a helping hand. b. Be an expert and know when to give business outside your specialty. If you are a roofer and you can recommend a good drywall and insulation expert, your customer will see you as a more valuable contact. Here are 5 Reasons You Should Give Referrals. [...]

  2. [...] new friends, give referrals, and be a real [...]

  3. [...] Peter. 5 Reasons Why You Should Give Referrals: How it Creates the Best Leads You’ve Ever Had. firepolemarketing.com. January 13, [...]

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