Five (More) Reasons Why Most Referral Systems Fail

Have you ever wondered, even though the vast majority of service-oriented businesses grow by referrals, that so few businesses are really good at asking for referrals? And, more importantly, why you and your business haven’t worked as hard as you could on optimizing your referral systems?

As you know, referrals are one of the fastest—and frequently one of the least expensive—ways to acquire a new customer/client/patient/member. Why? Because a warm lead accelerates the speed at which a prospective client moves through the know/like/trust barrier.

So, if that’s true (and it is), why aren’t you investing more time and energy on using referrals as one of your primary marketing strategies?

And, if you are, what are you doing to optimize your referral tactics?

As with most things in life, it usually pays to eliminate what’s ineffective before deciding to add something to your current process (i.e. it’s better to “subtract before you add”), which is why I decided to focus this post on five more reasons why most referral systems fail. Note: if you missed part one in this series, click here >> to read the first five reasons why most referral systems fail.

6. The Company’s Products and/or Services Aren’t Remarkable

Think through the companies or businesses you’ve referred people to lately. How many of them were just ordinary or average? Hopefully, none of them. When you go to an ordinary restaurant and have an ordinary meal with an ordinary experience, do you ever refer a friend or colleague to go there? Not a chance (unless, of course, you don’t like them :-).

You only refer when you’ve had a remarkable experience. For example, if you haven’t read my review of Halls Chophouse and their customer service, you should. Halls is a remarkable restaurant with remarkable service. So when someone from out-of-town emails me and asks, “Where should I go for dinner?” Halls is one of the restaurants at the top of my list.

Note: we have a lot of great restaurants here in Charleston, SC so it’s easy to give someone a list. It’s also one of the reasons why Charleston has won, for the past four years, the Conde Nast Readers Survey as, “The Top Destination City in the US.”

Bottom line, if you want to generate more referrals, I’d recommend that your starting place is making sure that you’re referrable (i.e. that what you offer is remarkable). If what you offer isn’t remarkable (i.e. it’s similar to what others offer) then your system will break down before it’s even started. To get more referrals, you have to be referrable (i.e. more remarkable).

So, are your products and services, your people, your offers, and the experience clients have with you remarkable or not? If not, you know where to start.

7. They Don’t Provide Any Marketing Collateral for Their Referral Prospects

After someone asks you for a referral and you go back to your office or place of work, what happens to you? Chances are, you immediately forget about that referral ask because, well, you have 643 other items on your “to do” list and helping someone else grow their business isn’t one of them.

If that’s true for you, what do you think is true for the people you ask to give you referrals? Exactly. The same thing.

Back in my old pastoral days, I used to preach an average of 42 Sundays per year. At the end of each service I would say something like this, “Next week I’m going to be talking about X (let’s say, “How to Beat Stress Before It Beats You.”). Now, I know none of you deal with stress, but I’m sure some of your friends, neighbors or colleagues do so why don’t you invite one or two of them to come with you to church next Sunday.”

Every week, we’d have new people who came because a friend invited them—but the vast majority of our members didn’t invite anybody that week. However, about four to six times a year, I’d do a big direct mail campaign in our community. And before the start of each of those series, I’d give every one present a couple of mailers to hand out to their friends and colleagues. And guess what? The number of invitations would grow exponentially (as well as our guest traffic). Why? Because they had something in their hands to remind them (later in the week) to invite someone and they had something in their hands that they could hand over to that person about our church so they would remember.

in your case, your collateral could be an invitation, a couple of business cards, a brochure, a white paper, a case study, etc. It could even be a special coupon. But something tangible that you can leave with your prospective referrer so they’ll remember to refer later on—and have something to pass along to that person.

So, what marketing collateral do you need to include in your referral system?

8. Their Referral “System” is Used Inconsistently

As you know, here at Wired To Grow, we’re all about systems and measurement. So, let’s say that 80% of your new clients come because of the referral of a friend or colleague. And let’s say that half your people ask for referrals only 50% of the time and the other half only 25% of the time. Averaged together, that’s just 37.5% of the time. And let’s say, that on an average year you get 100 new clients (which means 80 of them came from referrals).

Now, on the one hand, you might be thinking, “That sounds pretty good.” However, you’d be wrong. At just 37.5% of the time, your 80 referral clients could have been, all things remaining equal, 213 clients, plus the 20 from other sources, which equals 233 clients vs. the 100 new clients you received last year—without having to spend another dollar in advertising or marketing costs. Think about that. If your people just asked for referrals 100% of the time, you could have generated a 233% increase in your results (and more than doubled your revenues and profits).

Inconsistency is not your friend.

So, are you and your people asking clients 100% of the time, following your system of when, where and how you ask? If not, you know where to start!

9. They Fail to Get Their Referrers Involved In Making an Introduction

Another common mistake most business people make when they ask for referrals is that they don’t go the next step. In other words, they’re so happy someone has referred a name to them they don’t want to ask/impose on the person anything else. It’s almost like they’re afraid that the referrer might say, “No.” or “That’s too much.”

However, when someone gives you a referral, and they’re in a referral mindset (see the first five mistakes for what they means), they’re very positive and excited about you and your company. When they give you a name, not only are they excited about you, they’re giving something very precious to them—the name of someone they know who they believe you can help solve a problem. So, why wouldn’t they want to help facilitate the conversation? Friends help friends.

In other words, don’t just take the name and run as if you’ve absconded with stolen goods before they could come to their senses. Instead, ask them if they’d be willing to make an introduction for you. “Joe, thank you so much for Angela’s name. I look forward to talking with her and seeing how I might be able to help her with X. Would you be willing to make a short introduction to her about me and just cc me on the email over the next day or so?”

As you know, the probability of that referred person taking your call or responding to your email goes up exponentially when your friend has paved the way first and you’re simply following up vs. breaking the ice.

So, if you want to maximize your referrals, make sure you ask your referrer to make an introduction for you whenever possible.

10. They Practice the “One and Done” Method of Asking for Referrals

Let’s be honest. After you ask someone for a referral, how often do you go back to them and ask for additional referrals? If you’re like most people (and I’m guessing your team members are similar), the chances are your answer is, “Not often” or “Not at all.” Why?

Probably because of the fear of rejection. “I asked them once and they didn’t have any referrals” or “I asked them once and they gave me all their referrals” Either way, the feeling is, “I don’t want to be rejected.”

However, life isn’t stagnant. Whether someone gave you names or not before, their lives and the lives of those they know are constantly changing. Someone who didn’t need your services six months ago, now might. Or your friend may have just met someone three weeks ago at the golf course that they didn’t know six months ago when you asked. Etc. Life, relationships and situations are continually changing. So, does it make any sense to ask once and be done with it?

Bottom line, if you believe that your products and/or services can actually deliver the results someone wants and solve problems that they need solved, then you should never be afraid of asking anyone for a referral. And since you know that everyone’s life, relationships and situations are always changing, why shouldn’t you be asking often?

The “one and done” method is a bad strategy. It’s not good for you, nor is it good for the people who actually need what you offer.

So, how often do you ask your potential referrers per year? And how often do your employees ask?

If you want to accelerate the growth of your business, you need to make the most of your referral systems. And to do that, you’ll want to follow all ten of these systems improvements.

  1. Create a real “system” for referrals (with dates, metrics, scripts, etc.) so you get out of the ad-hoc referral business
  2. Stay in touch with your clients regularly, not just when you need something (like a referral)
  3. Learn to use the right language when asking for referrals (especially use the word, “Brainstorm”)
  4. Set the expectation for referrals from the very start of your relationship so it never feels “weird”
  5. Make sure you qualify referral names before investing time in them
  6. Make sure you, your products and services, your people and the experience clients have with you are all remarkable
  7. Provide marketing collateral for your referrers—to help remind them and their referrals about you
  8. Ensure consistency of use in your referral system (anything less than 100% of the time is short of optimal)
  9. Get your referrers to make introductions for you (so you’re following up a warm lead vs. a cold one)
  10. Ask your potential referrers more than once a year because situations are always changing

If you religiously follow these ten ideas, you should see you referrals soar!

To your accelerated success!

P.S. If you have some other ideas about referrals that you’d like to share, make sure you add them in the comments section below (or click here >> if you’re reading this by RSS feed or email).

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