Five Reasons Why Most Referral “Systems” Fail

Do you ever get frustrated that you’re not generating as many referrals as you’d like? Or that you’re not getting the kind of word-of-mouth marketing response that you’d like to see? Or that the people in your business aren’t generating the kinds of referrals or the number of referrals that you’d like to see?

If any of those are true for you, then you’re going to want to keep reading today’s post because, as you know, referrals are one of the best strategies any business can use to grow.

So, why do most referral “systems” fail? Well, here are five reasons why.

1. They’re Not Real Systems in the First Place

In other words, most referral “systems” are ad-hoc. They’re done inconsistently. You ask when you remember to ask or when you think about it. Your people ask when you ask them “Have you asked any of your past clients for referrals lately?” In essence, your “system” is a by-the-seat-of-your-pants system.

But good systems aren’t organized that way. They’re designed for consistency. If the system is, “Ask for a referral at the time of purchase,” then every person who purchases should be asked at the time of purchase—not 20% or 64% of the time, but 100% of the time.

If the system is to ask for referrals at a certain date count (30 days after purchase) or after a certain milestone has been hit (they’ve successfully completed X number of transactions) or when they’ve achieved a certain result (i.e. when they’re in a happy customer state), then, in a real system, they should be asked for referrals every single time that event happens (100% of the time).

In other words, one of the primary reasons why so many “referral systems” fail is because they’re not systems at all. Though randomness is technically a system, it’s a bad one. So, if you want to radically increase your referrals, make sure you create a real system that is executed 100% of the time.

As you’ve heard me say many times before, “A Mind is a Terrible Thing to Depend Upon.

2. They Don’t Stay in Touch

If the only time someone talks with a customer or past client is when they’re asking for a referral, that “system” is going to fail. This is especially true for past clients or customers on continuity payments (for example, a customer who has a maintenance contract for three years who doesn’t hear from the maintenance company for a year or two and then gets a call for a referral).

In general, most people give a referral when they feel the company cares about them, does a great job, and … stays in touch with them. People like to help people they like. So, any system whereby you’re not staying in contact or not adding value, is going to produce minimal referrals.

On the other hand, just staying in touch and adding value can turn a referral system from a dud to a profit generator in no time at all. For ex. I have a client who was getting a minimal number of referrals compared to his peers. When I asked him what he was doing to stay in touch with his past clients he said, “Nothing.” I said, “I think we’ve discovered the problem!”

So, we created a system whereby he began contacting his past clients at regular intervals and guess what? They loved hearing from him. He apologized for staying out of contact, started adding value, and then, surprise, surprise, he started receiving more referrals.

Note: in this case I said, “Don’t ask for any referrals until the third contact.” He was simply trying to reconnect and rebuild some old relationships before he ever asked for a referral. The good news is that his past clients were so glad to hear from him (and he had done a great job on the front end) that he started getting referrals before he even started asking. Just staying in touch was enough for some of them.

3. They Don’t Use the Right Language

As you know, language matters. If a husband says to his wife, “You’re a looker,” he’s in good shape. If he says, “You’re a sight,” he’s on the couch. Similar words, different outcomes.

The same is true for asking for referrals. The typical person asking for a referral says something like, “Do you know anyone who could use my services?” which requires someone, on the spot, to think of someone who might need that specific service right at that moment. Unfortunately, very few people can do that well, which is why most people get the answer of, “Not that I can think of,” more frequently than they’re care to admit.

However, if you were to ask a question like, “Would you mind if we take a few moments to brainstorm a couple of names of people you know who might benefit from using my service, similar to what you experienced?” That question almost always gets a yes (I’ve never received a no). And then that allows you to suggest some categories, “Okay, so can you think of anyone at your church (or synagogue) who might need …” Or, “Can you think of anyone at your health club or country club?” Or, “Can you think of anyone you know who struggles with ….?” Etc.

Just by changing up your referral questions, you can radically increase the number of referrals you receive.

4. They Don’t Set the Expectation Early On for a Referral

In general, most people do what’s expected of them. Unfortunately, very few businesses set the expectation for a referral early on, which them makes the referral ask more difficult later on because a lot of business people feel like they’re asking their customers/clients to do something they didn’t sign up for/agree to before.

The unfortunate outcome of that feeling is that a lot of referral “systems” get poor results because no expectation was communicated from the beginning of the relationship.

However, if that were reversed, and the expectation was set early, that same “system” would get a better result. For example, let’s say you said to your prospective client during your sales presentation, “In addition, I just want you to know up front that one of my goals in this process is to deliver such a remarkable outcome and experience for you that you’re going to want to refer your friends and acquaintances to me so they can experience the same kind of results that you’re going to experience. Does that sound acceptable to you?”

Now, regardless of whether you use those kinds of words or not (make it your own), I’m sure you can already imagine that this kind of approach would result in more referrals. Why? Because it’s not weird to bring it up later. You’ve already told them you’re expecting to get referrals from them but that you’re not going to ask for them until after you’ve delivered a remarkable outcome and experience for them. Who wouldn’t want that?

Then, once your new customer has those experiences, it’s quite normal to say, “Remember, when we first started talking and I said to you that one of my goals was … well, now that you’ve experienced … let’s talk about who you know who might benefit from those same results …”

So, do you set the expectation in your referral “system” early on or not? If not, and you want to get more referrals, make sure you set the expectation early on.

5. They Don’t Qualify the Referral

A frequent mistake that causes a lot of business people to waste a massive amount of time is getting a lead that isn’t really a good lead. In other words, the goal in asking for a referral is not to get a lead, the goal is to get a qualified lead—which is not the same thing as a lead.

Far too often, when a business person asks for a referral—and they get a name, any name—they’re so relieved they received a name that they don’t want to follow-up with any other questions. But it’s that kind of thinking that wastes a massive amount of time (calls, lunches, meetings, emails back and forth, etc.) following up someone who’s not a good prospect.

To avoid that, you’ll want to set up a better system that asks follow-up questions like “Marge, thanks so much for the referral to Joe. I really appreciate it. But before I contact, Joe, can you help me understand why you think Joe would be a good person for me to follow-up with?” Or, “What makes you think that Joe and I would be a good fit?” Or, “ When you thought of Joe, what were you thinking I could help him with?” Etc. You get the idea.

Why waste time pursuing leads that are unqualified? That’s a poor system. It would be far better to ask a couple of follow-up questions to your referrer so that you have a better sense of whether you would be a good fit for that person. Note: I only gave you one question. Feel free to add some more like, “Do you think Joe has the kind of budget to afford me and my services?” Or “Do you think Joe has the power to make the decision to use me or will he need to get approval from someone else?” Be creative. Just select questions that would allow you to know, “This is someone worth pursuing.”

So, there you have it, five reasons why most referral “systems” fail.

1. They aren’t real systems in the first place
2. They don’t stay in touch
3. They don’t use the right language
4. They don’t set the expectation for a referral early on
5. They don’t qualify the referral

Those are just five (I have plenty of others), but they’re a good start. So, which ones are you and your business guilty of? And then, more importantly, what are you going to do to improve your referral system so you get more qualified leads which turn into better long-term customers?

To your accelerated success!

P.S. If you have some other ideas (or want to comment on the mistakes above) make sure you add your voice to the comments section below (or click here >> if you’re reading this by email or RSS feed)

P.P.S. If you want help marketing your business, and creating a system to do so, make sure you check out my “Attract More Clients Like Clockwork” course

Image from Flickr and Sal Falko

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