It’s been reported that a full 70% of business is generated from referrals, it’s most likely B2B business that is being referred to here, although even when we shop for groceries to some extent it’s influenced by the people around us.
So, the question is: Can we stimulate referrals?
I first encountered this magic when an auditor friend of mine began sending me a new lead every couple of months. He was obviously intimately involved in company finances and understood the challenges of his clients. So, when an opportunity presented itself, he would refer me in to look at ways to improve or grow the business. This was magical, in some cases I didn't even have to do a sales pitch, they so imply said they trusted William and that was enough to sign me up on, what was a pretty hefty retainer for some of them.
Can you find your William?
You've probably already had the conversations, two no competing companies that share a similar client base get together and discuss the possibility of referring business to each other. Of course, it makes sense, you agreed, nodded heads and maybe even got excited, but it didn’t turn into the magic. I believe you probably stopped just millimeters short of the goal post.
Here’s how to do it.
You have to make it intentional. It's about positive reinforcement and the power of positive feedback loops as a result. Imagine for a moment that there is an exchange of cash for a referral, perhaps a ten percent commission. When my marketing efforts land me a new client, and I refer this client to William, who also signs them up at the end of the month I receive a commission payment. Remember I didn’t have to do any work for this except to refer my good friend William, its free money, and do you think I might be inclined to want to repeat it? Of Course YES!
So, what’s required is the reciprocal exchange of real value, cash commissions are good but not the only value that can be exchanged. In this way it becomes important for the other party to remember you, to think about you, to look out for opportunities for you and then to do the all-important referrals when the opportunity presents itself.
Some further action is required here though, and that is to manage the relationship, to reinforce the fact that it's working well for both parties.
A monthly check in is good here:
You want to thank the other party for the business and provide some feedback on the value you delivered to that client. Remember that referrals are trust based and if you make them look bad, that's the end of it, so reinforce the relationship by ensuring they know you're doing a good job.
You also want to discuss new possible opportunities here, who have you recently met, what are you doing right now that might turn into business?
And of course, if there are current referrals do that right now too.
It's the combination of the value transfer, the managed relationship and the positive reinforcement of the relationship that is critical. Without these, it's very easy to forget you when an opportunity arises, almost impossible with these in place.
But don't do this with everyone, choose a very select few businesses to become strategic alliances, imagine that they are currently sitting with your clients!! You could unlock this really quickly and make a sustainable pipeline of new, good, qualified and pre-sold leads in no time.
Take this one step further by signing an agreement and by setting up a monthly recurring meeting.
Juice this one up… Case Study
I once advised a business that designed and built interiors. To my surprise and delight they already had the strategic alliance model as a strategy. They aligned themselves with property brokers, the first people to make contact with a potential tenant and the first contact for a client base that needs interior design work done.
One of their sales staff was not being very successful, despite doing all that she was asked to do, which was to meet, regularly with a range of brokers, old and new and pitch the value of referring the clients to my client.
So, we ramped it up. We got her to say that she wanted to prove the value, that the real value to the broker was that if he brought them in early enough they could actually help him sell the space. You see nobody is very good at imagining themselves in a space that's essentially just an empty warehouse. The designers could create a basic plan, show them mood boards and help them visualize themselves in that space and that the space would be beautiful and functional for them.
We took it just one step further by getting her to actually ask, “what are you working on right now? And Can I come and do a space plan for you?
Results, a whopping 10 000 percent increase in sales in a single year, yes you read that right from $20 000 in 2016 to $1 700 000 in 2017.
Can you see that she was 99% of the way there already and it was just a single, tiny step required to make all the difference.
So get cracking, identify and setup meaningful strategic alliances for your business right now for sustained quality leads to flow.
Let me know how it goes - or contact me if you don't know how to start.