Principles of referral marketing
By Fran Tarkenton
We all want more referrals in our business. It’s the most effective, efficient form of marketing because you are getting the endorsement of people who not only know you, but also know your prospective customers, and a personal endorsement is a powerful statement.
I believe that the way we learn and get better is by opening our minds to new people and new ideas. So when our agents repeatedly asked “How do I get more referral business?” I scanned the marketplace to find smart, innovative people who had something truly meaningful to say on the subject.
The man for the job this time was Steve Beecham, author of the book Bass Ackward Business . Steve runs his whole business through referrals, and in his book, his conversations with me, and presentations to our agents, he shared his philosophy on referral marketing.
Here, I’ll pass on to you the most important principles of referral marketing that I took away from listening to Steve and other experts on the topic. I hope they can help you.
Referrals happen when you build relationships
To build a business on referral marketing, you can’t start by soliciting all the people you know for business. Rather, it starts by building relationships on trust. Many people are uncomfortable with sales because they go into that first meeting, the foundation of the relationship, thinking about how to sell something. What happens then? The relationship ends up being short-term, transactional, and not genuine.
So, how can you make sure this doesn’t happen to you? For starters, try not to focus as much on what you’re going to sell or how to get money off of this person in that first meeting. In those crucial moments when you’re setting the foundation for the relationship, set all that aside and focus on just getting to know this person better. What are they like? What are their passions? What are they doing? What are their hopes? Their fears?
Once you’ve built a relationship, keep it going. Stay in regular communication with the people you know, even if it means setting up a schedule of the people you want to talk to in a given week. A relationship, once built, still needs to be maintained. Continue to learn more about the other person, about what’s changing in his or her life. Why? Because you are far more likely to give a referral for someone who is genuinely interested in your life, and who cares about you as a person, as opposed to someone who approaches you as a mark to be sold. The same is true for other people who might refer you to their own network.
Referrals happen when your goal is to help
When you’re building those relationships with people, find out what their problems are. What are their points of pain, the deeply felt needs in their lives? Then think about ways you can solve their problems. Are there things you can do yourself? Who are the people you know, the people in your personal village who have the ability to solve these problems? When your goal is to solve problems for people you know without guarantee of getting something back, you establish a reputation as someone who is willing and able to help, either personally or by giving good referrals yourself. Those people you help are, in turn, more likely to say good things about you and refer you to other people when a problem comes up related to what you do.
When you do good things for other people, it has a tendency to come back around as good things for you. Reciprocity is a powerful force. You won’t get referrals by sitting back and waiting for them; you have to go out there and establish yourself as someone worth referring, someone with great credibility, ethics and ability.
Referrals happen when you paint a picture
As you build relationships with people and learn all about them, the conversation will eventually turn to you: How’s your business doing? What things are you doing these days? That’s your opportunity to put something in their mind that will help generate referrals. When you’re doing good things for others, they in turn will talk about you to other people. But what they say, and who they say it to, depends on your ability to paint a picture.
The way to do that is by putting together strong descriptions of the kinds of people you are targeting as customers. When someone asks about your business, share one of those pictures. Instead of just saying, “If you know anybody looking for a financial advisor, let them know about me,” you can share a very specific word-picture of what you’re looking for.
Maybe you’re looking for people going through a very specific life event, be it marriage, buying a home, parenthood, or retirement. Maybe you’re looking for people who work at a specific place, giving you an entry into a broader network. Share the particular categories you’re looking for, the type of customer or type of company you want to meet, and people will remember that more than a generic target client. Share a different picture every time you talk to a person, and they’ll set to work referring you whenever they encounter people in the specific circumstances you describe.
Referrals happen when you generate buzz
In the end, referrals are all about buzz. They depend on what people know about you, what they think about you, and what they are saying about you. When you build relationships, you build positive buzz. When you help people solve their problems, on your own or by your own referrals, you build positive buzz. When you paint pictures of the clients you’re looking for and share examples of how you’ve helped other people in those categories, you build positive buzz. The more those things work together and get people thinking and saying the same thing, the more powerful that buzz becomes and the more people will believe it and become part of a powerful referral marketing program.
In the end, it comes back to the true mission of business — helping people.