Referrals are one of the most effective ways to build a business, but most business owners have never taken the time to create a truly effective referral strategy.
Do you have a referral strategy? Is your strategy to simply accept referrals? Because that isn’t enough.
Let me show you how to create a simple referral strategy that gets results.
Why Are Referrals So Important?
According to Paul and Sarah Edwards, authors of Getting Business to Come to You, up to 45% of most service businesses are chosen by customers based on the recommendations of others.
Let me say that again… 45%!
In other words, if you’re not actively using a referral strategy, you are missing out on almost half of your potential clients.
The Referral Snowball
One of the reasons referrals can be so effective in building your business is the snowball effect they create.
When you deliver great products and services, your clients will love you and will be happy to refer you.
Who will they refer you to? We tend to hang out with people similar to us, so they will probably refer you to other potential ‘ideal clients’ looking for the same kinds of products and services.
Those referrals, who then become your clients, will fall in love with you too, and will also be happy to refer you.
And so, the Referral Snowball Effect begins to grow.
But referrals are not only reserved for existing clients. There are other potential referral sources we’ll discuss in this guide, and they also contribute to the Referral Snowball Effect.
Why Are Referrals So Valuable?
Most business owners assume that referrals are valuable for their business simply because they bring in more clients and revenue, but there are many other reasons referrals are valuable:
- Referred clients are often more loyal.
- Referred clients are better suited to you and your services.
- Referred clients are much more likely to refer you to others.
- An effective referral strategy can mean having hundreds of potential referrers out there raising awareness for you.
- Securing a referred client is much easier due to the transferred trust that came from the referrer.
If you ask a business owner if they have a referral strategy, they’ll probably answer ‘yes’, but chances are they don’t. Simply accepting referrals isn’t a strategy, and that’s just one of the many Referral Mistake Business Owners Make.
Have you ever asked someone to send you referrals and had them enthusiastically agree, but nothing ever comes of it? Why is that?
Most people don’t send referrals for a number of reasons:
- They feel uncomfortable sending referrals.
- They’re busy or don’t have the time.
- They aren’t sure who to refer to you.
- They don’t know how to go about making the referral. (e.g. email, in peson, etc.?)
Your Network Wants To Send Your Referrals
The fact is that most people want to give referrals.
It’s human nature to want to help others. If someone in your network can help someone else in need and provide a solution by referring them to you, they’ll feel great. It’s a win, win, win for everyone involved – you, the client, and the referrer.
For someone to refer prospects to you, you must remove all of the potential problems and pitfalls that create friction for the referrer.
And that’s why we need a referral strategy.
The 6 Step Referral Strategy
Your referral strategy doesn’t have to be complicated. As a matter of fact, the more simple you can make it, the better.
There are 6 key steps you want to cover when designing your referral strategy.
Let’s review the steps one at a time, then we’ll put them all together and show you how to execute your completed referral strategy.
Step 1: Be Worth The Referral
Let me put this in simple terms…
You must do great work and deliver value.
You must be likeable.
You must be trustworthy.
You must provide exceptional service.
In other words… You must be worth the referral.
Step 2: Know Your Who & Do What
In the Book Yourself Solid Masterclass I teach something called your Who & Do What Statement.
Your ‘Who’ refers to your target market and the ideal client profile within that target market. In other words, who you most want to work with.
Your ‘What’ refers to the single biggest result that you get for your clients. Or in other words, what you do for them.
A clear and concise Who & Do What Statement not only gives you focus and direction in your business, but it will also provide clarity for your potential referrers.
When your network knows your Who & Do What Statement, they’ll know exactly who they should refer to you, and why.
Step 3: Design A Referral Gift
One of the most common reasons people don’t make referrals is because of the awkwardness they feel. For many, the idea of setting someone up to be ‘sold to’ feels sleazy. And that is why you’re going to create a referral gift.
The referral gift is something that a referrer can give when making a referral to you. It can be a physical gift such as a book you’ve written, but electronic or virtual gifts tend to be best because they can be easily shared.
Some examples of virtual gifts include ebooks, pdf guides, online video training links, event invitations, or tip sheets. If you already have an opt-in “bribe” on your website, that may serve as a good referral gift.
When creating your referral gift, make sure that it addresses the needs and desires of your target market and ideal client, and that it provides real value to them.
When you provide a referrer with a referral gift, they can now approach potential clients for you using the gift as a way to deliver value up front. They’ll feel good about sharing the gift, and the pressure of feeling ‘sleazy’ will be gone or reduced.
The referral gift is also important because it demonstrates your expertise, establishes you as an authority, and helps you to build trust with a potential client, even before you’ve had the opportunity to meet them.
Step 4: Identify Your Referrers
Past or existing clients are typically the most valuable referrers you can have. They’ve had experience working with you directly, they know that you do great work, and they know what kinds of people are your ideal clients.
Another great advantage to client referrers is the people they hang around with. Most of us tend to spend time with others who share our interests. So, it stands to reason that if a client was a good fit for you, their colleagues and friends will have a high likelihood of being an ideal client for you too.
Influencers also make great referrers. An influencer is someone who’s opinion is respected by others, and they may also hold a position of authority within a certain group. When an influencer makes a referral there is often a great deal of trust transferred to the potential client.
Review your network and identify the clients and influencers that you can approach for referrals.
Step 5: Plan Your Referral Checklist
Having a referral checklist ensures that you remove the obstacles your potential referrer partner may experience.
You referral checklist is simply the steps you should follow when requesting that someone send you referrals. The easier you can make those steps, the more likely you are to get referrals.
A good referral checklist will not only make it easier for the referrer, but it will also help to ensure that the most important elements of a referral are covered. That means better referrals and better results.
Here are the key elements to have in place for your referral checklist:
Share Your Who & Do What Statement
Provide your potential referrer with your Who & Do What Statement so they know who your ideal clients are and the results you help them get. Give them examples of ideal clients you’ve worked with in the past so they understand who is a good referral.
Tell Them How To Refer You
Let your referrer know how you’d like to be introduced. Would you like an in-person introduction over lunch, or will an email suffice.
Share Your Gifts
Provide your referrer with the referral gift you’ve created. Be sure to tell them about the benefits of the gift, and how it can help the people they share it with.
You will also want to recommend how they can incorporate the gift into a referral. Should they deliver the gift first and follow up with a referral to you afterwards, or should they give the gift as part of a referral email that introduces you to the potential client.
Write Your Referrals
It takes time an effort for someone to write an email introduction and make a referral. Remove that obstacle by writing sample emails that your referrers can use as is or edit to their liking. This may sound presumptuous, but referrers are usually grateful for you having done this as it saves them time.
Identify Unique Obstacles
Consider all possible obstacles that could prevent someone from sending you a referral. We’ve already identified some of them, but your business is unique, and so it may present some unique challenges for your referrers.
Put yourself in the shoes of your referrers and ask yourself what steps in the referral process may feel awkward, time consuming, or difficult for them. Then, do whatever you can to remove those obstacles. The more obstacles you can identify and remove, the more referrals you’re likely to receive.
Use the above elements to start your own checklist and create a personalized referral process for your business. Then, when requesting referrals, make sure you check off every aspect of this list to make the referral process as smooth as possible for everyone involved.
Step 6: Take Action
It’s time to ask for referrals. All of the steps above will be pointless if you don’t take action.
I’m going to guess that reading the paragraph above has you feeling uncomfortable. You’re not alone. Most people cringe when it comes to the thought of asking for referrals.
My advice to you… GET OVER IT!
Look, building a successful business is going to require that you put yourself out there and be vulnerable from time to time. There are people you’re meant to serve who are waiting for you, so put on a brave face, suck it up, and get to it. Trust me, the more you do it, the easier it gets.
One word of caution. There are many mistakes people make when trying to implement a referral strategy.
You’re probably making many of those mistakes already.
There are too many to list here, so I’ve written a post for you on The Most Common Referral Mistakes Business Owners Make.
Many people find referrals intimidating, but there are few strategies as effective for building a constant flow of clients into your business.
Of course, once you’ve implemented your referral strategy you’ll create opportunities to make sales, which is why I’ve written a post for you on the 10 Steps To The Perfect Sales Conversation.
Do you have questions about referrals? Do you have a referral strategy you’d like to share? Please share in the comments below.