EXECUTION INSIGHTS

Becoming Referable

referable
Any business leader will tell you that referrals and word-of-mouth introductions are the most effective sources of new customers for any company in a business-to-business environment.  A recent review of our client base showed that well over 50% of our current clientele originated from a referral, and in some cases we could trace numerous new clients back to one raving fan.

But ask business leaders if they have a systematic process for generating and capturing referrals, and many will say ‘no’.   Rarely does ‘referral process’ appear explicitly as a line in the marketing plan, or drive specific, measurable activities within an organization.

Why is this the case?  If referrals are so important, why don’t organizations recognize it and have a defined referral process as part of their growth strategy?

In his book from 2010 titled “The Referral Engine: Teaching Your Business to Market Itself”, author John Jantsch tackles this question.  In his research, he interviewed hundreds of small and mid-sized businesses to determine not only the importance of referrals for business growth, but how referrals actually present themselves.  Here are some of the key process steps that John recommends:

Step 1: Create a Superior Customer Experience

The first step in becoming referable is to look at your current service offering.  Would existing customers refer you?  Does your firm provide a superior customer experience?

In previous articles we have referenced the Net Promoter Score (NPS) approach to soliciting customer feedback, and it is an indicator of how referable your firm is.  An NPS score is achieved by asking clients regularly, “On a scale of 0 – 10, how likely are you to refer our business to friends or associates?”, and why.   The ‘and why’ component of this feedback is the critical element to determine what improvements can be made to your current product or service, or the overall customer experience.  Look for themes and determine what changes need to be made to improve your NPS score.  These changes may be minor (like offering electronic funds transfer for payment of invoices) or major (like developing a new product line).  In either case, your firm must respond to the themes and find ways to stand out from the crowd.  To become referable, the experience your clients have must be superior relative to your competition.

Step 2: Clarify Your Market and Your Message

There is little point in executing any marketing activity without knowing who you want to target.  Clarifying precisely your target market, both in terms of demographic and psychographic criteria, ensures that any activity you undertake is focused and directed to the right audience.

Secondly, it is critical to clarify brand position and promise.  Look for a position of leadership – are you the quality leader, the cost leader, or the best at time to deliver?  Is your promise to drive down clients overall cost of ownership, or to give them a leg up in speed of bringing their product online?

The answers to these questions should make up the key messaging for your firm.  Sometimes called the ‘elevator statement’ or the ‘unique value proposition’, this phrase or sentence should quickly and simply provide anyone with an understanding of what your company does, its position in the industry, and its brand promise to customers.

Step 3: Develop the Referral Engine

Once you have a referable product or service, and you are crystal clear about your target market and message, it is then time to build the referral engine.

The old school approach to generating referrals would be to sit down with current clients, pen and note pad in hand, and say something like, “OK Bill, can you give me the names and phone numbers of 3 companies you can refer me to?”.  In some cases this approach may still work, but generally it is intimidating and too high-pressure for today’s business environment.

Alternately, a referral engine can be built by combining content and community:

Content – Business is complex.  So much change happens every day, and new information and techniques are constantly presenting themselves in every industry.  Your customers and prospects can’t keep up with it all.  They are busy running their businesses.

That creates the opportunity to position your firm as a trusted knowledge source by creating relevant content.  Content can take many forms including white-papers, newsletters, webinars, seminars or presentations.  All of these provide the opportunity to educate, teach and inform, and while doing that it positions your firm as a competent and credible source of expertise in the industry.

Since late last year my firm, RESULTS.com, has hosted weekly webinars focusing on business execution.  The webinar itself educates and informs business leaders about the challenges and solutions in business execution, and positions us as a leader in the field.

Community – But how does this tie to referrals?  Well it is easy to encourage current clients to forward a white paper or bring a guest (a prospect for you) to a seminar or event.  It positions the referral introduction as a value-add for the prospect.  In this way you begin to develop community; relationships between existing customers and their associates, friends or colleagues who are new leads and prospects for your business.

Consider a specific example.  You host and education event and invite 20 current customers and ask them to bring along 1-2 guests each who they think might be interested in the topic.  Through this mechanism you get a warm referral introduction and a chance to provide educational content that positions your company and expertise.

This is the basic framework for a referral engine – combining your content with an appropriate forum for your clients to make an introduction.

Step 4: the Role of Technology

Technology can play a key role in taking your referral engine to the next level.  Social media tools are built on the idea of community where like-minded individuals can meet, share ideas, and post discussion in the virtual world.  This creates countless opportunities for your firm to participate in online forums and discussion boards, and to add-value while demonstrating an expertise or competency.  Is your firm active in online industry forums and communities?  Are your customers there too, and what are they saying about your firm?

Take LinkedIn as an example; there are literally thousands of LinkedIn Groups that exist as communities around particular topic areas, geographies or associations.  This provides opportunities to share knowledge and position your firm as a leader in your industry.  Combine that with LinkedIn’s profile references, networks and company pages, and you have a complete online referral platform.

Putting it all together

Becoming referable is not a one-time project, or a goal that is going to be achieved this quarter or even this year.  It touches all elements of your business and requires discipline and commitment.  But in the end it could be the best way to allocate resources and grow your firm.

(image reference http://www.sxc.hu/photo/990755 )

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