John Jantsch, the author of the excellent blog and podcast Duct Tape Marketing, explains how small businesses can create an effective referral generation system in The Referral Engine. Most business owners know that the referral is one of their biggest sources of new customers, but few actually have a system in place to generate referrals. This book goes into depth on how to tap into this potentially endless source of new customers. While focused on small business, the concepts are very applicable to any size business that would like to increase their referral rate.
What is your talkable difference?
To make it easy for customers to talk about you, create a talkable point of differentiation. This should be something that is easy to explain so that people can easily share it. For instance TerraCycle produces all their products from stuff that is thrown away. Another example is TOMS Shoes who gives a pair of shoes to a child in need for each pair that is sold. It’s not enough to do something slightly different because people do not talk about boring businesses. It has to be something unique and worth sharing.
Having the right attitude for referrals
In order for you to generate referrals for your business you have to first believe that you deserve them. If not, you may need to first work on your product or service. Additionally, Jantsch argues that you have to believe that you are helping people by asking for referrals. A good referral can help someone improve their social status and build social capital with their friends or colleges.
Set an expectation of referrals
When you first meet with a client, Jantsch suggests telling them: by the end of the engagement, we are so sure that you will be thrilled with the results that you will refer us to three of your friends.
Create a referral network
Jantsch suggests working with other businesses to create a referral network. For instance an accountant, web designer, commercial leasing agent, and marketing consultant can hand out eachother’s discount cards to their clients. You can also gather together service providers that have the same customer, such as small business owners in your town, and cooperate to write blog articles for a local small business blog. Another idea is to partner with non-similar businesses like a coffee shop that had a local fly-fishing instructor give lessons in the back of the shop which attracted more traffic.
The Referral Engine is definitely a book worth referring and I would echo Seth Godin’s recommendation that says “this book will pay for itself in one day”. There are tons of great examples of businesses that have come up with creative ways to encourage referrals and Jantsch shares a lot of actionable things you can start doing right away to get more referrals.