Tuesday 18 September, 2007
When you have a fully functioning referral-marketing
strategy in operation, you will know approximately how many referrals
you can expect, and of what quality they will likely be, over a given
period.
True, you won't know very far in advance exactly whom you're going to be
selling to or how much the order will be, but that's true of almost all
marketing techniques. So if you look at each individual sale, it may be
hard to understand exactly how that sales opportunity came to you.
A few years ago, one member of a referral-networking group (we'll call him Frank), a business owner who was well-liked and had received plenty of referrals, decided to leave the group. When asked why, Frank explained that the opportunities that had come to him by referral seemed to be random coincidences that had little to do with his networking activities and could never be replicated.
Although the members of the referral-networking group liked each other and helped each other whenever they could, he felt that it wasn't working for him the way it should. Anyway, he had been gaining so many new clients that he said he didn't need the group anymore.
When asked to describe a few of the new clients he had acquired, Frank named some individuals who sounded familiar to different members of the group. As it turned out, many of Frank's new clients were people who had come to him through referrals from other members over the past year. But Frank said that it was mostly by chance that he had been introduced to these individuals by members of his group, or by people who knew members of the group.
He didn't feel the results were an indication of any system at work; it was just coincidence that his fellow members had bumped into people who just happened to need his services. So why did Frank think these new clients were only coincidental?
Frank's mistake was evaluating his success against the abstract standard of repeatability. His professional training taught him that he and his employees should call people from a list that was generated based on the supposed demographics of his clientele. To generate more business (so the theory went) he should call more people.
The clients he got through referrals, on the other hand, always had a story attached to them that couldn't be repeated. This led him to believe the results were coincidental - a misconception that happened because he focused on the individual referral, rather than on the relationship that produced the referral.
Referral marketing is like fishing with a net. You're thinking about how to cast the net to optimise your chances of catching fish. You choose a likely spot, you throw your net, and when you pull it in, you find a number of fish. You have a pretty good idea of how many fish you're going to catch if you do this a few times, but you don't know which individual fish are going to end up in your net.
It is no more coincidental that people receive regular and consistent referrals from the people in their network, than a fisherman who casts a net catches fish. The fisherman concentrates on his action of casting the net, not the individual path of one of the fishes that swam into it. If he based his decisions on that one random fish, he would quickly come to the same conclusion Frank did: that it was coincidental.
The reason Frank focused on the referral and not the relationship, is because he didn't understand that building effective and profitable relationships is a system. In fact, he had never been trained on how to systematically build mutually profitable relationships. In his early training, he was taught about products, customer service, and cold-calling.
When he did receive referrals, he had no idea what specific actions he had taken that had caused it - so he was simply thankful for his good luck and went back to what he knew.
When it comes to networking, "luck" is where persistence meets opportunity. There is no coincidence about repeat referrals. They are the outcome of the day-to-day activities of building relationships. Although referrals can't be measured as easily as tracking cold-call ratios, the results are dramatic - and almost never coincidental. Repeat referrals happen because you've laid the groundwork through professional relationships.
What are the odds of that particular five-pound largemouth bass ending up in your net? If you don't know about that fish in advance - what kind of fish it is, how big it is, where it hangs out, what time of day it comes up into the shallows to feed - the odds are pretty low that you'll catch that exact fish. But once you've got it, it's yours.
Like the net fisherman, the referral marketer concentrates not on the individual fish but on the process. He knows the process will bring him many referrals - he just doesn't know who they will be or by what roundabout route they will come to him.
Referral marketing may seem a bit messy and random to those who have been trained to call a list of names in hopes of selling one in a hundred. But it's a system that works well because it is good at ferreting out all those unpredictable, hidden, complex connections that exist between people in everyday life and in business.
A few years ago, one member of a referral-networking group (we'll call him Frank), a business owner who was well-liked and had received plenty of referrals, decided to leave the group. When asked why, Frank explained that the opportunities that had come to him by referral seemed to be random coincidences that had little to do with his networking activities and could never be replicated.
Although the members of the referral-networking group liked each other and helped each other whenever they could, he felt that it wasn't working for him the way it should. Anyway, he had been gaining so many new clients that he said he didn't need the group anymore.
When asked to describe a few of the new clients he had acquired, Frank named some individuals who sounded familiar to different members of the group. As it turned out, many of Frank's new clients were people who had come to him through referrals from other members over the past year. But Frank said that it was mostly by chance that he had been introduced to these individuals by members of his group, or by people who knew members of the group.
He didn't feel the results were an indication of any system at work; it was just coincidence that his fellow members had bumped into people who just happened to need his services. So why did Frank think these new clients were only coincidental?
Frank's mistake was evaluating his success against the abstract standard of repeatability. His professional training taught him that he and his employees should call people from a list that was generated based on the supposed demographics of his clientele. To generate more business (so the theory went) he should call more people.
The clients he got through referrals, on the other hand, always had a story attached to them that couldn't be repeated. This led him to believe the results were coincidental - a misconception that happened because he focused on the individual referral, rather than on the relationship that produced the referral.
Referral marketing is like fishing with a net. You're thinking about how to cast the net to optimise your chances of catching fish. You choose a likely spot, you throw your net, and when you pull it in, you find a number of fish. You have a pretty good idea of how many fish you're going to catch if you do this a few times, but you don't know which individual fish are going to end up in your net.
It is no more coincidental that people receive regular and consistent referrals from the people in their network, than a fisherman who casts a net catches fish. The fisherman concentrates on his action of casting the net, not the individual path of one of the fishes that swam into it. If he based his decisions on that one random fish, he would quickly come to the same conclusion Frank did: that it was coincidental.
The reason Frank focused on the referral and not the relationship, is because he didn't understand that building effective and profitable relationships is a system. In fact, he had never been trained on how to systematically build mutually profitable relationships. In his early training, he was taught about products, customer service, and cold-calling.
When he did receive referrals, he had no idea what specific actions he had taken that had caused it - so he was simply thankful for his good luck and went back to what he knew.
When it comes to networking, "luck" is where persistence meets opportunity. There is no coincidence about repeat referrals. They are the outcome of the day-to-day activities of building relationships. Although referrals can't be measured as easily as tracking cold-call ratios, the results are dramatic - and almost never coincidental. Repeat referrals happen because you've laid the groundwork through professional relationships.
What are the odds of that particular five-pound largemouth bass ending up in your net? If you don't know about that fish in advance - what kind of fish it is, how big it is, where it hangs out, what time of day it comes up into the shallows to feed - the odds are pretty low that you'll catch that exact fish. But once you've got it, it's yours.
Like the net fisherman, the referral marketer concentrates not on the individual fish but on the process. He knows the process will bring him many referrals - he just doesn't know who they will be or by what roundabout route they will come to him.
Referral marketing may seem a bit messy and random to those who have been trained to call a list of names in hopes of selling one in a hundred. But it's a system that works well because it is good at ferreting out all those unpredictable, hidden, complex connections that exist between people in everyday life and in business.
Author Credits
Called the father of modern networking by CNN, Dr. Ivan
Misner is a New York Times bestselling author and Founder of BNI
(www.bni.com), the world’s largest business networking organization.
His latest book, 'The 29% Solution' can be viewed at
www.29PercentSolution.com. Dr. Misner is also the Sr. Partner for the
Referral Institute, an international referral training company
(www.referralinstitute.com). He can be reached at misner@bni.com
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