David Frey’s Mini-Course: Six Deadly Small Business Marketing Mistakes – Part I
Read David Frey’s mini-course titled “Six Deadly Small Business Marketing Mistakes – Part I”.
David Frey’s mini-course is reprinted here.
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Six Deadly Small Business Marketing Mistakes – Part I
How to Make it Rain Referrals
If you don’t have a systematic referral program you are missing out on one of the simplest, lowest cost, ways to generate your highest quality customers. Referrals are the lifeblood of small business and if you haven’t yet institutionalized a referral program, you’re making a huge mistake.
Why are Referrals so Powerful?
The reason referrals are so powerful is because they come from a credible third party that has experienced first hand the benefits of doing business with you. They are even more powerful when they come from a friend because you know that a friend has no ulterior motivations
but to do what’s in your best interest. You can believe what you friend is saying versus hearing a commercial from a salesperson whose sole purpose is to make money from you.
Referrals are also valuable because most of the time they are completely free. How would you like to receive the benefits of the most compelling sales advertisement on earth for absolutely nothing? You can through referrals.
Research shows the importance of referrals. 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. A recent Dun and Bradstreet survey found referrals to be one of the two most popular small-business marketing methods (the other one is advertising).
Lastly, and I think this is the most powerful reason of all, customers that give referrals become more loyal to you and your business. Once someone stands up and makes a public statement about you, psychologically they will become more loyal to you and your business.
Customer Service Doesn’t Always Equate to Lots of Referrals
Customer service is critical to the success of your referral program. It is the foundation of the referral process. But just because you give good customer service, it doesn’t mean that you will get a lot of referrals. Receiving referrals on an ongoing basis is as much a function of deliberate
planning as it is great customer service.
Many small business owners assume that referrals will happen by themselves if you give good customer service. This isn’t true. If you are not deliberate and proactive in creating referrals, the chances of you receiving as many referrals as you want are slim. And your best customers
are ready and willing to give you referrals as was shown in the statistics above, you just need to show them how.
Word of Mouth Advertising and a Referrals are Not the Same
Word of Mouth advertising happens when one of your customers or friends mentions your small business in a casual conversation. It’s not intentional or planned. It’s just something that came out of their mouth.
A referral system is a methodical process that you have put in place to capture qualified prospects through your association with other people.
A ‘system’ by its definition is a ‘process that products predictable results.’ A system can be turned on and off like a light switch at will. Your business needs word of mouth advertising but don’t mistake that with developing a methodical system for referral prospecting.
Making it Rain Referrals Starts with Your Attitude!
Time and again the same question keeps coming to me, ‘How do I get more referrals?’ My answer is always the same, ‘You must ask for them.’ In reality, most small business owners know that they have to ask for referrals to get more referrals but it’s the fear of asking that impedes them from moving forward.
This fear of asking is rooted in your attitude. If your attitude is one that believes that you are asking that person to go out on a limb for you by asking them to give you referrals then you will always be battling with fear.
People Want to Give Your Referrals
If you truly believe that it will be helping them if you ask them to give you referrals your fear would fade quickly. Your customers want to give you referrals. It makes them feel good that they found a great small business that they had a good experience with and they want to share their ‘little secret’ (you) with their friends.
They will be seen as a hero, or someone ‘in the know.’ And when their friend receives great service from you as well, your referring customer will feel as though he was able to do their friends a great favor.
When you ask for a referral, and you have treated that person right, you are actually doing them a special favor.
How to Ask for a Referral
Has someone ever asked you for a referral? Did it go something like this: ‘Hey John, by chance would you know someone who could benefit from my services?’ John starts to ponder and think about it and eventually says, ‘Well, not off the top of my head, but I’ll keep thinking about it.’
This is how 90% of all referral questions are asked and unfortunately, you might as well not ask the question. Rarely, if every, will you get a positive response. Why? Because you didn’t ask the question right. ‘know anyone who…’ questions are too broad for people to think about.
People need a frame of reference to help them narrow down the playing field of potential referral candidates. For instance, imagine that you are talking to one of your good clients who is pleased with your services.
You ask her, ‘Mary, you’re a member of the Women’s Financial Planning Association here in Chicago right?’ Mary responds, ‘Yes, I am.’ You ask, ‘Do you go to their meetings on a regular basis?’ ‘Yes, most of the time.’ Mary says. ‘Is there anyone in your association that you believe could benefit from my services? Maybe one or two people you’ve known in the group for awhile or sit next to regularly?’
Did you see the difference? You gave Mary a narrow frame of reference from which to think about. It allowed her to ‘see’ the potential referrals in her mind. This may be limiting the number of potential people that your associates might know, but it is far more effective than opening up the ocean of people that Mary may know, but can’t remember. Your request will also stay in Mary’s mind long after you’ve asked it because she visualized your services with much greater intensity.
Two Types of Referral Programs
Basically, there are two sources for referrals, your current customers (people who have done business with you) and other influential people. You should have an active referral system for both types of people.
Your customers are perhaps your most enthusiastic referrers because they have experienced your product. But, you may in fact, get more referrals from other influential people who have never tried your product.
Develop a system for obtaining referrals first from your customers and second from other influential people or ‘Centers of Influence.’
Customer Referral Program
Receving referrals from customers starts with giving great customer service. Without going into much detail about the ins and outs of customer service I’d like to share with you eight ‘Moments of Truth’ that provide opportunities for you create a loyal customer for life.
Pay close attention to watch out for these seven moments of truth and if you go the extra mile at the right time, bang, you have a lifetime customer.
– Moment of Truth # 1: The moment your customer complains.
– Moment of Truth # 2: The moment one of your new customers comes back to place a second order.
– Moment of Truth # 3: The moment a customer has thanked you.
– Moment of Truth # 4: The moment one of your customers has been through a hard time because of a foul up on your (or their) part.
– Moment of Truth # 5: The moment a customer needs a favor from you.
– Moment of Truth # 6: The moment you see your customer in public.
– Moment of Truth # 7: The moment your customer brings in a referral.
Perhaps the simplest way to harvest referrals from your customers is to write a simple letter asking them for their help.
Centers of Influence and the 80/20 Rule
Your best referrers are your customers. The people who have experience with you and can vouch first hand for your product and service. However, there are many other people and organizations that you must include in your referral prospecting system.
These individuals are people who know and mingle with many other influential people. These people are often known as, ‘Centers of Influence.’
Centers of Influence can multiply your marketing efforts ten-fold. They turn your marketing efforts from one-to-one to one-to-many. They are the heavy hitters that can have a profound multiplying effect on your business.
A smart small business owner will spend the majority of his referral prospecting time with the 20% of their Centers of Influence that will produce 80% of the results.
Tier 1 and Tier 2 Centers of Influence
Your Tier 1 Centers of Influence are people that are directly related in some way to your industry or profession. Tier 1 Centers of Influence have a connection to your industry because they provide complimentary products and services. Referrals coming from your Tier 1 Centers of Influence can be very powerful.
For example, suppose you are a chiropractor. Tier 1 Centers of Influence for you would be orthopedic doctors, massage therapists, physical therapists, family physicians, local gym owners and managers, outpatient placement coordinators etc. All these occupations deal with people who may be in need of chiropractics.
What is Your Goal with Tier 1 Referral Givers?
Your goal with Tier 1 referral givers is to be the first person on their minds when someone asks them about purchasing a spa or pool. With this in mind, you should sit down with your staff and come up with ideas about how to be the first person standing in line in the minds of your Tier 1 referrers.
Here are a few ideas to start you off:
1. Be their number one referrer: Make sure that you also have a referral mindset. Before you get you must give, which means that in order to get lots of referrals from these people you must be giving them referrals.
2. Sponsor networking events or social gatherings for them. Make sure you try not to invite competitors. Have a good cross section. You might hold several of these parties throughout the year so that you can invite several different potential referrers from the same industry.
3. Put each one of them on your newsletter list. Give them helpful information that they can use to make their sales go up. Give them marketing advice and information on new developments in your industry in which they should be aware.
4. Invite them to an all-expense paid marketing association luncheon that has a great speaker.
Rent a limo to pick them up, serve them wine or fine drinks, and treat them like stars. (I know a mortgage broker that does this with real estate agents and makes a fortune in referrals)
5. Purchase an information product about marketing in their business and give it to them as a free gift. They will thank you for your interest in wanting to help them grow their business.
6. If it’s a big potential referrer, send them a Harry and David (www.harryanddavid.com) year round gift that they will receive every month. This will keep you in their minds all year long. Not long ago someone did this for me and my wife and I glow when we receive our fruit basket each month.
If you don’t have the time or inclination to develop a relationship with your Tier 1 Centers of Influence then don’t even try. If you’re a chiropractor, it’s better to choose only one local family physician and become close friends with him then trying to be friends with 10 physicians haphazardly.
Have a great week.
About the Author:
David Frey is the author of the best-selling manual, “The Small Business Marketing Bible” and the Senior Editor of the “Small Business Marketing Best Practices Newsletter.” To get your free lifetime subscription visit http://www.MarketingBestPractices.com
P.S. Have you discovered the Microsite Secret yet? http://www.TheMicrositeSecret.com
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Go to David Frey’s MarketingBestPractices.com
*IMNewswatch would like to thank David Frey for granting exclusive permission to reprint this mini-course.
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