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Today’s question, submitted by Ferdinand Kentjana: What's the best way to encourage word-of-mouth marketing when clients aren't sharing the way we'd like them to?
Bob Serling: The key to successfully getting word-of-mouth marketing, or what I prefer to call referrals, is that the responsibility for generating those referrals is not your customer's – it's really your responsibility.
So with that in mind, Paul, what’s your solution for consistently generating referrals?
Paul Lemberg: Well, there's two parts to it. The first part is you have to do an amazing job of whatever you do and build a great relationship with your customers, so they’ll tell other people about you.
When you think about this, if a client is going to refer you to one of their friends, they're putting their reputation at stake, so they're only going to do that when they think there's really something valuable for the people they're referring you to.
The second part is that they have other issues on their mind. They're not actually thinking about generating business for you, so if someone were to ask them for a referral, then they're going to give one, but if people aren't asking, that's not the thing that's top of mind. Most people don't go out of their way to refer you, so it's like you said, Bob: As a business owner, it's your responsibility to actually activate the process and very simply do the asking.
So the simplest thing that you can do is use this formula: Tell people you have some openings, compliment them in some way, and then ask for referrals.
If we’re talking about smaller amounts of referrals, just pick up the phone, call people and say, “I’m looking to expand my business with other people like you," then ask them to make referrals.
If we're talking about larger numbers, then you're going to use some kind of automated mechanism, whether it's postal mail or email or something along those lines to do the same thing.
Then there's the question of whether you should reward someone for a referral. I’m not talking about paying a referral fee, but that it's nice to reward the people who do refer you with some sort of gift, and it can be something small. It could be a gift certificate to a local restaurant or a $25 iTunes or Amazon card. Or, if the referral's meaningful, it could be something more significant, such as a case of wine.
Bob: Perfect. Here’s another way to approach larger groups of people that I've used and found to be very effective, which is holding a referral contest.
With one of my clients who sold sales training programs for insurance agents, we sent an email telling all her clients that she was having a referral contest. And we used that same phrasing that you mentioned, Paul: “I’m looking for more clients who are as great to work with as you are and we'd really appreciate it if you’d refer other agents who you think would benefit from our services as much as you have.”
It then said that the contest will run for one week and at the end of the week the person who generates the most referrals will win a big-screen TV. In addition, everybody who sends in any referral will be eligible for a drawing for a second prize, which was an iPod. So that prize is not as big as the grand prize, but it's still a really inviting prize.
This was very simple, and what happened was very interesting because all the referrers were licensed insurance agents, and the people they were going to refer had to be licensed agents as well, which limits the audience significantly.
But as a result, she got almost 2,000 referrals, and the person who won the grand prize generated 243 highly qualified referrals. In addition, because her training programs sold for around $5,000, she generated hundreds of thousands of dollars in new business from this referral contest.
Any business can hold a simple contest like this with their customers and benefit from it quickly. And the only thing I'd add to this the next time is what you recommend, Paul, which is to reward everybody who gives you a referral with some type of gift, like a gift certificate or a report that you normally sell for $50 or so.
Bob Serling helps business owners and entrepreneurs generate more traffic, make more sales, and do both more often. Get his free e-book of interviews with 30 leading experts, including SUCCESS publisher, Darren Hardy, at www.ProfitAlchemy.com/success
Paul Lemberg helps entrepreneurs grow revenues and become wealthy. His private advisory and coaching clients have added tens of thousands, or even hundreds of thousands, and sometimes millions of dollars, to their personal bottom lines. Download Paul's "7 Keys to Faster Business Growth" video series at www.paullemberg.com.