referral sources Archives - Page 2 of 2 - Dr. Ivan Misner®

The Referral Process–Step 3

The referral process (CLICK HERE to read a short overview of the referral process) can be broken down into eight easy steps. In a blog entry I posted last Monday, I explained step 1 (Your Source Discovers a Referral) and step 2 (Research the Referral).  Today, I am going to talk about step 3.

  • Step 3.  Check Back in with Your Referral Source

After learning all you can about the prospect’s company through your outside research, it’s a good idea, especially if the referral appears to be complex or of very high value, to call your referral source back to confirm or refine what you’ve learned about the prospect’s company.

You need to keep your referral source in the loop and out of trouble. Making her look good is a primary objective, perhaps even more important than the immediate sale, because you want this referral relationship to continue and to benefit both of you far into the future.

More important for your approach to the prospect, you need to know more about him personally, which is something you can assume your referral source is particularly well positioned to help you with.

Try to learn about what sort of individual you’ll be dealing with. What’s his personality type?  Is he detail oriented?  If so, he might want to see a lot of collateral material or samples.  Is he hard driving and results oriented?  He might just want to talk about your offerings, see your track record, and make a quick judgment.  Does he like to have fun while he’s doing business?  Perhaps you’ll join him on the golf course.  If he’s all business, the office environment is probably better.

What are the prospect’s goals?  Why is he interested in your products or services?  Is he happy with his current provider or looking for a change?  Is he ready to do business with you immediately based on the referral, or is he sending out requests for proposals to other companies?

What you don’t want to do is charge at the prospect with no idea of what is expected or desired.  Having some certainty about these factors will help you put together a powerful presentation that is tailored to the individual and his company.  This will help you accomplish your two most important objectives: closing the sale quickly and making your referral source look good.

If you have a testimonial you’d like to share about a time you successfully executed step 3 in the referral process and how it made for great results, or a story about how you learned the importance of step 3 after neglecting to complete it and suffering the consequences, please feel free to share by leaving a comment.

Be sure to check back in next week if you want to learn about step 4!

The Referral Process–Steps 1 and 2

Last week, I wrote a blog explaining that referral networking is a system –when it comes to the actions of generating, developing, and closing a business deal through a referral, there is a well defined, systematic process.

The good news is, this process can be broken down into eight easy steps and today I am going to explain steps 1 and 2.

  • Step 1.  Your Source Discovers a Referral

The referral begins with an event that is outside your direct involvement: your referral source uncovers a referral opportunity for you.  This occurs without your direct involvement, but it happens because you have laid the groundwork for it by cultivating a mutually beneficial relationship with the person who is going to be motivated to bring you the referral and by making sure she can inform the prospect about the benefits your business can provide.

  • Step 2.  Research the Referral

Your referral source tells you she has a referral for you.  At this stage, your impulse might be to call the prospect immediately–you know, strike while the iron is hot!  But that would be a mistake.  In fact, it’s the most common mistake people make, and in many cases it’s referral suicide.

Don’t let your excitement cloud your judgment about the opportunity.  As soon as you get the call from your referral source, and before you even think of picking up the phone and calling the prospect, you should start digging to find out everything you can about your prospect and his company.  How old is the company?  What is the prospect’s main line of business?  How successfully does it compete?  What is the company’s market valuation?  What products or services of yours might be of most use or interest to the company?  What is its track record with vendors?  Does it deal fairly and straightforwardly with suppliers and clients?  Is it in good financial condition?  Will you be competing with other vendors for its business?

Can you think of any other questions that would be good to consider when researching a referral in Step 2 of the referral marketing process?  If so, please share it in the comment section.  Also, be sure to check back next week to read about Step 3: Checking Back in with Your Referral Source.

The Importance of Knowing Your Products and Services

When your referral marketing plan is working well, prospective customers buy from you the first time because they have been referred by your sources. They may continue to buy from you because they trust you and develop a good relationship with you.  But whatever the reasons they come and whatever the reasons they stay, they are your customers primarily because they need your products and services.

A clear idea of your range of products and services is something your sources need to communicate to prospects. For each product or service you plan to market during your referral marketing campaign, you must be able to articulate for your sources the answers to the following questions:

  • What is the purpose of your product or service?–What needs does it satisfy?
  • How would you describe it?–What are its shape, size, functions, key features, principal activities, benefits?
  • How is your product or service delivered to the customer?
  • How much does it cost and under what conditions?

There are other questions concerning your products or services that you should answer for your own strategic purposes. Is your product becoming obsolete?  Is there a newer or better way to provide the same service?  What are the social and environmental effects of your product or service?  Will economic or regulatory trends force you to change your products or services or the conditions under which you provide them?  In the long term, will you be satisfied to continue to offer these products or services?

Knowing the answers to the questions above will help you clearly communicate your products and/or services to your referral sources.  This is extremely important because only when you’re able to do this will your referral sources be able to effectively refer business to you.

What’s the Payoff for Developing an Effective Word-of-Mouth Strategy?

Developing an effective word-of-mouth strategy that results in a strong referral-based business takes endless time, energy, effort and, above all, commitment. The actions and steps necessary to create a successful referral-networking campaign are simple, yet far from easy; they take tremendous dedication and drive, and results can be a long time in coming.

So why should you put forth the time and effort to develop a word-of-mouth strategy for your business?  Because, if you commit to doing it right and don’t give up, the payoff can be unbelievably high.

In fact, many businesses have become so adept at referral marketing that they get most of their sales through referrals and spend little or no money on advertising — and they never have to place cold calls. Some of these businesses hire most of their employees through referrals, manage complex financing arrangements and even procure necessary products through referral contacts they have cultivated for many years.

But a referral-based business can reward you in ways beyond those measured in dollars. Dealing with people you like and trust is a better way to live and work than sparring with strangers all day long. You may even find the relationships you form with your referral sources more important than the dollars your new customers bring you. Such relationships are central to both the referral-generation process and the satisfaction you derive from your work.

So, the next time you find yourself doubting whether your networking efforts are really worth it, remember: If you don’t give up, and you continually devote yourself to working on making your word-of-mouth strategy better and better, the payoff can be enormous both financially and in terms of happiness in business and life.

A Win-Win Way to Reward Referral Sources

If you’re looking for creative ways to give referral incentives, it’s worth considering a technique I like to call “Incentive Triangulation.” This is a powerful way of leveraging other people’s services to benefit your customers, clients or patients and reward those who refer you.

The concept is simple and can be designed to fit the needs or requirements of any business. For example, a retailer might negotiate an arrangement with another local business, such as a florist, printer or appliance store owner, whereby that store will provide its customers with a discount of 10 percent or more on their next purchase. After that, each time someone gives you a referral, reward him with whatever you would normally give as an incentive and also a coupon good for the discount at the prearranged business.

This form of joint venture is beneficial for all three parties, hence the term “Incentive Triangulation.”  You benefit because you are providing another incentive for people to refer you. The other business benefits because you are sending your clients to it, along with a recommendation, of course.

Finally, your clients will benefit because they got recognition for their effort as well as an additional product or service at a reduced rate.

If you have an example of how you’ve successfully used Incentive Triangulation, leave a comment and explain how you’ve used it. Your example could spark great ideas for other blog readers on how they might use the technique for their business.

What is the VCP Process?

The key concept in referral marketing is relationships. The system of information, support and referrals that you assemble will be based on your relationships with other individuals and businesses. Referral marketing works because these relationships work both ways: They benefit both parties.

A referral marketing plan involves relationships of many different kinds. Among the most important are those with your referral sources, with prospects these referral sources bring you and with customers you recruit from the prospects. These relationships don’t just spring up full-grown; they must be nurtured. As they grow, fed by mutual trust and shared benefits, they evolve through three phases: visibility, credibility and profitability. We call this evolution the VCP Process(R)

Any successful relationship, whether a personal or a business relationship, is unique to every pair of individuals, and it evolves over time. It starts out tentative, fragile, full of unfulfilled possibilities and expectations. It grows stronger with experience and familiarity. It matures into trust and commitment. The VCP Process describes the process of creation, growth and strengthening of business, professional and personal relationships; it is useful for assessing the status of a relationship and where it fits in the process of getting referrals. It can be used to nurture the growth of an effective and rewarding relationship with a prospective friend, client, co-worker, vendor, colleague or family member. When fully realized, such a relationship is mutually rewarding and, thus, self-perpetuating.

This simple concept has made a bigger difference in more people’s networking efforts than any other single idea I’ve discussed. For this reason, I’m going to devote the next few blogs I write to explaining each step of the VCP Process individually. Come back on Monday to learn why it all starts with visibility . . . I guarantee you you’ll want to read this one!

Strengthening Relationships with Referral Sources

To be an effective networker, you should always be working on strengthening your relationships with your referral sources.  So, what’s the best way to do this?  It really depends on the referral source and what he or she responds to.

There are a number of actions you can take to build good will and credibility in your relationships, and the list below contains an array of examples.  Of course, this is not an exhaustive list, so you should feel free to add your own actions to it.

  • Send a thank-you card.
  • Send a gift.
  • Call a referral source.
  • Arrange a one-on-one meeting.
  • Extend an invitation.
  • Set up an activity.
  • Offer a referral.
  • Send an article of interest.
  • Arrange a group activity for clients.
  • Nominate a referral source.
  • Display a source’s brochure.
  • Include a source in your newsletter.
  • Arrange a speaking engagement.
  • Invite a source to join your advisory board.

This is an important topic so, in the coming weeks, I’ll be posting a handful of blogs explaining in more detail how to do each of these things effectively. Be sure to come back to find out more about this. In the meantime, I’d love to hear your comments about what actions have been fruitful for you when working on strengthening relationships with your network partners.

If You’re Not Inviting, You’re Missing Out

Inviting prospective referral sources to an event you’re attending, hosting or participating in as a featured guest, exhibitor, panel speaker or award recipient is a great way to enhance your contact with them and build credibility.

If you’re not inviting your prospective referral sources to events, you’re missing out on a great opportunity to keep them informed of activities you’re involved in. When the event is one where you have a chance to share your expertise or where you are being recognized for an achievement, using this tactic contributes to building your credibility and image as a successful and knowledgeable professional.  This tactic also helps acquaint your targets with others in your network and transforms strictly business relationships into friendships.

If you haven’t been inviting prospective sources to events and you’re not sure whom to invite or how to invite them, here are some tips to get you started:

  • Make a list of the events you’ll be attending and a list of network members you might invite.
  • With plenty of lead time, call or write each prospective source to invite him or her to the event; explain the reason for the invitation.
  • Pay your network member’s admission fee, if there is one.
  • Make sure the event offers benefits to your prospective sources, such as an opportunity to meet someone they admire, to be entertained or to be recognized.
  • Whenever possible, allow your guests to invite guests of their own.
  • It’s OK to invite people you do not expect to attend.  Remember, one of your aims is to keep your sources informed of what you are doing.

So, what events are you attending in the coming weeks?  Make use of the tips above and make it your goal to invite someone to each event you attend from here on out. Chances are you’ll not only reap some great benefits, you’ll probably enjoy the event even more with your network member along.

Become a Customer to Become a High Priority

One of the friendliest and most natural ways to make contact with a referral source is to buy her products or services, whether in large or small dollar amounts.  It’s important to note that the purchase doesn’t necessarily have to be from her primary line of business–perhaps a ticket to a fundraiser, a used car, a computer, even a box of Girl Scout cookies from her daughter.

By purchasing something from your network member/referral source, you become one of her customers. As a customer, you are high on her priority list; she will be more inclined to do business with you and give you information, support and referrals.  This approach also increases your source’s interest in getting to know you and staying in touch.

Tips for purchasing from your network:

  • Analyze how you are spending your money now.
  • Decide how much you want to spend.
  • Test your relationship with the people you buy from now. Do they know you? Do you benefit from doing business with them?
  • Identify the products and services your sources offer that you want or need–or the purchase of which might benefit your business in the long run.
  • Are you buying products and services from people and organizations that see you as an individual? Do the people you buy from know your name and think of you as their customer? There’s a big difference between being a customer of Sears and being a customer of Joe’s Shoe Store.
  • Use your purchasing power in a way that gives you more benefits and builds relationships.  Buy at least half of your products and services from people you know; however, don’t do it in a way that makes them feel obligated to buy things from you.

It’s Not WHAT You Know, But WHO You Know–True or False?

How many times have you heard the phrase “It’s not what you know, but who you know” when it comes to determining success??  I’m willing to bet that over the course of your life to this point, you’ve heard it a lot.  Do you think it’s true?  Well, it’s not–it’s false.  It’s not what you know, or who you know–it’s how well you know them that really counts.

Here’s the difference.  How many people do you know?  Open up your e-mail address book and count the names.  You know as many people as are listed n your e-mail address book and probably a lot more.  Now, reach into your pocket and pull out your car keys.  How many of the people you know would you hand your car keys to?

Surely, now you understand that the importance of how well you know a person.  A contact is a person you know but with whom you have not yet established a strong relationship.  A connection, on the other hand, is someone who know you and trusts you because you’ve taken the time to establish credibility with that person.

Your network must not only be broad but also deep.  When you rely on others to cross-market your business or promote your program to a client, you’re not asking a simple favor.  For true referral networking, you need relationships that are deeper than mere contacts; you need strong connections, established well in advance.

So, beginning this week, focus on taking the time and energy to cultivate deep relationships by giving your referral sources anything and everything you can to help them succeed.  These will be the relationships you can count on when you need powerful connections because it really isn’t what you know or who you know–it’s how well you know them, how well they know you, and how well they know the people you want to meet.

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