Tuesday, July 31, 2007

How to Create the Ultimate Referral Marketing System in 7 Simple Steps

By John Jantsch

It’s funny how often small business owners tell me that the number one way they acquire new business is by way of referral. Yet, when I ask what they do to intentionally stimulate this powerful marketing strategy, I get blank stares.

If you’re doing something right in your business, you will get the accidental referral but, by creating a systematic approach to consistently generating referrals, you will find that your job of marketing and selling can become a pretty simple affair.

The following seven steps constitute the core components used to build an effective referral marketing system for your business.

Step #1 - Create a referral target market(s) – you must create a target list of companies and individuals who can be motivated to refer. This can be clients or a network of related businesses. In many cases you will find a certain percentage of your clients already refer some business. Tap these sources first, create tools to make it easy for them to refer you, ask them what would motivate them to refer more business. Don’t spend your time and energy trying to create a referral program that everyone will buy into. Some people are just wired to give referrals – focus on that group

Step #2 – Identify your ideal referral client – In order to receive high quality referrals you must be able to quickly communicate the exact type of person or business that makes a great referral. Skip this step and you will likely find yourself on too many wild goose chases with referrals that don’t fit your ideal target client.

Step #3 – Create and communicate your core referral message – you must be able to easily explain the value you can bring to anyone who is referred. For example, a marketing and branding expert for professional services might tell an attorney, “We show estate attorneys how to become famous,” as a way to simply communicate how they are unique. It’s important that your referral sources know what makes you unique, what your brand has to offer that a referral might value most.

Step #4 – Design a referral education system – When you meet with a potential referral source you can substantially increase the number and quality of referrals if you systematically educate them on: Who makes a great referral, what’s in it for them to provide a referral, how to refer you, and the exact steps you plan to take with that referral. Taking the time to educate your referral sources is a great way to differentiate your business from the hoards of other businesses that are probably courting them are referral sources as well.

Step #5 – Outline your referral lead offer and system – this is the heart and soul of the system. This is where you devise the creative offer that makes people want to refer you. Spend some time to craft a creative approach to motivate your referral sources. Money for referrals is rarely the best approach. Motivate your sources with recognition, thanks and contests. Example: Earn a 100 percent refund on your tax return preparation when you refer 4 people who become clients.”

Step #6 – Create a referral conversion strategy – what good are referral leads if they don’t become referral clients? You must map out a specific set of steps that will allow you to convert your referral leads. A referred lead is a warm lead, but in some cases, they may actually have higher expectation, due to the referral. Make sure that your initial marketing materials, meetings and sales process meet those expectations or you may find that the referral tap gets turned off. Remember, you are borrowing the trust a referral has with the referral source, don’t abuse it.

Step #7 – Identify a referral follow-up strategy – to bring your referral system full circle you need to devise two follow-up steps. 1) a way to continue to market to your referral leads that don’t immediately turn into clients and 2) a way to systematically communicate the progress of a referral back to your referral sources to keep them motivated. I find that often it makes sense to create several ways to reward your referral sources. Acknowledge them in some way as they refer leads and then again, in a more significant way, as a lead becomes a client. This way you consistently communicate how much you appreciate their support on your behalf.

Take the time to complete the steps outlined above and then operate your referral marketing system week in and week out and you will soon discover a steady flow of highly qualified leads, already aware of the value you can provide, seeking to do business with your firm.

---Source: John Jantsch is a veteran marketing coach, award winning blogger and author of Duct Tape Marketing: The World's Most Practical Small Business Marketing Guide published by Thomas Nelson. He is the creator of the Duct Tape Marketing small business marketing system. You can find more information by visiting http://www.ducttapemarketing.com

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