Referrals Are Wonderful

Word of mouth is a powerful tool – it is using other people as ambassadors for you, or your company.

If you offer to recommend your contacts and help them with their business development, they will reciprocate. It is possible to build a business entirely on referrals with the right network in place.

New business obtained on the recommendation of other people is highly profitable. The clients usually spend more and are loyal. But few companies actively seek referrals.

Pareto’s Law

The nineteenth century Italian mathematician, Pareto, gave his name to Pareto’s Law. It is often known as the 80/20 rule.

It suggests that 80% of your business comes from about 20% of your clients.

A recent survey showed that almost 80% of a company’s customers would be willing to act as referrers for them, but only 20% of them were asked to do so. A company that asks for referrals from 80% of its existing clients would increase its annual turnover by 20%.

Take time to organise and categorise your business contacts. Use this arrangement to help work out how you deal with them and how often you contact them.

Why Referrals Work

Referrals work because they come from a trusted source that has already benefited from the commercial or professional relationship yet has no vested interest in the business. It is independent and unsolicited. In business terms it has a rapid conversion rate – acceptance being dramatically accelerated because the service or product has already been tried and tested by a reputable third party.

When building brilliant business connections you are setting up the perfect mechanism for profiting by referrals. The key principles are ‘giving to receive’.

Satisfied customers are both loyal and profitable. If you are always on the lookout for opportunities to recommend products or services which you trust and admire, you can expect this to work in your favour.

Make it a rule when beginning a business relationship to ask how you can help them.

What organisations or people do you know who could benefit from their services? If you build a ‘rapport web’ it can be an ever-increasing source of new business. Consider your business network’s own contacts database, and so on. It’s like ripples on a pond -self-perpetuating if you are persistent.

Don’t be afraid to be direct. Make sure anyone who can offer a referral knows as much as possible about you or your company’s services. If they do not understand the value of your product or services, or appreciate the key benefits, they will not realise what makes you outstanding and memorable. This is the message that they should be communicating.

Referrals are the rewards that come once you have created your network, made your connections and built your relationships. They are the ripe fruit that you have worked hard to grow. Like a harvest, they only appear if the conditions are favourable (i.e. if they are deserved).

Asking for referrals is one of the most powerful and low-cost ways of building or developing your career or business. It is a simple approach which feeds on its own success. But it has to be built on secure foundations.

When To Ask For Referrals

The time to ask for a referral is when:

• you’ve introduced someone to one of your contacts who awards them a project

 

• you have successfully completed at least two transactions for a client

 

• you solve a problem for someone who wants to reciprocate in some way

 

• someone thanks you for providing a good service

 

• you’ve helped someone through a particular difficulty.

 

If you are leaving referrals to chance and think of them only as an occasional welcome surprise, you are ignoring an essential part of your business development plan. Someone who knows you and your company are genuine and is prepared to pass on that information to an interested third party is worth his weight in gold.

When you were taking those first tentative steps outside your comfort zone, meeting new people, how did you feel? Nervous? Ill at ease? What about the occasion when your contact said, ‘Oh, you must know my friend X?’ Hearing a name that is familiar encourages you to respond positively in a given situation. I expect you visibly relaxed and began to build your brilliant business connection from that moment. That is exactly how a referral works. It’s all about relationships, trust and respect.

Business success is built on the quality of the relationships we have with others. Relationships come in various and subtle shapes and sizes. Never assume you know what role a person has in an organisation. Inquire, investigate and direct your attentions appropriately. Collaborative relationships are the ones that you’re attempting to build so you need to be knowledgeable as to how this is going to happen.

Every Relationship Is Different

Without business contacts, preferably positive ones, you will make little progress.

All your contacts are unique, some are demanding, others quite difficult, and some require understanding. Understanding them doesn’t just make your relationship-building easier, it is inherent to the whole process. Where there is no understanding, how can a business relationship develop?

You must make sure you know enough about your business contacts to enable you to do a good job of rapport-building when you are with them. If not, you simply will not be taken seriously and you will lose credibility. Make sure you have background knowledge, and that it is noted somewhere. Add other information as you glean it – this could relate to your contact's current circumstances (a forthcoming marriage or an anticipated promotion).

Remember that your success in building brilliant business connections relates directly to your understanding of the other person – so make it your business to know as much about them as possible. That makes it much easier to build great rapport.