Why Referral Marketing Works
Think cold-calling is the most effective way to snag customers? Try referral marketing and catch a new batch of clients.
By Dr Ivan Misner, Founder & Chairman of BNI.
When you have a fully functioning referral marketing strategy in operation, you can predict approximately how many referrals you can expect and what quality they'll likely be. True, you won't know exactly who you'll be selling to or how large the order will be, but that's true of almost all marketing techniques. One mistake to avoid, however, is looking solely at the sale itself. When you do this, you'll miss exactly how that sales opportunity came to you.
A few years ago, one member of a referral networking group (We'll call him Frank) who was a well-liked business owner and had received plenty of referrals, decided to leave the group. When asked why, Frank explained that the referrals he received seemed to be random coincidences and his clients couldn't be replicated. He felt the group wasn't working for him the way it should.
Plus, he'd been gaining so many new clients that he said he didn't need the group anymore.
When asked about the new clients he'd acquired, Frank named some individuals who were familiar to members of the group. As it turned out, many of Frank's new clients actually were referrals from other members over the past year. Frank said that it was mainly by chance that he'd been introduced to these individuals and didn't believe the results were an indication of any system at work; it was simply coincidence that his fellow members had bumped into people who happened to need his services.
Frank's mistake was evaluating his success against the abstract standard of repeatability. His professional training taught him that he and his employees should call people from a list generated by the supposed demographics of his clientele. To generate more business--as the theory goes--he should call more people.
Each referral he got, on the other hand, had a unique story attached to the client--something that can't be repeated. This led him to believe the results were coincidental--a misconception because he focused on the referral itself, rather than on the relationship that produced the referral.
Referral marketing is like fishing with a net. You think about how to cast the net to optimize your chances of catching fish. You choose a likely spot, throw your net and when you pull it in, you find a number of fish. You have a pretty good idea of how many fish you're going to catch if you do this a few times, but you don't know which individual fish are going to end up in your net. The fisherman concentrates on casting the net, not on the individual path of one of the fish.
Frank focused on the referral and not the relationship because he didn't understand that building effective and profitable relationships is a system. In his early training, he learned about products, customer service and cold-calling. However, he'd never been trained to build mutually profitable relationships. When he did receive referrals, he was unaware of his actions that had caused it, so he was simply thankful for his good luck and went back to what he knew.
When it comes to networking, "luck" is where persistence meets opportunity. There's no coincidence about repeat referrals. They're the outcome of the day-to-day activities of building relationships. Although referrals can't be measured as easily as tracking cold-call ratios, the results are dramatic--and almost never coincidental. Repeat referrals happen because you've laid the groundwork through professional relationships.
What are the odds of that particular five-pound largemouth bass ending up in your net? If you don't know about that fish in advance--what kind of fish it is, how big it is, where it hangs out, what time of day it comes up into the shallows to feed--the odds are pretty low that you'll catch that exact fish. But once you've got it, it's yours.
Like the net fisherman, the referral marketer concentrates not on the individual fish but on the process. He knows the process will bring him many referrals, he just doesn't know who they will be or by what route they will take to get to him.
Referral marketing may seem a bit messy and random to those who've been trained to call a list of names in hopes of selling to one in 100. But it's a system that works well because it ferrets out all those unpredictable, hidden, complex connections that exist between people in everyday life and in business.
Most big companies are still in the dark ages when it comes to networking. The procedures and results of referral marketing are not as easy to measure as cold-calling. Therefore, big companies stick to the old ways when training their sales staff. Someday, savvy people in corporate settings will catch on to this system. In the meantime, small businesses are leading the way in this networking technique.
Called The Father of Modern Networking by CNN, Dr. Ivan Misner is a New York Times bestselling author. He is the Founder and Chairman of BNI, the worlds largest business networking organization.
Dr. Misner is also the Senior Partner for the Referral Institute, an international referral training company.
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Wednesdays - 7-8.30am - Welcome Inn, Kingston View Drive, Kingston
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Thursdays - 7-8.30am Salamanca Inn, 10 Gladstone Street, Salamanca, Hobart
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Join us on Ecademy!
As networking evolves, we are going to see a greater combination of online and off-line or face-to-face networking.
In the next few years we will also see BNI start to incorporate more online types of communication between members and bulletin board type access.
As we move in this direction, BNI Tasmania has set up a special group within Ecademy (www.ecademy.com), one of the popular global online networking sites.
Our BNI Tasmania Club on Ecademy, has a number of features to help raise our profile, allow us to post articles, organise functions and to include networkers in our area to participate even if they are not quite ready to become face-to-face networkers. People around the world may also wish to join our online group if they wish to do business with Aussies.
We invite you to register to join this online networking site. There is no cost involved. The link is as follows:
The BNI Australia club on Ecademy is up and running where you'll are able to network and trade with BNI members Australia wide!
The Fear Factor
Don't let fear make your decisions. Find out how to ease your worries, and boost your business to new heights.
By Geoff Williams
It's late at night, and you're minding your own business by working on your business. Suddenly a creepy thought invades your head: This would be the perfect moment for a homicidal psychopath to burst into your office and attack. Suddenly you're wondering if you should be bolting the door or hiding your paper shredder.
Relax and stop watching horror films. After all, there are so many other frightening and more realistic scenarios that can destroy you or your business. For instance:
- You might fail to meet payroll.
- Perhaps being audited will set your financial life backward 10 years.
- Maybe the squeeze of high fuel prices will suffocate your business into bankruptcy.
- What if you made a lousy decision with your inventory?
- What if you offended your customer base?
Maybe you've mistaken complacency for efficiency, and you don't know it, but your best days as an entrepreneur are behind you.
If we're honest with ourselves, fear is a powerful component of business. An underlying trepidation is invested in almost every business decision we make. Reading this article can't make business fear go away, but it doesn't hurt to take a look at the monsters under the bed and see how they affect entrepreneurs.
Breathe deeply: Fear is natural
"[Fear is] a natural byproduct of our ancestry--one of those innate fight or flight mechanics of survival," says John Baker, an Eden Prairie, Minnesota, management and leadership consultant who routinely advises Fortune 25 companies. "Today it's less life threatening, but it's out there in every aspect of business that we do."
You may already have come to terms with that and know that whatever your fears in business, they're unlikely to paralyze your decision making for a longer period of time than you can afford. Or you may be too busy to worry about your fears and whether they're affecting your thinking. But even if you wake up every morning in a cold sweat, wondering whether today's the day you'll screw up and see your business collapse like a house of cards, you shouldn't feel as though your business instincts aren't as good as anyone else's, at least according to Baker.
"People are under the assumption that the secret of conquering fear is that they feel no fear, but that's not the secret," he says. "The secret is being able to do something with the fear."
Mike Brey, owner of HobbyWorks, a chain of stores in the Washington, DC, area, agrees. Early in his business, Brey learned that his bookkeeper was embezzling funds. He later had an ex-employee leave to start a competing business--but not before recruiting several of his staff members. For a long time afterward, Brey was afraid that anyone he hired or worked with would soon betray him. It was a fear that was probably justified. In any case, Brey thinks that fear is natural and pervasive among all entrepreneurs.
"Fear can be a way of telling you something," Brey says. "Even now that I'm older and not in danger of going out of business, I don't think I'm different from any entrepreneur."
Wipe off the sweaty palms: Face your fears
Kelly Coyne and co-founder Erin Fouberg, both 38, own Maggie Delaney, a custom children's clothing company that lets customers design their kids' clothes on an interactive design website. Last year, when they learned that Country Living magazine would feature Maggie Delaney in a Pitch Your Product contest, Coyne says the two were ecstatic. But the excitement quickly gave way to fear.
"Would production be able to handle the influx of national business? Would our website crash and burn? Did we really want our home-grown business to explode, or were we happy with our comfortable, manageable work-life balance? Needless to say, we froze," Coyne says.
Coyne and Fouberg actually pulled back on their marketing.
"We declined participation in events that would have provided exposure and income because we were nervous that we would not be able to handle the combination of these events and the magazine-related business. We were waiting to see the impact of the Country Living press."
Then that magical day happened. The national press led to new customers, but otherwise . . . nothing. Their website didn't crash. Production didn't stop. Life went on and, suddenly, Coyle and Fouberg wondered might have happened had they spent months preparing and welcoming the upcoming press instead of fearing what it might bring.
"We haven't made that mistake again," Coyne says. "We now embrace rather than run from our successes."
Relax your mind: Worry about you, not others
Jeff Tobe, the president of Infinite Speakers Agency, says his biggest fear so far was the time he had to fire an employee who had been with him for a year.
"I knew within the first two months that she was not the right one for the position," Tobe says. "I tried everything from outside coaching to changing her responsibilities, and nothing seemed to work."
Then everything came to a head just before the Christmas holidays. Yet Tobe couldn't bring himself to fire his employee at that time of year.
"I had come to the end of my rope but still played with the idea of sticking it out another two months to get through the holiday season," he says. "I lost a lot of sleep over it, and December 20, she entered my office and quit!"
Tobe says the experience taught him a valuable lesson--that most employees know what the situation is and that avoiding dealing with the fear doesn't mean the issue will go away.
"You are actually doing them a favour by letting them go and allowing them to pursue another opportunity," concludes Tobe, who adds that he has conquered his fear of firing. These days, if Tobe needs to prune his staff, he says he can do what needs to be done.
Matt Blumberg, CEO and founder of Return Path, a New York City-based e-mail performance management company, had a similar experience. Except in his case, he was trying to talk a CTO who wanted to quit into staying.
Afraid his financing would be destroyed if the CTO left, "the result was an even more difficult situation going forward, with a disengaged senior manager who believed--correctly--that he wielded great power over me. I'd never do that again."
Your white knuckles aren't important: your company is
If there's a theme to entrepreneurs who succeed despite fear, it's this: Focus on your company, not your fears. If you do what's right for your company, and you turn out to be right, your fears will probably be blown to oblivion.
Penny Sansevieri, owner of book publicity firm Author Marketing Experts, has been sued by a contractor and bullied by authors and publishers. Though Sansevieri could stand the discomfort of having a high-profile author intimidate her, she realized the real risk when it started affecting her staff.
"When it started to affect out staff, I'd pull the plug. I'm very protective of my team," Sansevieri says.
Still, if you can't quite close your eyes and punt in the best interest of your company, you'd do well to consider the advice of consultant Starla Sireno, who founded Fearlessness, a coaching program that helps with the emotional aspects of business building. Here are four steps she advises fear-paralyzed clients to take when trying to summon up the courage to make a hard decision:
Accept that you're afraid. This is the first step to overcoming fear.
Write your fears down. According to Sireno, this brings clarity to the issue.
Shift your focus. Instead of focusing on getting through a shaky economy, or summoning up the nerve to fire a toxic employee, ask yourself what you're ultimately trying to achieve, Sireno suggests.
"If you're worried about money and the recession, and that's your fixation instead of your business, your actions are going to follow that," Sireno says.
So envision your business's future-- not how the economy's doing or how your temperamental employee will react--and you'll guide your business toward success.
Take action. As the saying goes, courage is not the absence of fear, but rather the judgment that something else is more important than fear. According to Sireno, "The biggest enemy of fear is action."
Also consider talking about your fears with trusted employees or colleagues.
"It can be therapeutic," says Chris Lyman, CEO of Fonality, a telecommunications company aimed at servicing small and medium businesses' telephone needs. "You need to get that stuff out on the table, or you just carry it with you."
He adds that he's never "opened up and had the situation worsen. I can think of times when I was too stalwart or obfuscated, and that worsened the situation. But I think people realize we're all human, and if you're honest about your fears and feelings, usually you get rewarded."
And that's the weird, if comforting, thing about fear in business. If you confront the fear, you usually see results.
As Sireno says, "Behind failure, there's often a great opportunity."
And even if there isn't a great opportunity, getting past fear is generally a confidence booster.
Says Brey, who found himself feeling the most vulnerable after two employees betrayed him.
"I've learned that even in a serious situation like that, my business is going to go on, and I know if that kind of thing happens again, we're going to survive."
Thanks to Geoff Williams for this article - Read more articles from Geoff on Entrepreneur.com
Having an effective on hold strategy is not only important at a marketing level it can also serve an equally important role as a customer service tool.
With more and more business being conducted over the phone first impressions have never been more important in this competitive business world.
On hold messaging enables you to talk direct to a captive audience, market your products and services, enhance your companys image and let your callers know that their call really matters.
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Book of the Month
Masters of Sales
Secrets From Top Sales Professionals That Will Transform You Into A World Class Salesperson
By: Ivan R. Misner, Ph.D. and Don Morgan, M.A.
For the first time, more than 80 of the most successful salespeople in the world have come together to reveal their secrets to success.
You'll learn what makes these outstanding sellers true masters of their craft - and how you can adapt the masters' tactics for your own.
This exclusive compilation of the sales strategies ever known puts you on the fast track to sales success.
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Other Books available now
Its Not net-SIT, or net-EAT,
Successful networking is about learning how to work the networking process not just letting it happen.
Develop your networking skills, increase your connections, and become part of the roughly 29% of people who are separated from the rest of the world by just six degrees.
Co-authored by bestselling author Dr. Ivan Misner, who is referred to as "The Father of Modern Networking," and Michelle R. Donovan, who is known as "The Referral Expert" in Pittsburgh, The 29% Solution is the first book designed to integrate networking into the way you do business on a weekly basis with fifty two quick, straightforward networking strategies.
Your income is directly related to your ability to network your business for growth. This book gives you the tools to become a great networker and part of the 29% of the population that produces exceptional results.
Once you decide to be great,
good is no longer an option!
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Masters of Success
The second in the Masters Series - By Dr. Ivan Misner & Don Morgan. A #1 Wall St. Journal Bestseller! Stories from: Brian Tracy, Tony Alessandra, Buzz Aldrin, Wayne Dyer, Larry Elder, Michael Gerber, John Gray, Mark Victor Hansen, Tom Hopkins, Vince Lombardi Jr. Tony Robbins and many others.
All these famous people and many more contributed to the writing of Masters of Success. If you seek inspiration and ideas, Masters of Success has stories of daunting hardships overcome, lessons learned and unexpected successes in abundance.
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Truth or Delusion
Truth or Delusion, Busting Networking's Biggest Myths co-authored by Ivan Misner, Mike Macedonio, and Mike Garrison.
In this book we tackle 49 questions and/or myths about networking and show how they are in fact "truth" or "delusion".
Truth or Delusion? If you provide good customer service, people will refer business to you.
This one's a delusion. Many, many entrepreneurs think that good customer service is the number-one way to cultivate word-of-mouth marketing and referrals. But it's not! It's a good policy and one that's vital to the health of your business, but it's not at the core of building a referral-based business.
People have come to expect good customer service. In fact, they demand it in today's marketplace. When considering customer service and its role in the referral process, it unfortunately works much more effectively in reverse: People are more likely to talk about your business when they're unhappy with you than when they're happy with your service.
So if you want to build your referrals, you must actively cultivate your referral sources and not rely on good customer service alone.
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Copies now available for only $30 plus $5 for postage