Why Referral Marketing Programs Fail

 

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Why Referral Marketing Programs Fail

Copyright © 2006 Judy Murdoch

Highly Contagious Marketing

True or False: Referral marketing is the easiest way to get the

word out about your small business? The answer is...

FALSE

Don't feel bad if you answered, "true." Most people do.

So often, I've seen someone start a new business, with the

assumption that their friends and colleagues would send lots of

new business their way. Three months, sometimes six months later,

these new business owners are still waiting for the phone to

ring. And even if the phone does ring, only a small percentage of

those calling end up converting to real paying customers. Sadly,

many of these businesses don't make it.

The owners of these failed businesses aren't dumb or naive. Many

have owned successful small businesses in the past or had

successful corporate careers. They know how to get things done.

So what's going wrong? Why do referral marketing programs so

often fail to produce results?

First, business owners simply don't ask for referrals. Often

this is because the business owner assumes that others "know"

they need more customers. Unfortunately, the folks outside their

business often assume the opposite; that if a business owner

isn't asking for customers, they probably don't need any! It's

easy to see how this dynamic undermines the referral marketing

process.

Business owners may also resist asking for referrals because they

think they're "bugging" people or haven't earned the right to

ask for referrals.

Regardless of the reason, the consequence is the same: if you

don't ask for referrals, you won't get them.

The second reason referral marketing programs fail is because

when we do ask, we leave it up to our referral source to figure

out who to send us. So often, we ask for referrals in a vague,

general way ("uh, do you know anyone who needs my services?").

Asked in this way, people almost always say, "no, can't think of

anyone." Why? Because they're running through their mental

contact list, a list so large for most folks, that they rarely

think of someone specific when asked.

The third reason referral marketing program fail is because

people forget your request. Let's say someone has agreed to send

you referrals and they are completely sincere in their desire to

help you. Unless they immediately call the person they want to

refer to you, chances are that they will forget because they're

busy and there are more urgent things demanding their attention.

Unfortunately, if they don't remember you, they won't send you

referrals.

At this point you may be thinking, "Sheesh, this is harder than I

thought, maybe I should tattoo my company logo on my forehead

after all," don't be discouraged. With the right skills,

know-how, and a little creativity, your referral marketing

program can thrive. Read on for strategies that will take the

number of referrals you receive from "blah" to "VROOM."

Four strategies to getting more referrals:

1. Don't assume anyone knows what your business needs. Ask for

referrals.

2. Understand why people give referrals and, in particular, why

they will give YOU referrals.

Put simply, people give referrals to look good.

Think about when you are the referrer. Have you ever referred a

friend to your favorite restaurant and your friend ends up loving

the place? They probably thank you every time they see you and

you feel pretty great--like you let someone in on something very

cool and special.

That's why people give referrals for everything--plumbers,

realtors, pediatricians, electrical contractors, you name

it--they get to be a hero in a small but significant way.

3. Make it easy for people to refer you.

To send you referrals, your referral sources need to remember you

when opportunities arise and they need to know what to tell the

person about your business. For example, compare these two

referrals:

"My friend, Ann is a realtor"

"My friend Marion is a realtor who will buy your house

if it doesn't sell within 90-days."

See the difference? Which is more memorable? In a tough seller's

market, who would you rather refer? If this were all I knew about

the two realtors, Marion is the one I'd refer.

4. Follow up and acknowledge.

If you assume people don't care whether or not you say thank

you, you assume wrong. When you call your referral source and let

them know how your meeting went with the prospective customer

they sent you, it reinforces their involvement in your success

and their ablity to make things happen.

In addition, sending a note of appreciation regardless of whether

the referral works out, encourages your referral source to send

more.

When done right, referral marketing is, without a doubt, the most

inexpensive AND most effective way to get the word out about your

small business. Although it requires more of your time upfront in

terms of planning, developing a strong message, and educating

your referral sources, remember that--every dollar--every

minute--you spend on your referral marketing program will pay for

itself many times over in terms of the high quality new business

you attract.

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Judy Murdoch helps small business owners create low-cost,

effective marketing campaigns using word-of-mouth referrals,

guerrilla marketing activities, and selected strategic alliances.

To download a free copy of the workbook, "Where Does it Hurt?

Marketing Solutions to the problems that Drive Your Customers

Crazy!" go to http://www.judymurdoch.com/workbook.htm

You can contact Judy at 303-475-2015 or judy@judymurdoch.com