Everyone agrees that word of mouth is the best advertising. Everyone knows the power in one person telling another about a service or a product. The problem is that casual referrals usually don’t create a phenomenally successful business. To generate a massive number of referrals, you need a phenomenal Referral Marketing system.
I mentioned earlier that not marketing to your past clients was the biggest marketing mistake you can make. The second is what I call “chasing suspects.” We’ve all been there. You meet someone who says he or she might be interested in your service or product. You spend a massive amount of time and energy chasing an individual and nothing ever comes from it. The person was a suspect, not really a prospect.
Instead of spending a lot of time pursuing an individual, let me show you how to generate an unlimited supply of ready to buy prospects…
The Secret to Record Sales and Profits
In coaching thousands of small business owners around the world, I’ve learned that most small business owners are missing
out on a very big secret. This secret is how I have built my companies and how small businesses worldwide are having record sales and profits.
Here’s the secret: Instead of chasing suspects and spending so much time following up with individual prospects, invest your time building relationships with powerful referral sources.
What I mean by a referral source is a company or professional that has a relationship with a large group of your perfect niche clients. For example, if you are a CPA and you get referrals from attorneys, invest your time building relationships with as many attorneys you can.
Here’s an example: I’m the exclusive small business coaching company for Ziglar, Inc. They are a referral source for me. There are many small business owners (my niche) on their list. I’m also a referral source for Ziglar. Who needs Zig Ziglar products? Everyone! Especially small business owners!
Here’s another example: Not too long after I began my training firm, Phenomenal Products, Inc., I approached a large supplier that had thousands of small business owner customers across the nation. We put together a joint venture; I traveled to their stores all over the country and they made sure the small business owners were there to learn from me.
We sold hundreds of thousands of dollars in business-building products and business coaching services, but what is most important is that it added value to them because they were helping their customers build their businesses. And it helped me in turn, as it was a phenomenal way for me to get in touch with a large number of business owners.
The first company I started is a business that cares for Oriental rugs, stone floors, and fine carpets for Houston’s most prominent citizens including world leaders, celebrities, and athletes. Of course, we didn’t start out with that clientele, but from the beginning, I grew the company by building relationships with flooring retailers, interior designers, and real estate agents. They refer their clients to us exclusively. That business brings in an average of two hundred new clients every thirty days just through referrals.
My definition of Referral Marketing is: “The process of building a network of sources that will refer multiple clients to your business.”
My first two books, 7 Secrets of a Phenomenal L.I.F.E. and The 5 Secrets of a Phenomenal Business, were both Amazon #1 best-sellers in specific genres because I coordinated a launch with a dozen referral sources who promoted my books to their list.
My definition of Referral Marketing is: “The process of building a network of sources that will refer multiple clients to your business.”
The Top Ten Reasons Referral Marketing Is So Effective
1. Your Network Is Unlimited. As you begin to build relationships with powerful referral sources and you get your clients to refer you, the network continues to grow with no end in sight. The more you build and nurture those relationships, the more your business grows. Casual referrals usually don’t create a phenomenally successful business. To generate a massive number of referrals, you need a phenomenal Referral Marketing system.
Higher-Quality Clients. High-end clients will seek out a referral rather than responding to an ad with the best price. Being “referral based” helps you attract a higher-quality client. Referred clients usually don’t even ask about price; they are more concerned about quality than price.
Prequalified Clients. By educating your referral sources, your prospective clients will be prequalified; therefore, they will already know more about you (and that you charge more than the commodity- or service-level company).
People Trust Referrals. Wouldn’t you agree that referrals already have a level of trust in you? Sure they do. They trust you because the person they trust knows you.
Reduces Competition. With Referral Marketing, you are no longer fighting for the best ad placement or having your ads copied. Relationships are hard to duplicate.
Low Cost. With the right Referral Marketing sys- tem, you won’t spend money on expensive advertising. The cost is very low for Referral Marketing. Even with a Referral Reward Program (which I highly recommend), the cost is still extremely low compared to most advertising.
High Returns. The returns can be huge. In many small businesses, a 4-to-1 return on investment on advertising dollars would be outstanding. In other words, if you invested $1,000 in advertising, you would get an average of $4,000 in return. Most small business owners would be thrilled with that return. With Referral Marketing, if you pay a 10 percent referral reward and everyone cashed in on it, you would have a 10-to-1 return. In my reward program, I get a 20-to-1 return. (More on the Referral Reward Programs in a moment.)
Returns Guaranteed. With a referral reward, you don’t pay until after the product or service is paid for. With paid advertising, you put your money on the line and hope for a return. Please don’t misunderstand: there is nothing wrong with advertising if it works. More on that later as well.
Small-Time Investment. The biggest objection I get to Referral Marketing is “time.” See “Exponential Multiplication!” below to overcome that challenge.
10. Exponential Multiplication! Would you be interested in how investing just a few minutes a day doing something really fun could potentially give you a return of more than $10,000 in new business each and every month after six months? Of course you would. Even though I can’t guarantee it, I have seen it happen many times.
Here’s what I discovered with Referral Marketing (see chart).
If you invested just thirty minutes per day calling on powerful referral sources (companies that are in a position to refer you on a regular basis), do you think it’s possible to generate just $1,500 in new referrals in a one-month period? See the first column on the chart. Not too difficult for most small businesses.
What I discovered about Referral Marketing is that once you win the confidence of a referral source, they will continue the habit of referring you (New Income), unless you give them a reason not to. You will then continue to develop new referral sources each month, to the tune of $1,500 each month.
All told, at the end of six months, you would be at more than $10,000 per month in new referred business! The total monthly income in new business is demonstrated by the Recurring Income column.
This is how I built my first company from the trunk of my car to a multimillion-dollar enterprise. I still use Referral Marketing today. This is how I built a phenomenal training business and the reason you are holding this book in your hand right now. And it’s the same method I have taught countless small business owners around the world. They are having record sales and profits because of it. Finally, it will work for you too, if you understand it and apply it.
You can clearly see why this strategy is the “secret” to record sales and profits. Yet, many small business owners still struggle to get out there and see referral sources. If that’s you, hire someone! You cannot afford to continue to leave those dollars on the table!
All of Business Is About Relationships
Would you agree that all of business and all of life is about relationships? You bet. So the idea here is to build relationships with potential referral sources. By adding value to them, they will add value to you.
Have you ever heard “It’s not what you know, it’s who you know”? Over the past thirty years in business, I have learned that all of business is about relationships. But, it’s not just who you know, but it’s what you know about who you know.
And it’s not about who you know—but who knows you and what they know about you. That’s called positioning. My good friend Bob Burg, best-selling author of The Go-Giver, says that people do business with those they know, like, and trust.
Are You Building Phenomenal Relationships?
Are you actively building phenomenal relationships? Or are you just relying on casual word of mouth or advertising to get customers? How much time do you invest in business relationships? Or are you kind of stuck working “in” your business?
In today’s digital world, we are more connected, but more isolated than ever before. I personally love social networking and actively network on Facebook, but I also make time to connect face-to-face, because nothing can replace that.
American legend Zig Ziglar said, “You can have everything in life you want, if you will just help enough other people get what they want.”
Jesus said, “Give and it will be given back to you, pressed down, shaken together and running over.” It may not come from the same person, but my experience has shown me that if you give people what they want, they will be more apt to give you want you want.
Jim Cathcart, best-selling author of Relationship Selling, says that “relationship selling is becoming an asset to others before they become an asset to you.” So when you want to build a relationship with someone who can benefit your business, find out what they like, what they want, and what they need—and simply be the one to give it to them.
Best-selling author Jeffrey Gitomer says, “All things being equal, people would rather do business with a friend. All things being not so equal, people would still rather do business with a friend.”
Again, Bob Burg says, “people do business with those they know, like and trust.”
You see, you can have higher prices and a longer wait, but your referral sources will still support you because you are a trusted friend and advisor. While others are begging at the front door, trying to get by the gatekeeper, you are being graciously invited in through the back door.
If people don’t know about you, they obviously can’t use you or refer you. If they don’t like you, they won’t use you or refer you unless they absolutely have to. And if they don’t trust you, they won’t use you or refer you.
Finally, building relationships requires leadership on your part. My good friend John C. Maxwell (the world’s number one leadership expert) says that leadership is influence. Nothing more, nothing less. We all have influence in other people’s lives. How do you gain influence in someone else’s life? By adding value to them. John says, “If you don’t add value to others, you devalue them.” Add value to them, and they will add value to you.
Remember, all of business is about relationships. You can know everything there is to know about the technical part of your business—and be broke! Not to say that being technically savvy isn’t important. It is. But you can be the most technical person in the world and still be broke in business.
The Value of Becoming a Phenomenal Networker
To build a phenomenal Referral Marketing system, you need to understand networking and how to build rapport quickly.
First, dress well. Did you know that people make eleven important assumptions about you in the first thirty seconds of meeting you? Most of this happens before you even open your mouth! First impressions last, so you want to make it a good one!
My personal view is that this is an area where many small business owners and professionals are failing. We have become so casual in our culture that we aren’t even aware of the impact of dressing professionally. You influence others in how you dress and groom yourself. Positively or negatively.
My goal is to always be dressed sharp without overdoing it. If you are going to build powerful business relationships, you need to look like a businessperson. Wear a sport coat and a tie if you are a man. Wear a dress or nice pantsuit if you are a woman.
Make sure your clothing is professionally pressed, your shoes are shined, and your accessories are appropriate. Your hair should be well groomed, your fingernails clipped and clean; be clean shaven, and keep some breath mints with you at all times! No one likes spending time with someone whose breath could melt butter!
Always have business cards (or brochures) with you. Don’t go anywhere without business cards! Keep a stack in your pocket, a stack in the car, and keep your extra supply wherever you keep your car keys. When you meet people, always get their card. It is much more important for you to get their cards, because there is no guarantee that they will call you, so be sure to follow up with them. Ask them for permission to add their names to your marketing list.
Be gracious. When you are in a networking environment, you are not there for you! You’re not there to eat and take advantage of the food and drink. You are there to build relationships, so prefer others before yourself. Be polite and kind. Be positive and likeable.
Avoid getting into negative conversations. Sometimes you will run into people at networking groups who want to talk about the weather or complain about the food, or whatever. Keeping in mind that you are not there for you, avoid these conversations. They are not productive, and they bring everybody down.
Don’t stand in the corner all alone. Instead, identify those who could be good referral sources for you and strike up a conversation. When you begin speaking with them, instead of being anxious to share what you do, show interest in what they do. Find out as much as you can about them and their business. This will come in handy when you get to talk about your business. People love nothing more than to talk about themselves and their business. In fact, a great exercise is to practice asking as many questions as possible without saying anything about yourself until they ask. Once they ask, that means they will listen closer to what you have to say.
Listen emphatically. Instead of halfway listening (called “selective listening”), listen closely to what the other person is saying. Use nods and positive affirmations to let them know you are interested in what they are saying.
Even if you aren’t interested in what they are talking about, you should be—at least from the standpoint of how you will build a professional relationship with this person. Try to discover ways you can help them and add value to their business.
Remember why you are there: you are there to build your business. To build relationships, to find out how you can help others so they will in turn help you. You are not there for personal reasons. Keep your goals in mind and make the time investment worthwhile.
Immediately put their name and address into a database. Every card you gather, immediately put the information into a database. If you are strapped for time, hire a high school or college student to do data entry for you. Then follow up immediately by sending the new contact a “Nice to Meet You” letter or card and an info packet. You should develop an information packet that shows why prospects should choose you over someone else.
You should have a follow-up system that includes an initial information package, regular mailers, and a regular e-mail newsletter. (More about this in Client-Based Marketing.)
Put them on your calendar to call the following week or whenever you told them you would call. The late Zig Ziglar said, “The fortune is in the follow-up.” But also remember that your goal is to make so many contacts that you don’t have to chase individual suspects to survive.
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