The Referral Formula
Last week I discussed an important concept for getting people to talk about you and refer their friends to you without you having to ask. You can read that post here if you didn’t catch it last week.
Today I want to talk about what is necessary in order to be successful at proactively soliciting referrals. There is definitely a formula for accomplishing this, but that formula is akin to a gourmet recipe. All of the ingredients must be present in the proper amounts, and if one thing is off, the result could be unpleasant. So what are the ingredients?
If you have been to many networking groups or read any networking books, you are familiar with the concept of Know, Like, and Trust. I became familiar with the concept from Bob Burg’s amazing book, “Endless Referrals.” (Side note: If you have not read that book, you should. Follow the link there and go buy it on Amazon. That is not an affiliate link and I gain nothing from you purchasing the book, but I just think every business professional should read it.) I am not sure if the concept is original to Bob or came before, as it has made the rounds among the business networking world.
Basically, the concept goes like this -
“All things being equal, people will choose to do business with those they know, like, and trust.”
Sounds pretty simple and straightforward, right? But what do those terms really mean? And why do they all have to be present in order for referrals to happen?
Know
OK, this one is pretty self-explanatory. It is step one of the formula. If I am going to do business with a company, or refer business to them, I need to know who they are and what they do. Knowing is simply being aware that a company exists and what products or services they offer.
Although this step seems like it may take care of itself, the truth is that making sure people know you takes some work. Someone may know your company, but they may not be familiar with all of the products you offer. You may be an insurance agent who handles the policies on clients’ cars and homes. But if the clients don’t know that you also offer liability protection for businesses, they may seek another agent for such a thing.
Even I have been guilty of screwing this up before. I had a very loyal client who ended up doing business with one of my competitors for a different service. When I asked him if I had done something wrong and why he had not done business with me for that need, he told me he didn’t even realize I offered that service. In a case like that, the only one I have to blame is myself. I had not done a good job of effectively communicating all that I could offer.
So, once again, Knowing is simply being aware that a company exists and what products or services they offer.
Like
The next ingredient in this formula is Like. If someone doesn’t like you or your company for whatever reason, they are probably not going to do business with you. I would say that this is the easiest of the steps in the formula. Really, all you have to do is treat people well and be friendly. People will tend to automatically like you unless you give them a reason not to.
Of course, you need to treat people right all the time, not just at networking events or when you are trying to form these referral relationships. Because if in your normal course of business you happen to do something that someone does not like, they will tell people. Thus, if someone does not like you and does not want to do business with you, it may not be because of anything you did to that person, or even anything you had done recently. But poor reviews travel far, and a person may have heard a story about your business, and thus they automatically do NOT like you, in which case you have an uphill battle to win that person over. Yes, it is possible to change that person’s opinion, if they are willing to give you that chance. But you are just better off treating everyone like royalty.
Liking comes from having people being predisposed to do business with you because it seems like it would be a pleasant experience.
Trust
This one is the biggie. In the entire referral formula, this is the ingredient that is usually lacking. Now, this just isn’t regular trust. There are several people that I have known for years through various business endeavors. I like them and enjoy spending time with them. And yes, I trust them in that I believe they are ethical in the ways that they do business and do not go around kicking puppies in their free time.
However, I don’t trust them with my most valuable of business assets - my reputation. When you refer someone to a business colleague, you are entrusting that colleague with your credibility and reputation. If they screw up, it reflects poorly on you.
It may just be that I have never done business with the person, and so I don’t know enough about how they do business to trust them with my rep. Or they may just have a different philosophy in the way they believe business should be run. I don’t think poorly of someone because they have different thoughts on how business should be done, but if they are very different from my own philosophies, I cannot trust that person in the way that is required for this formula.
For the sake of this formula, Trust can be defined as the responsibility imposed on a person in whom confidence is placed. If people are not willing to give you that responsibility and do not have that confidence in your business, you will not get the business.
So that is the formula. They have to know, like, and trust you in order to do business with, or even more importantly, refer business to you. If any of those elements is missing, you will not get the business. It doesn’t matter how nicely you ask for referrals. Chances are, the person will smile politely and tell you they will keep you in mind, but you will never get a referral from that person. (How many of you have experienced that?)
It is your responsibility to cultivate those elements of the formula, and if you are successful, you will truly be a referral magnet.
