Referral groups have grown in popularity, especially due to the decline in the economy. After all, sales and marketing people are chasing fewer dollars. Referral groups have the potential to be one of your best sources for new business. This is especially true since trust between vendor and customer is so important these days! Determining which referral group is best for you is as important as deciding if you should join one. Below are some points to consider.
Expectations: The source of most people’s dissatisfactions concerning their involvement in referral groups tends to be miscommunications, unclear and unmet expectations. Of course the opposite of these 3 creates incredible results! I should know. I had more than 3000 members in referral groups during my 8 years as Executive Director of BNI for Mississippi. Expectations regarding referral groups ranged from the member not knowing or abiding by the basic guidelines agreed upon by the group’s leadership to unknowingly allowing unsavory characters to join their group and create mayhem. Clearly knowing what you want from your investment of time, energy and money in a referral group will generate greater satisfaction and results. If your primary focus for membership in a referral group is to generate more business, in my opinion, there are 3 attributes the referral group members must embrace; leadership, structure and accountability.
Leadership, structure and accountability: When these 3 attributes are implemented in a referral group in a consistent manner, the ROI for members and the companies they represent will greatly increase. There must be a small core group of people within the larger group who know how to help everyone have a successful referral group experience. There are rules, that when adhered to, help everyone succeed. It’s just the way it is. The real question about rules is; if there is a successful track record because of the rules, are you willing to abide by the rules to achieve success for yourself? Another way of looking at this truth is laid out in the booklet, The Common Denominator of Success by E.M. Gray. It basically says that just like anyone else, successful people don’t always like doing what it takes to reach their goals. However they hold themselves accountable to do what it takes to succeed anyway because they prefer great results over easy, less productive activities. Good leadership, solid structure and consistent accountability helps people generate more business from their referral group.
Results: The primary deficiency of most people’s referral group experience is due to an insufficient or underperforming contact sphere. A contact sphere is made up of those professions that have a symbiotic relationship with you and your profession. That is, they are constantly coming across opportunities for you due to the nature of their business as it relates to you and your business. An easily recognized example is the relationships between a realtor, mortgage lender, appraiser, home inspector, security alarm systems, etc. When a customer buys a house, they typically require the services of those in the “real estate” contact sphere. If the customer trusts the realtor, they may ask them, “Who do you know that can finance my home?” In many cases, several professions receive business from just one home buyer! We see the same model in the medical field. How do you get into see any specialist? You must be referred by your general practitioner or family doctor, right? There are several really good reasons for this, which we will get into in our follow-up article. Or, you can visit our web site for additional information.
When you have a high performing contact sphere made up of 4-8 seasoned professionals, within a year of meeting together once a week, you can expect to be generating at least 30% of your new business through these relationships. This is especially true if these people have been in their industry and in the same market for 5+ years.
Relationships: A successful referral relationship is one built on T.R.U.S.T (To Rest Upon A Sure Thing). Trust is the key to successful referral relationships. When the nature of your referral relationships move beyond just that of being transactional in nature, the amount of referrals you receive will multiply. When I say transactional, I am referring to the relationship being based solely on the transaction of business. For example, if we aren’t discussing business, we wouldn’t have anything to talk about. That sounds a little strange since we are talking about business relationships. However, you have probably been on the receiving end of a conversation where the person is reliving a situation where they were literally standing in the middle of a referral for you, but didn’t realize it until it was too late. The person wasn’t thinking about you when the opportunity appeared. You weren’t on their radar. Often times, the reason is they weren’t personally and emotionally motivated to be on the lookout for you. Certainly, you will receive business referrals based solely on business relationships; 30%-50% of new business by referrals is great. But if you want to grow your business exponentially; 200%-300%, people need to be personally motivated to help you succeed.
Teaching: Reflecting back on the previous paragraph, let’s say the person who overlooked the referral opportunity for you was actually personally motivated to help you. Let’s say the person was your spouse, customer service rep or your referral partner. If they are motivated to help you succeed, even to the extent of benefitting financially, how could these people overlook important opportunities to refer you? In many cases, they don’t know what a good referral looks like for you. So, whose responsibility is it to teach them? Is there anyone who is more motivated or capable than you?
The fact is you have the opportunity to teach most everyone you speak with how to generate more referrals for you. And if you do it right, they will be motivated to do so. How, you may ask? When you meet someone for the first time, what do you want to know about each other? Their name and what they do for a living, right? When it’s your turn to speak, what you say next will tremendously influence what that person thinks of you and your business! In processing information, people tend to pigeonhole your response by relating what you say to something they are familiar with. Since you do not know the positive or negative experiences they have had with others in your profession, it is best to talk about the results you create for your customers vs. assuming they have had great experiences with others in your line of work. Otherwise, you may be creating barriers in your relationship caused by problems they have had in the past with losers or charlatans! At the very least, they may be confused based on the inaccurate information they received from your competitors. For example, you may be able to provide replacement of income in times of death or injury while lowering the taxable income of your client. However, telling a stranger you are an insurance agent may not do your intentions justice in the mind of the prospect and may limit additional conversation. There are some people that would label this approach as misleading. However, if you believe you have the ability to help people with your products and services, and you know there are others out there who will take advantage of them, if you are a person of integrity, shouldn’t you talk about the results you can achieve vs. product labels that can be misunderstood?
Summary: Referral groups are based on people and the relationships between them. Relationships are influenced by communications, expectations and performance. When you manage yourself in a way that creates positive outcomes in these three areas, your referral group experience will be profitable for you.
Next? For additional information on generating more referrals, visit our web site and look for the section entitled, “It’s Who You Know…”
Wes Holsapple is the president of BDS Institute which works with businesses to increase their sales by developing new strategies and skills to capture untapped markets and new customers. His areas of expertise are in business development through referral generation, sales, and marketing.
Wes served as a Dale Carnegie trainer and area manager in Mississippi for ten years where he worked with more than 5000 clients ranging from small companies to the Fortune 500.
Wes owned and operated BNI of Mississippi for eight years. BNI, Business Network International, is the world’s largest business referral organization. Wes worked with more than 3000 local business people, teaching them how to grow their businesses through word-of-mouth marketing. He is a contributing author of the New York Times and Wall Street Journal bestselling book, Masters of Networking.
Wes can be reached at www.bdsinstitute.com.