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Friday, November 13, 2009

CONNECTING IS NOT ENOUGH: The Anatomy of a Referral (Part Two)

Connecting Is Not Enough with Andy Lopata

Referrals should be the backbone of the development strategy in many businesses, but few approach the key skill of asking for referrals with the necessary understanding of what they are asking for, who to ask and how to track results.

In The Anatomy of a Referral Part One I talked about a client of mine whose lack of the knowledge outlined above has had a severe impact on their bottom line. We looked at what a referral is, in comparison to other types of business information such as recommendations and leads. And we discussed the impact referrals can have on the way you work and the results you get from the activity of your sales team.

We now need to move on and investigate where referrals come from, before next month, moving on to how to educate the people who are going to refer you, to make it as easy as possible for them to make the connections you are looking for.

Who do you ask?

If you are going to build a strong referral strategy, you need to recognise who your Champions or Advocates are going to be.

To do this, you need a firm understanding of the principle of Six Degrees of Separation. This phrase, coined by social psychologist Stanley Milgram in the US in 1967, has caught the imagination of people across the World, leading to films and games with the same title. In short, the theory suggests that we are no more than five steps from anyone in the World.

For example, I recently wanted to source a signed Chicago Cubs jersey as a present for my cousin’s son. One of my contacts in the UK introduced me to his sister, who works in a senior position in the White House. In one simple introduction I was one step from the President of the United States!

You won’t necessarily want such high level connections, but if you have a clear idea of who is in your network and who they are connected to, it becomes much easier to recognise the routes you need to the connections you seek.

In another case, a participant on one of my workshops talked about me and introduced me to the father of one of the boys on the kids’ football team he coached. That father was the Sales Director for one of the World’s leading airlines.

Most companies who do have a referral strategy of any kind tend to focus on their existing clients, which is a sensible place to start. After all, there are two key elements that make people comfortable referring you. They need to have trust in both you and your product, and they need to understand your services and why people would want to talk to you. Who better to ask than your clients, people who hopefully have both of those elements in place?

Interestingly, however, the most popular time to ask a client for a referral is when they have just bought from you. At that stage I would argue that, although they have shown an element of trust by parting with money for your support, that trust is based on what you have told them, not on their personal experiences.

Surely the best time to ask for referrals is later on in your relationship, when they have witnessed the power of what you do and the impact on their business or life?

I discussed this point in a meeting with one company recently. They admitted that they asked new clients for referrals as a matter of course when they signed them up, but couldn’t recall a single instance of going back to those clients to ask again after delivery, or when their relationship had developed. As we discussed this they realised how nonsensical their current approach was.

Break out of narrow thinking

My concern is that most companies who focus on just asking their clients for referrals miss so many opportunities through such narrow thinking. They are not tapping into the support available from the people closest to them and with the greatest vested interest in their success.

During the workshop I ran with the manufacturing company I wrote about last month, the Managing Director suddenly realised that in the eighteen months he had worked for the company he had not recognised that a connection to a dream client was the person closest to him. As we talked about possible referral sources, he thought of his wife, who works in a senior position for a company who has the exact need for his company’s products.

Interestingly enough his wife had recognised the same opportunity at the same time. As he was talking about the possible connection in the workshop, she was talking to her colleagues about inviting him into the company to tell them more about what he could offer!

This wasn’t an unusual outcome from a workshop. On another occasion, a Deputy Regional Director for a major bank went out at the break and called his brother-in-law to ask for referrals. He had never asked before, or even thought of doing so, yet he walked back into the room with three promised introductions and the business relationship developed from there.

Why do we have such an obstacle about asking our family and friends for support? There is a reticence to cross the ‘line’ between personal and business lives. That is understandable but that line is becoming increasingly blurred as people make friends through their networks and realise the power of connecting people.

Besides, who decides where the line should be drawn and how thick it is? It’s absolutely right that you shouldn’t force your business problems on friends or family; I remember sitting stupefied through a friend’s flipchart Amway presentation when I was eighteen. But how would you feel if you found out that a friend’s business had folded and you could have helped; but they never asked?

A friend of mine recently found out what I do for a living, after knowing each other for fifteen years or more. We go to football together and never discussed work. It was only through becoming Facebook Friends that he started to see what my business is. He was mortified to realise that his firm had been working with one of my competitors for five years instead of with me!

The danger of pigeon-holing

In a coaching session last year with a web designer, we talked about the different people who could possibly refer him. One key place to start is with people who understand your business well (remember the importance of trust and understanding discussed above) and who are talking to similar customers about similar issues.
I asked my client if he used a printing company in his business and whether that printer regularly visits his office and chats with the team when he is there. As expected, the answer was yes on all counts.

I then asked where the printer would go when he wasn’t with my client or at his own premises. Of course he wasn’t just visiting one client; he was out and about going to deliver to a number of companies and getting to know their business and their challenges. Not only that but he was surely in a great position to refer a web designer as he would be talking to clients about their marketing and about changes in their business which required new print work. Such changes would often impact on their web strategy too.

So, had the web designer ever asked the printer for help with introductions and referrals? Of course not! Not only had he never had the discussion, the printer had just had a new website done and hadn’t invited my client to tender.

The reason for this was quite simple, the printer saw the designer as a client and the designer saw the printer as a supplier. These pigeon-holed positions dictated the conversations they had and the way they thought of each other. Yet surely the printer had a vested interest in supporting the web designer and helping his business grow. After all, the more successful the designer, the more work the printer would get and, hopefully, the more punctually the printer would pay his bills!

You are surrounded by a network of people who can help you. But if you are like most people, you are pigeon-holing them into particular relationships. Understanding how to develop a network of Champions starts with unraveling those relationships and recognizing that they all potentially have a network which could support you.

Look to friends and family, industry peers, clients, suppliers and social groups for people who could potentially refer you. Identify who has the greatest levels of trust in you, who wants to refer you the most, who understands your business and can recognise opportunities for you and who mixes in the right circles, talking about the right subjects giving them the opportunities to refer.

Make life easy for yourself and draw up a list of five or ten people drawn from all of these groups. People who you think may either be motivated to or positioned to refer you. You can then focus on building the levels of trust and understanding, working out the connections they have in their network and building these people into your team of Champions. Start with this group before adding to it.

In next month’s article we’ll take this group and look at how you educate those people so that they find it easy to make connections for you and become effective sources of new business for you. In the meantime, think about what you need to do to inspire them to want to do so and how you can help them first.


Are you struggling to put an effective networking or referral strategy into place? Do you want to know more about how to ensure you get the maximum possible return from your networking?
Andy's new Audio programme 'Networking in Ninety Minutes' will give you the tools you need to make the most from your networking. Available in CD or mp3 format here.
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For more information, please visit Andy's TNNW Bio.

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