Grow Your Business In 5 Days
- Video Training Course - Video #3
TUTORIAL #3: CREATE A SYSTEM FOR REFERRALS
Hello and welcome to ‘Grow Your Business In 5 Days’.
In this tutorial we are continuing to look at how you can create even more sales and profits from the ‘Acres Of Diamonds’ we discussed in the last video – your customers, clients or patients.
Having a Referral System in place is far more likely to generate new business than a policy of just hoping and praying that your customers are out there recommending you. Let me explain...
Our research has shown that less than 4% of businesses have a referral system in place. We have also discovered that 91% of business owners are dissatisfied with the volume of referrals they actually generate. In other words, they believe they should do a whole lot better. There are three significant reasons for this particular ‘underachievement’…
REASON #1: APATHY
Most people simply don’t recommend their suppliers because they have no cause to. The referral process for most businesses is a reactive one (people only ever suggest a supplier if they are asked. This is because they have no real reason to enthuse about their existing suppliers). Yes all good businesses get referrals, but customers need to have a reason and/or an incentive to recommend other people.
REASON #2: NO DISCERNIBLE DIFFERENCE BETWEEN COMPETITORS
Just being good at what you do isn’t sufficient. You see, most people think you and your competitors are the same. Why would they recommend you to someone else when they think you’re are identical?
REASON #3: NO SYSTEM
Research has shown that some two-thirds of customers say they are prepared to recommend their suppliers to others, but only 6% say they have ever been asked. That’s a shocking statistic, but reinforces our own research which shows that most businesses just don’t have any system in place for requesting referrals from customers. If you don’t ask – you don’t get.
The good news is there is a simple ‘referral formula’ you can use to rapidly improve the number of referrals you get…
You need ALL 4 elements of the formula to really motivate people to recommend you. If you’re missing just one of these elements, then the number of referrals you get is significantly reduced.
Now, I’m taking it for granted that you offer a good level of service to your customers (you deliver on your promises in terms of the product or service you sell, although we will talk in detail about how to create world class service in the next video), therefore you need to focus on creating a differentiator or as I call it a Unique Perceived Benefit, which we discuss in video Tutorial 6, together with the effective communication of the referral system to your customers.
A referral system is the process you use to ensure ALL customers are aware that you want referrals, and the incentive can be anything from money-back, referral fees, vouchers, money off certain products or services, or anything you believe will incentivise your customers to give you more referrals. Experience has shown us that the more generous you are – the more you get.
One thing to think about with referrals and the incentives you offer customers is that a referral doesn’t cost you anything to get. Therefore, other than the actual cost of your incentive, your acquisition cost is ZERO. So you can ‘afford’ to spend more on the incentive to acquire the referral in the first place.
Unfortunately, the differentiator or, in other words your Unique Perceived Benefit is a more challenging element for you to create. You have to come up with something that’s not only highly desired by your customers and potential customers, but something that your competitors don’t offer. But the 10 proven ways to create your Unique Perceived Benefit that I will take you through in Tutorial 6 will be a massive help.
And finally you need an effective method to communicate the referral system to your customers. What you need here is something that really stands out and ensures customers are motivated and excited about the system once they read or listen to your message. It really is that simple. But as I explained, all these components are essential if you are looking to ramp up your referrals.
A structured referral system that adheres to my referral formula will give your business the following benefits:
- First, a constant supply of quality referrals.
- Second, increased enthusiasm dealing with people who are highly interested in your products or services.
- Third, an increase in the quality of customers.
- Fourth, increased profits. You spend less time and money converting referred people. They have already been recommended and therefore trust is already established.
- Fifth, referred people tend to value your products or services more than an ‘ordinary’ prospect. They usually don’t ‘shop around’ to get the best price. This means you’ll be able to sell your products or services at an optimum price.
- And finally it will help strengthen relationships with your existing customers. By helping their friends, colleagues and business associates, you make customers look good in the eyes of their peers.
Let me give you two quick examples to demonstrate what can be done…
The first one is from the portrait photography industry. Stu Williamson is arguably the finest black and white photographer on the planet. He currently operates out of the Far East in Singapore, and Dubai. On my recommendation he decided to create a system for generating referrals. His incentive is a free 8 by 10 photograph. Here’s how it works…
The customer comes for their shoot. They then choose the photographs they want and which frames to mount them in (by the way we made it compulsory for all prints to come with a frame – a simple tactic to increase the average order value of every sale). The sales assistant notes which photo the customer prefers the most and this is the photo that would be given as the incentive. Of course, this happens without the customer knowing. Then once the photos are ready, the customer returns to collect and pay for them. As they pay they are given a sheet of paper which basically asks them if they would like a free copy of their favourite photo. All they have to do is recommend three friends who would like to receive an offer from the studio.
92% of people complete the form – and why wouldn’t they? He then follows the recommendations up and as a result he gets just over 5 times as many referrals as he did without a referral system.
The second example is from Gary Pierce. He runs 3 children’s nurseries on the Isle Of Man just off the west coast of England. He implemented a simple referral system whereby they would ask existing customers to recommend other families on the island and then if a recommended family also became a customer they gave the existing customer £50 as a thank you.
This is of course the incentive. In the first 3 months Gary spent £2,300 on the referral system, with a return of £154,000 in extra business.
I could give you hundreds more examples, but hopefully this shows you, once you understand the formula and then apply it to your business, the results will be staggering.
So let’s recap...
Here are the key learning points from this tutorial...
① First... to multiply the number of referrals you get from your customers you have to put a referral system in place.
② Second... your system has to adhere to the 4 components of the ‘referral formula’ to get results.
③ And third... you can spend time creating your own referral system, or you can join the BGS Vault and get access to arguably 18 of THE most successful referral systems ever created. For more details, simply enter your name and e-mail address in the boxes on the right of this page and watch the video presentation. (Note that as a client of this firm you can have immediate and free access to the Business Growth System Vault. It’s valued at over $6,000 per annum and to get access just contact the office today.)
Now please DOWNLOAD the ‘One Page Action Plan’ that accompanies this tutorial and start putting in place your own referral system.
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