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by Peter Swensson
A referral by definition is an act of will motivated by a positive experience. A person buys a product or experiences a good service that is positive and it motivates his or her desire to share that experience with others.
That is not to say that every client who receives good service will automatically send referrals your way. There is more to it than that. Good service is just the foundation that has to be in place and then built upon in order for referrals to stem from there.
There is an art, a science, to extracting referrals from clients that can only be applied once the foundation of good service is in place.
It has to do with building a relationship in a set sequence. We then add the right ‘ingredients’ and techniques in order to create a specific awareness. In order to maintain this awareness, we must be able to capitalise on it over time. This allows us to extract referrals well into the future. Only if and when carried out in this sequence, does it eventually become an effortless process of extraction.
This can be likened to a farmer spending many hours working and plowing and cultivating a field, then planting a seed, watering, fertilising and looking after the trees. When the trees are mature and producing fruit on a regular basis, the process of simply picking the apples off the tree, when seen in isolation, is an effortless procedure as compared to the whole process from start to end.
The practice of paying money for referrals is like the farmer attempting to speed up the process of harvesting by applying some sort of chemical boosting formula to the soil that promises to produce bigger apples. The apples do indeed grow quicker and bigger, but the taste is compromised, and the after effects or side effects only become evident further down the track.
In terms of the process of following the correct procedure and applying, or adding the right ingredients at the right time, the act of rewarding with money for referrals should never promised.
When choosing people or past clients to become ‘advocates’ for your referral program, they should never be chosen on the basis of ‘needing your money’. They already have their own money. They are financially secure in their own right.
On the contrary, they should be chosen on the basis of having experienced your exceptional service. Having acknowledged it themselves and having consented to willingly sending referrals your way, simply because they were so impressed with what you have provided for them, they just can’t wait to tell others all about it.
This means that when you do receive a referral you can be certain that it is indeed because of you and your good service!
Having received the referral motivated by you and not by the promise of money, you now have the perfect opportunity to reward their loyalty to you with an act of gratitude. A gesture that is received as a total surprise, received by a person who wasn’t expecting any money from you, has the powerful effect of further building and enhancing an already good relationship. From that point onwards their tendency to refer again and more often will be much higher than it was before the referral was received.
Picture yourself in this situation: You had a wonderful experience with, say, a plumber. As far as you’re concerned a plumber is a plumber, so you had a leaking tap and called one out to come and sort it out for you. In the first instance, he arrived on time and promptly sorted out your leaking tap. While he was there he pointed out many other areas in your home and was able to save you money by upgrading certain areas of your plumbing. He also showed you how much money you could save by installing a range of power and water saving apparatus in your home.
To cut a long story short, he gave you much better value for money than you were expecting. When he told you that he works exclusively by referral, you were not surprised. He had the confidence to ask you for referrals for anyone else that you might know who could also benefit from the same advice.
Two days later, a good friend of yours was complaining about all sorts of problems he was having with his plumbing. You set him up with your plumber and that in itself makes you feel good because you know that you have given him a recommendation that is going to add value to your relationship. On top of all this, you receive in the mail, a day later, a personal hand written note of thanks from your plumber with a $40 movie voucher enclosed.
The note states: “Just wanted to let you know how much I appreciate your referral! You can rest assured he will receive my very best attention. Meanwhile please enjoy a movie on me. Much obliged! Harry”
Not only do you experience a unique emotion of appreciation when you are opening the card, you also are inclined to tell as many people who are close to you: “ Hey, just look what I got from my plumber!” The card itself has a ‘shelf life’ on your sideboard or desk, and the movie tickets continue to bring to mind the experience of the gesture of your plumber prior to, during and after the experience of going to the movies.

Are you beginning to see what a powerful tool this is in building relationship and gaining ‘top of mind’ awareness of you and your business in your clients mind?

In short, if you reward their loyalty, you will only build more loyalty and encourage further loyalty.
If you appeal to their greed factor, you will take the focus off the true motivation for referrals and that is your uniqueness and your good service.
This should not be mistaken for professional cross endorsement programs where similar and related businesses engage in reseller type arrangements with each other. Money changes hands between the respective businesses, but ultimately it is for the benefit of all parties concerned.
It is also common practice for referral orientated companies to reward their staff for self generated referrals and this is a positive practice as it encourages an overall swing towards a referral oriented culture.

However, in appealing to your domestic client base, money has never bred loyalty. Excellent service, friendship, trust and a positive relationship are what drive loyalty to you and your business.

Posted in business |
Posted by Peter Swensson
15 Jun 2010

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Excellent article. I totally agree, the excellent service groundwork is so crucial and cannot be short circuited or substituted. Only bit I would add is that it's important that the reward for referral, like the movie voucher, is not connected with your business - eg no point giving a gift voucher for "$50 off your next purchase with us" as it will just be taken as a tacky ploy to get you to spend more with you, instead of a genuine gesture of gratitude.
Rating: 5 / 5
by Kevin Cruickshank on 19 Jun 2010

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