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Good Customer Service Alone Doesn't Win Referrals

Don't wait around for your excellent service to pay off. Instead, build a network for word-of-mouth marketing.
June 26, 2008
URL: http://www.entrepreneur.com/article/195308

Many entrepreneurs are under the impression that if they provide good customer service, people will refer business to them. Just like that. However, that's only part of the picture. Sure, customer service is important. But good customer service is just a prerequisite--a minimum expectation.

Think about it. Would you refer somebody to me if I provided lousy customer service? Of course not. Your own credibility would suffer.

Good customer service is part of what the prospect expects when you refer him to me. If you're recommending me to him, I must be something pretty special, right? And if I want to keep that customer coming back, I'll need to give him more than the minimum expectation of simply good customer service. I'll need to provide great, outstanding, memorable customer service to really stand out.

On several occasions, my colleagues and I have discussed a point I made in my book, The World's Best Known Marketing Secret, about how people were under the delusion that good customer service alone was enough to enable people to build their business through word-of-mouth. We shared stories about people who had gone out of business by just sitting back and waiting for good word-of-mouth to rescue them. This got us talking about all the other delusions people had about networking and referral marketing . . . including the misconception about customer service.

People don't refer business to you because you meet their minimum expectations. They refer you because they expect you to do a good job which, in turn, enhances their relationship with the person they are referring. They may not even be doing business with you, so customer service may not be an issue with them personally--but of course they expect you to provide outstanding value to the prospect. They want the prospect to come back to them and say, "Thanks for sending me to Joe Trueblue. He had just what I needed, and the service was great. You sure know some outstanding people!"

Your referral source has a strong interest in making sure everyone comes out a winner. She knows that when the happy customer comes back to you again and again, you're more likely to send business her way when the need arises. The great service you provide to the customer comes back to you in the form of a stronger relationship with your referral partner.

One of my colleagues is Bob Burg, author of Endless Referrals, and here is his take on what it takes to receive referrals consistently:

We all know of companies and salespeople that couldn't stay in business, despite having superior products. We're also familiar with companies and salespeople that were remarkably successful with just an average product.

Of course, having an excellent product is important. However, technology today has made that commonplace and expected. In order to have qualified prospects "beating a path to your door," you must be able to network and to market yourself and your product or service in such a way that it makes people want to do business with you and refer you to others. You need to provide them with such a great buying experience that they know they made the right decision. However, to get them there in the first place, it's the networking and marketing that's most important.

Being in a referral group like BNI is one of several important parts of an effective word-of-mouth marketing plan. One of the things these groups emphasize is that you need to be very specific in what you do and in how your product or service is uniquely valuable. If you use general terms, you're at the lowest level of competitive effectiveness. And if you say, "customer service," that's not what people are buying.

In the book Truth or Delusion, my co-authors and I say that you don't sell the process; you sell the result:

Talking about what you do does not motivate people as much as what happens to their client or friend as a result of what you do. I used to sell copiers, and I never met anybody who was buying good customer service. They were buying the ability to make photocopies quickly and reliably. They weren't shopping for customer service, because that's a prerequisite. It's part of what creates that end result.

As I have pointed out many times, unhappy customers are 11 times more likely to talk about your business than happy customers. Good customer service only reduces negative word-of-mouth; it doesn't necessarily increase your business through positive word-of-mouth.

If you provide outstanding customer service, and your referral partner has experienced that as a customer, it can definitely increase the number of referrals you receive. As already mentioned, good customer service is a prerequisite for cultivating your referral network . . . but great customer service to a referral partner can be a jump start.

Referral networks and other referral settings often feature third-party testimonials, in which someone who has used your product or service (in this case, your referral partner) tells the group, "I've used Moe's products, and I'm here to tell you, they're the best I've ever found." Hearing it directly from someone they know is often enough to get people to believe it and act on that belief.

Testimonials are crucial to the referral process, especially within referral groups. Never underestimate the power of the third-party testimonial. When you stand up and say, "I've used this person, and you should use this person too, because . . ." and then go on to explain why, it changes how people view that service provider. Your experiences become my experiences. This makes it much easier for people to refer that provider--even if they haven't personally used his services yet.