Through The Grapevine

Tap into the power of referrals to boost yourbusiness.

Like many new entrepreneurs, David Sakrison, a Ripon, Wisconsin,editorial consultant, tried to snag clients with a series of snappyprint ads. His $1,600 expense resulted in a grand total of twocalls. "And one," he reports, "was from a competitorscoping me out."

Sakrison knew there had to be a better way. The answer wasreferrals. "Once I started really pursuing referrals, therewas no sense in advertising," he says. "Using referralsputs every other way of building a business to shame."

While most successful business owners know that referrals areimportant, few employ a consistent system to target, approach andfollow up referrals. Yet many experts agree that a well-planned andexecuted referral strategy can bolster business by as much as 80percent.

Here's a three-step process anyone can use to buildreferrals:

1. Target people most likely to give you referrals. BobBurg, author of Endless Referrals, suggests starting withyour "sphere of influence," which means everyone youknow. Make a list of friends, relatives, casual acquaintances,business associates, suppliers, and professional service providers,such as doctors, lawyers, accountants, dentists, teachers--even theperson who delivers your mail. If you're already running abusiness, the list will naturally include your customers. Don'tforget ex-employees, or people you've met through religiousgroups, classes, or alumni associations.

If you've left a company to start your own business, yourbest referral source could be your ex-boss or a former colleague.That's how it was for Sakrison. When he left his job as theeditor of two aviation magazines to start his own business, hedidn't burn his bridges at the publishing company. Instead, hisformer boss agreed to spread Sakrison's name to advertisers whomight need help with public relations articles or other businesswriting. It was a win/win situation all around: By includingSakrison's flyer in their mailings, they provided theircustomers with the name of a reputable editorial consultant at nocost; at the same time, Sakrison received a subtle endorsement to avast group of potential clients.

Bankers are another good referral source, according to Alyce AnnBergkamp, assistant dean of the School of Arts and Sciences atCatholic University of America and an expert in general businessmanagement. "Bankers tend to know a lot of businesspeople," says Bergkamp. "If you prove yourself a goodrisk for a loan and establish a good relationship with your banker,your name may well come to mind when he's talking with otherclients who can use your services. And what more believablereferral source could you want working for you than abanker?"

2. Structure your approach. The success of any referralstrategy will depend on how it's carried out. Start planning byconsidering how many referrals you want to pursue each week. Pick anumber, then determine which methods will help you reach yourgoal.

The most obvious way to secure referrals is to ask for them, butas easy as that sounds, many people find it difficult to do. Someunseasoned entrepreneurs feel a little embarrassed to ask forreferrals, for fear of imposing on their clients. Nonsense, say theexperts! How will anyone know you want referrals if you don'task?

According to Mark Lovas, district sales manager for VectorMarketing in Seattle, "It's fear that holds people backfrom asking for referrals--the same fear that holds them back fromcalling leads once they get them. But if you believe in yourproduct, your service and yourself, why is there anyhesitation?" His suggestion: Get into the habit of asking forreferrals. "The more it becomes a part of your business, theless you will have to think about it." Once you've made adecision to seek leads, he says, "Just ask, again andagain."

But you need to be careful how you ask--never beg, coerce orembarrass a source. Carefully word your appeal, indicating that youget most of your clients by referrals and would really appreciatetheir suggestions. Better yet, follow Burg's strategy:"People need to realize that the best way to get referrals isto give them." Burg makes it a practice to position himself assomeone on whom others depend for referrals. He asserts, "Ifyour attitude is How can I help people? rather than Howcan people help me?, you will have no trouble cultivatingreferrals."

Collecting referrals from your current clients should be apriority. To ensure that your clients will want to give referrals,provide top-notch products and service before, during and after thesale. The most satisfied clients are the ones most likely to offerreferrals.

Kimberly Stanséll, owner of Research Done Write! in LosAngeles, was referred to the company that became her second-biggestclient by a woman she had never met. When they talked on the phone,Stanséll evidently made such a positive impression that thewoman called a company that she knew was looking for people withStanséll's expertise and recommended her. "I oftenget referrals from people who see me in action although they'renot using my services," Stanséll says.

When asking for referrals face to face, avoid using blanketstatements like, "Who do you know who might benefit from myservice?" Instead, Burg suggests you help clients narrow theirlists. "Be specific," he says. "Lead your client togood referrals by asking about their associates. For instance, ifyour client is a golfer, ask if he plays in a weekly foursome. Ifhe answers `yes,' ask if any of his partners could use yourservices."

Make it easy for people to refer you. Be sure everyone who mightrefer you to others has a supply of your business cards and thatyour name, phone number and address appear on every piece of paperthat leaves your store or office. And if you're in a situationwhere you'll be asking for referrals, keep a notebook and penhandy. You don't want your referral source to be searching hispockets for the tools you should have.

3. Track and follow up. When you receive a referral,follow up immediately. Your client may have already told thereferral you'd call, so you'll look bad if you don't.Sakrison has a follow-up method that works like a charm. Whensomeone offers referrals, Sakrison tells them, "I promise you,I'll call them." When he calls referrals, Sakrison greetsthem with, "I promised so-and-so I'd give you acall."

Track referrals with a database. Weekly, monthly and annually,compute the number and types of referrals you've accumulated.Note who referred each person so you can thank them. Study how manyreferrals were converted to clients. These statistics should becomethe basis for an annual review of your referral strategy and thebasis for any changes you make.

Always send a thank-you note or letter to referral sources,whether or not referrals become customers; those who do convertshould generate a more meaningful thank you.

When Joan Kisver, an Aventura, Florida, organizationalconsultant, receives a referral who becomes a buyer, she gives thereferring party one free hour of consulting. Others say thanks withflowers, movie tickets or, best of all, something personallymeaningful to the client. For example, if the referral source is ahorse lover, a box of notecards or a calendar featuring horseswould be appropriate; a gourmet cook might enjoy a regionalcookbook or kitchen gadget.

Plan a quarterly reminder to the referrals and clients in yourdatabase. If you send a newsletter, include a story about referralsand how much they mean to your business. Include a form and aself-addressed, stamped envelope to be returned to you with a listof referrals. Offer a small gift or discount if it's returned.Don't just ask for names; be specific. Request names andaddresses of the customer's dentist, chiropractor, mechanic,travel agent or whomever fits your customer profile. Keep the listto five or fewer names. Be sure to include a space for clients tosign the card so you can thank them.

Melissa Giovagnoli, author of Make Your ConnectionsCount! (Dearborn Publishing, $15.95, 800-829-7934), believesthat when you get one good referral from a source, you'relikely to win three to five more if you follow up and say thank youin a personal way--with a gift or card that shows yourappreciation. "The way you get an endless stream ofreferrals," she says, "is to do a good job, keep buildingrelationships, focus on quality sources, and practice, practice,practice good networking strategies."