Author says one needs a team working for the common good of all members.
It has always been important to have a referral network in place in order to grow one's business, but in this day and age, it has become even more important, said an expert on the subject.
This is because people have ways to block receiving direct marketing pitches made on the telephone or through e-mail, and they can fast forward through television commercials if they use a digital video recorder or video cassette recorder, explained John Jantsch, author of "The Referral Engine: Teaching Your Business to Market Itself."
Referrals create an opening into previously closed markets. For example, many loan originators are trying to get new business from other businesses through cold calling and "I think it is a painful way to go," he said. He cited statistics saying these calls have a success rate of between 1% and 3%.
If a referral from someone is used to make the initial connection, the success rate jumps to 40%. "At least people will listen to you" if there is a referral. But you still must have a strong reason for them to use your services in order to close the deal.
When many sales people think about getting referrals, the first thought, Jantsch said, is usually past clients, people who are familiar with the service you provide.
"I think the real opportunity for a lot of folks is in what I call a 'strategic partner network.'" He defines this "as any other business, hopefully is best of class, that also serves your ideal client target market."
He coaches people that to get out of the commodity selling business to look at their existing clientele and try and to determine who might be offering compatible services and build a team of best-of-class resources (and they don't have to be real estate related). The aim is to be the go to person.
"You make yourself more valuable to your clients, so you stand out a little bit in that commodity world. But also, if you build up this team and you really do look at them as resources you would send your best clients to, I guarantee you're going to get some of that back in return," Jantsch said.
The first step in getting referrals is to make sure you're giving referrals. Most people, he said, already know that they should be doing this. In reality, you need to look at providing referrals as a way to enhance the value that you provide to your customers.
Then it is not just a nice thing to do, but also something that has "a hard, practical reason" behind it, Jantsch continued; you become seen as the go-to person.
To create this network of partners, the obvious first step: find who you want to be on your team. One source: ask your clients whom they would recommend.
Go out to these people and say, "We have clients we believe could use your services and we'd love it if you could teach us how to refer business to you."
When they get this call or letter, you will get their attention, Jantsch explained, because they see that you are trying to learn about them. In that process, they are also going to learn a little bit about you.
But many just stop at this point. The other crucial ingredient, he said, is that you have to have something for them—an opportunity for them to build their business.
This includes sharing information with them that your prospects seem to value, he said. Tell them they are free to forward this information under their own names or by co-branding it with you.
Co-branding a workshop or online webinar is good. Jantsch also suggested creating a blog and allowing your partners to contribute content to it.
When you are out on sales calls or clients visit your office, promote the members of team at these meetings. Create opportunities where you and your strategic partners can showcase each other. For example, if you are aware that your client needs the services of a certified public accountant, have them meet in your office.
Taking it one step further, if several of your clients have tax questions, set up a seminar in your office and invite the CPA to speak. The CPA doesn't sell anything (nor for that matter do you), but gives the client information they can use.
There are referral networks which really take this to heart and take that formal approach. "What they find is they can activate this network. It is no longer, 'hey, if you know anybody who needs us, send them our way.'
"The people are actively promoting each other in the network. When you get that going with four or five other businesses, I guarantee you, you are going to have some other folks that want to play," Jantsch said.
Most of the audience might just say thanks for the information, but there are those who don't know who to turn to. These seminars allow you and your partners to be seen as credible experts because you had the opportunity to showcase your knowledge.
It takes work, but organization that did this didn't suffer during the economic downturn the way many other businesses did. They built a strong foundation that generates leads, he said.
When people build their networks, they might want to get a couple of CPAs or a couple of attorneys, etc., just because of possible conflicts. This provides options for the client to choose from.
The stereotype of the mortgage sales person looking to get business from Realtors is one who goes to the office with their rate sheets and a box of doughnuts.
Instead of doughnuts, he suggested bringing in a list of the best roofers, plumbers, etc., information the Realtors can pass on to homebuyers. That is more valuable to the Realtor than the box of doughnuts, Jantsch said.
In regulated industries, such as mortgage originations, he recommends going out beyond the usual sources, to businesses such as car washes that want access to the same consumers and creating strategic partnerships. These firms can offer your clients discounts that you can include in your sales package.
