- THE MAGAZINE
Through years of experience I have found referral customers are the most profitable, the most cost efficient, and the most loyal and continual source of new business you could ever access.
There are five reasons why you should concentrate on building referrals:
1. It decreases your marketing costs
2. Studies have shown that referred customers come back more often and spend more
3. Referred customers tend to complain less and pay on time
4. Referred prospects are much easier to convert than those that come from advertising
5. Referral-based marketing frees you up to concentrate on your business
Quite a few years back, a new Oriental-rug dealer set up shop in my hometown. Being one never to pass up an opportunity, I immediately went in to their new store and introduced myself to the manager, whose name was Kash. Kash, I discovered, was the owner's son. Kash introduced me to his assistant, Frederick, and we quickly all became friends.
The most important thing I did that day, other than walk in and introduce myself, was to make sure not to ask Kash for any referrals. I just let him know that if he ever had a stain or a problem with one of his rugs I would take care of it for him right away. It was this simple act of offering to help his business and not asking anything in return that allowed me to enjoy several years of referrals from him.
We had a very informal arrangement, but it worked. Even after Kash moved away, his assistant Fredrick continued to recommend me to all his clients for rug washing and repair. This particular referral relationship was important to me, and I needed to keep it from becoming unbalanced. As it turned out, Fredrick loved knowing that I would make sure every rug in his home was kept clean, and also appreciated being acknowledged for all the referrals he sent me. I always thanked him either in person, on the phone or in a note I sent to him in the mail. This relationship turned out very profitable and over the years I did very well with it.
One day not too long ago I noticed that the referrals from Fredrick had dried up. This was a little unusual, so I quickly made a call to the store to find out what was happening. As soon as I finished dialing, a voice that I didn't recognize answered the phone. I asked for Fredrick but the woman on the other end let me know he no longer worked there. I could tell from the cool tone in her voice that this new manager was going to be a tough cookie.
If you've never taken any Dale Carnegie training before, then Principle #16 may seem like a new idea to you. The concepts in the Dale Carnegie Seminars have forever changed the way I do business. Now instead of every obstacle being a problem, I actually see them as an opportunity in disguise.
Principle #16 is all about letting other people feel like an idea was their own. When a person feels like they came up with an idea they are more likely to act on it - especially if the idea is to your benefit. In my case, I needed to have this new manager think the idea of giving me referrals was her own.
As soon as I could, I casually walked into the store (without my uniform) and began to look at rugs. The new manager came over and introduced herself as Pamela, and I introduced myself to her. After hearing who I was, Pamela's attitude became defensive and she promptly replied, "I recommend another company."
I fully expected this kind of reaction and it didn't bother me at all. I simply said, "Oh, I don't want any referrals, I just want to see your inventory because I get several clients every week coming through my store asking where they can buy nice rugs and I wanted some of your cards to pass on to them."
The look on Pamela's face said it all. You could see what I said was not at all what she anticipated. Pleasantly surprised by this unique approach, Pamela handed me, with a smile, a small stack of her business cards.
The way I got Principle #16 to work in this situation is by understanding one important thing: Pamela has absolutely no reason at all to care about my company; her only real concern is her business. What she wants more than anything is more customers.
And that is exactly what I gave her. I made it a point over the next few weeks to recommend her store to as many people as I could. Pamela had some beautiful "antiqued" rugs that were very popular with decorators at the time. Every time I handed out her card it always had mine stapled to the back. In this way I could virtually guarantee she would know I was recommending her business to my clients.
Within three weeks I went back and asked for more cards and Pamela's attitude had changed completely. She was now friendly and warm and actually wanted to chat with me. Without my having to say a thing, Pamela, on her own, asked for some of my cards. Principle #16 just became accomplished. It was her idea to start referring me.
But having her give away my cards wasn't enough. I wanted her to be my biggest referral source ever. To do that, I needed to build up a lot of pressure. So I let her know we were actually too busy to take on more clients and asked her to please not recommend us!
By asking her not to refer anyone to us, it reaffirmed in Pamela's mind that we were there to help her and not have her help us. Because of the powerful nature of the rule of reciprocation, Pamela was feeling more and more indebted to me while at the same time suffering from a major sense of imbalance.
When a person we like constantly does things to make our life better, we naturally feel the need to do something for them. If we don't pay them back in some way, we risk losing their friendship, we risk losing the things they were providing us and we also risk gaining a reputation as a freeloader, moocher, parasite or leech. In business, a bad reputation is certain death.
Now you can see how I put Pamela in a very uncomfortable and awkward situation. On the one hand she really wants and needs the new customers I was supplying her business. On the other hand I wasn't giving her an opportunity to give me anything back. By giving her something of value and not allowing her to reciprocate, the pressure was really starting to build. Also, by denying her something she wanted to do (give me clients), it increased her desire to want it even more.
To relieve some of this pressure, Pamela asked if she could recommend me to only her very best clients. I said I would think about it and if I agreed I would get her some cards next time I went to the printers.
The next week I got a frantic call from her. She had a nasty stain on a rug she had just sold and wanted it fixed before it was to be delivered that afternoon. I told her it would be no problem and arranged for a courier service to do a hot pick up so it could be in my plant within 45 minutes. When it was done, I called her right away to let her know it was fixed and not to worry.
Total time from frantic phone call to having the rug delivered back: less than two hours.
Pamela was so appreciative. The imbalance of the relationship was getting unbearable. She started to call every other day begging for cards to give her clients. I finally did deliver some to her but reminded her to please only recommend us to her best clients, as we were way to busy.
Well, she must not have heard what I said, because she didn't just recommend her best clients. She actually began to staple my cards to every sales order she wrote. She tells her clients to not ever get their rugs cleaned by anyone else. She even calls up her clients when the rug is a year old and lets them know it is time for it to be cleaned.
Now you can see how powerful Principle #16 really is. Pamela started aggressively promoting my business on her own without me ever having suggested a thing. It was all her idea. All I did was care about her success and create an environment where Principle #16 would take over on it's own.
Since then our relationship has grown even more. Whenever Pamela sells a rug she also sells the pad that goes under it, which we supply for her. If a client is in a hurry, she'll even get them to come to me directly to pick up the pad. It's gives me an opportunity to provide outstanding service and gain another lifetime client!
Pamela and I are now very close business friends. She has confided in me a few things you must pay attention to:
1. She said she gets very offended by the approach that carpet cleaners make to her. Usually a couple of times a week a carpet cleaner will walk into her store in uniform and start to spout off about how great he is and pull out his certification card. When this happens she immediately shows them the door. Until I learned Principle #16, I made this mistake myself many times.
2. The company she used to recommend did a terrible job of cleaning her rugs. She would often have to vacuum them herself whenever the rug came back from being "hand washed." This angered her immensely and she couldn't understand how a cleaned rug could still be full of dust and grit.
If you want someone to recommend you, then you must remember your one and only job is to make your referral source look like a hero for recommending you. If you fail and make them look bad, well, I really don't have to explain the consequences to you, do I?