Using Referral Prospecting to Build Your Business

Referral marketing can be described as the “science” and practice of initiating, developing, and maintaining deep trusting relationships to create business success. In today’s highly competitive, over-crowded world of services marketing, being ‘professional’ is a minimum expectation to get into and stay in business. Beyond that, you must also become known to and regarded by the kind of people who can best appreciate the beneficial difference you make in the life of a client. That is where marketing your services comes in. And, since you are not pushing a product off of the shelves in a retail environment, your methodology must be aligned with this reality: your marketing reflects the quantity and the quality of the relationships you develop with people who can help you grow your business or professional practice. Trusting relationships lead to referrals. To generate a large referral business, you must be in trusting relationships with the right people and they must be mutually beneficial relationships. A satisfied customer base is the foundation of referral marketing. Referrals will not happen if customers are unhappy with your product or service. 

Another expert in the area makes this distinction, Referrals work so well because of two main elements. First, commonality. The fact that your prospect and you know someone in common warms up the conversation from the very beginning. Usually, the better the relationship between your referral source and your new prospect, the warmer this first interaction will be.

The second element present is endorsement - either implied or explicit. An implied endorsement comes when you use the name of your referral source right away and mention that the referral was given because of the great service you provided. An explicit endorsement comes when your source speaks to your prospect before you call. These elements of commonality and endorsement do not just make the first conversation easier. They also significantly increase the chance of winning the new client. You will get fewer obstacles and objections, you will immediately operate from a higher level of trust, and your new prospect turned client will have a stronger sense of loyalty right from the start.

Prospects or clients have high expectations of what you might do for them. To provide great service, you must first learn about their previous experiences with others in your industry (and related industries). You must also learn what concerns they have and what they expect you to do for them. Only when you know these things, can you meet their expectations. Once you meet their expectations you can go on to exceed their expectations and turn them into referral sources. Make it a habit to ask every new client (or prospect) about why they chose you. Ask them about their past experiences. You will understand what they expect from you and having this conversation will help them trust you more.

Networking functions provide the opportunity to initiate contact, expand our contact list and to find leads, particularly when we create and nurture quality relationships. However, it is not enough to visit a networking group, talk to dozens of people and collect as many business cards possible. Building a network of trusting relationships with the right people is your most valuable asset in achieving any business goal. It is more valuable than business knowledge and specific skills. Smith says that few , if any at all, of the business commentators on reasons for the failure of businesses, in particular small business, focus on the one subject that virtually every entrepreneur says is critically important to their business—networking, referrals and social capital.

While some entrepreneurs, business owners, professionals and leaders  have a naturally ability to network  and to form trusting relationships others may find it is strenuous  to establish a large network of trusting relationships and maintain that network of relationships over time without the required knowledge, tactics, tools and systems to support that effort. For instance, it may not be easy talk to “strangers” at functions or “working rooms” such as conference, exhibitions, trade show. Others may find it difficult or even fail to ask for referrals without sufficient referral skills education.

Copyright 2007 by Karl Smith

This article may be copied or republished with the following credit:
“By Karl Smith, South Africa’s Business Networking and Referral Coach, Cape Town, South Africa. +27 (0) 082 7779431 “ karl@businessnetworkingsouthafrica.co.za” www.businessnetworkingsouthafrica.co.za