The Power of Referrals and Word of Mouth Marketing

I’ve never sold anything at any business networking event

So let’s go out and do some more right now, ok?

business card exchange

Doing the business card shuffle

I have been going to business networking meetings at Chambers of Commerce and gallery openings and industry specific events and conferences and seminars and dinner parties and everything in between for the past 11 years. I network with anyone from start ups and solo entrepreneurs, to owners of SME’s and everyone in between, some of my activities are really social networking, and  I often refer to myself as a business networking trollop. As they say: “I’ll turn up at the opening of an envelope”. I can’t get enough of it, it seems, yet I don’t think I have ever sold anything at any event I have ever attended.

For the past 8.5 years I’ve been a member of a business networking group. You might have heard about it, it’s called BNI, which stands for Business Network International (There are many BNI groups around the world have a look at www.bni.com )

When you are a member of a BNI group, you take networking to another level altogether, and we meet every week for breakfast at 6.30 am, week in week out, about 48 weeks of the year.

Why ever would I do such a thing?

Strange behaviour if I’ve never actually sold anything at a networking event, right? Maybe I and my weekly breakfast partners are we masochists? I suppose some of us might be, I wouldn’t like to speculate… But I’m certainly not. I get up week after week, rain hail or shine for one reason only, and that’s because it’s worth it.

Boredom

bored I get up every week because it is the most effective form of local small business marketing i know. I meet with my fellow members for the purpose of referring qualified business opportunities to each other, real honest to goodness paying clients. I and most of the members of my BNI group, rely for a significant percentage of our new business on the group. About 50% in my case. That’s worth getting out of bed for, don’t you think? Now I can hear you thinking: “Oh spare me, I’ve been to so many networking events and nothing ever comes of it. There is nothing more boring I can think of doing … watching paint dry is more fun… no one’s ever bought anything from me, networking, chamber of commerce gatherings, you name it, they’re all an enormous waste of time.”

Fair enough, I hear you, they usually are… That’s to say, if you go to a networking event with the aim of selling stuff, they will just about always be a complete waste of your time.

I heard someone give an address to a networking event some time ago and he said: “Hands up everyone who’s here to sell something?” and most people raised their hand. Then he asked: “Hands up everyone who is here to buy something?” This time no one raised their hand, demonstrating once and for all that going networking to sell stuff is a waste of time.

The mindset

So why does my business group work for me and for most of the members of the group? The difference is a mindset. In BNI and in some other business networking organisations we support each other by focusing on one thing only, and that is: Word of mouth referrals.

What that means is this: We don’t set out to sell stuff to each other, because we know that mostly the others in the room don’t necessarily want to buy stuff. Instead we ask our fellow members to introduce us to their friends and clients and their network.

Here’s how that works: the other day I had a conversation with one of my fellow members who is an event manager. I don’t run events, none of my friends are about to get married and none of my clients are planning a conference, so on the face of it there was little I could do to assist her. But we spent some time getting clear about her perfect clients and then she and I went digging around in my existing networks. We found 4 people in Linkedin, as it happens, who met her criteria and I sent all 4 of them an email mentioning that I have a good friend who is an event strategist and would it be ok for me to introduce the two of them to each other. Within half an hour I had a reply from one of those contacts saying: Yes please we are just about to start looking for someone and it would be great to talk to your friend because we’ve had some terrible experiences with event managers in the past.

Just last week my friend signed a contract with this company for a small user conference to be held in a few months.

Sabre Tooth Tigers

sabre tooth tiger Great outcome all round, it made me feel great to have made the introduction and I’m sure that my friend will do a great job for this client because she always does.

And that is the point of this whole article. The best, easiest, cheapest, most profitable new business you can get for your business comes from word of mouth referrals.

If I need a plumber, I am 10 times more likely to ring a friend and ask him for the name of his favorite plumber than to go to the local paper or search on Google for a plumber.

We are wired that way as human beings. It’s actually a leftover from prehistory, the days of the Sabre Tooth Tiger (I wrote about the principle in an article some years ago here) Of course there is a place for all kinds of marketing (and even advertising), but if you can get a referral from someone who trusts you, you are so much more likely to get the business and it costs you nothing.

Seth Godin

As so often, Seth Godin said it best:
“If you want to be successful in business you only have to do two things:

  1. Do great work
  2. Make sure lots of people know about it”

And that is how simple it is. Make sure you deliver a great product or service and then make sure that people know that they can trust you to do great work.

The quickest way for people to trust you is by having someone they trust tell them they can trust you.
Focus on having others spread the word for you and you will indeed build a Fun Business that sustains you for years to come… I promise you.

Turning Small Business Customers Into Raving Fans

restaurant

How can we create Raving Fans?

And let them do our marketing for us?

masterminds What does it take to make a success of your small business… how can you avoid adding to those frightening statistics about failure rates of small business.

In this series of articles and associated webinars and workshops, by Roland Hanekroot you will learn the basic concepts and get the knowledge you need to become a successful ‘Business-Owner’, as opposed to a struggling ‘Business-Doer’.

Format

The format of each episode in the “First Steps” series is to explain the basics of the topic and then in line with the principles of New Perspectives business development programs, to suggest some small simple “First Steps” you can take straight away to put the knowledge into action.

 3 Questions

customersIn this article we’ll look at your customers and ask:

How can we turn our customers into advocates for our business so that they’ll do our marketing for us?

There is an old maxim that says: ‘Your best and cheapest source of new business is in your existing customers database’

And that is so true. You know your existing customers and they know you; you know where they are and you probably know how to get hold of them and communicate with them already, and most importantly they’ve learnt to like and trust you already.

Well, I hope they do anyway.

Marketing 101

Marketing boffins refer to the ‘Cost of acquisition’ of new customers, meaning what you have to spend to get one new active customer, a customer who spends money with you.

Cost of acquisition can include all kinds of marketing costs; advertising, Google optimization, brochure delivery etc etc, down to the cost of offering a free garlic bread with a first order of Pizza from the local Dominos.

Marketing is all about balancing the cost of acquiring a new customer against the money you stand to earn from that customer.

But encouraging an existing customer to do business with you again is nearly always cheaper than finding and acquiring a new customer, because all you have to do is to pick up the phone or send them an email or something like that.

So much for Marketing 101, but here comes the interesting part: Turning your existing customers into Raving Fans has the potential to reduce your marketing investments to near zero.

How does that happen?

Let me tell you a story

Bedtime story

restaurant Once upon a time… a long, long time ago in a country not unlike Australia, Giuseppe owned an Italian restaurant in Sydney.

The restaurant employed some 20 people from kitchen hands to waiters and chefs and Giuseppe had owned the restaurant for about 5 years.

Giuseppe loved feeding his customers. The restaurant ran well and as far as Giuseppe could tell his customers were satisfied. The problem was that every time a new restaurant opened up in the area Giuseppe’s place dropped off for a while until clientele slowly started building up again. Every time Giuseppe was getting comfortable with his team and his turnover and his profit levels, there would be a new place in the street and for a couple of months Giuseppe would be losing money again.

‘It’s two steps forward and two steps back all the time’ thought Giuseppe

Giuseppe was ready to close up.

Loyalty

Working with me, Giuseppe came to realize that he needed to create a truly loyal customer base. A group of customers who were advocates for his business, Raving Fans. How do you create Raving Fans? By doing things for your customers they don’t expect, to always go one better, to truly make the customers feel at home and surprise them at every visit.

we love customersSo Giuseppe turned the culture of the restaurant around. Ordinary customer satisfaction wasn’t enough anymore. Staff were trained to ensure they knew customers by name. To record customers preferences for tables and wines and dishes. Customer’s birthdates were recorded and free dinner vouchers sent to them on their birthdays. Every time a customer had dinner they’d be given some little surprise, from a free desert or after dinner drink, to a little bon-bon to take home or a voucher to give to a friend. Any time a customer wasn’t entirely happy with their dish or service they would be given it for free. Customers would be surveyed to find out about their favorite wines or dishes and Giuseppe would make sure that these preferences would be available on the menu next time the customer came and had dinner with him. A couple of tables would always be kept free for his regular customers so they wouldn’t ever need to book on forehand. Giuseppe started free cooking classes for customers and organised wine tasting tours for his regular clientele.

Now, a couple of years later, Giuseppe’s restaurant is always full. Every day of the week… people come from far and wide. Giuseppe hasn’t spent money on advertising or any other marketing than his initiatives in the restaurant. New restaurants arrive in the area and barely cause a blib on the radar.  And best of all, Giuseppe and his staff feel that they have truly become part of the community and the community has made Giuseppe’s restaurant one of it’s institutions.

The restaurant is now consistently profitable

And Giuseppe and his very happy customers lived happily ever after… The end..

Lessons from Giuseppe

raving fan Giuseppe learnt to understand what it means to turn your customers into Raving Fans. Because when your customers are indeed Raving Fans, you don’t need to market to them anymore, they will be looking for opportunities to do more business with you. What business often don’t appreciate though is that the impact of turning your customers into Raving Fans is exponential.

Raving Fans will go out of their way to bring their friends and spread the word amongst their own networks. Raving Fans will also actively resist the attempts of the competition to win them over to their side. Raving Fans feel invested and emotionally engaged with your business and want you to do well.

There is a famous series of business management books written by Ken Blanchard, ‘The one Minute Manager Series’ and one of the books in the series is called ‘Raving Fans, why ordinary customer service isn’t good enough anymore’. Ken introduces a concept of ‘Plus One’ in the book, it’s short for ‘Find out what the customer wants, and deliver plus one percent’

The problem is that most businesses don’t take the trouble to find out what the customers really want and even if they do know they deliver inconsistently and certainly not more than the customer expects.

So if you want to reduce your marketing spend to near zero, commit to turning all your customers into Raving Fans.

Your business and your life will never be the same again… I promise you.

Take the first steps:

As mentioned in the opening paragraphs of this article, here are some ‘First Steps’ actions you can take right away, that will get you started on implementing the topics and principles of Raving Fans:

  1. Send a handwritten thank you card to your  top 10 customers
  2. Invite your favorite customer to lunch/ afl game/ golf etc
  3. Do something outrageous for the next customer you talk to
  4. Talk to your staff and give them authority to go ‘beyond reasonable’ for their customers
  5. Investigate ‘net promoter score’ customer survey system
  6. Call one customer this week for feedback
  7. Implement a monthly customer survey system (incorporating the Net Promoter scoring system).

 About the author and the Small Business Masterminds

Roland Hanekroot Roland Hanekroot is the founder of New Perspectives Business Coaching and the author of “The Ten Truths books for business owners”

To support small business owners take the first steps to building a business that sustains them for years, Roland runs a series of regular webinars called The Small Business Masterminds Foundation webinars. There are three different Foundation webinars, on Time Management, The Purpose of Business and How to have more Fun in Business.

The foundation webinars are totally free and you can find out more and register for the next one here: http://smallbusinessmasterminds.com.au

 

masterminds