Your second-best source of new business
It’s an often repeated marketing saw that it is N times more cost-effective to sell to existing clients than it is to create new ones. Opinion seems to differ on what N might be; I’ve seen anything between eight and 15.
The specific number doesn’t matter so much as it’s the concept that really counts.
So that’s where to start as you begin to grow your business – your database of current clients and contacts.
But where do you go next if you want to make the next step change in growth?
The same database again.
Because referrals from current contacts will always convert into business more quickly and more cost effectively than cold leads; 15 times more likely according to The Marketing Guild.
Why some firms don’t get referrals
Some businesses claim to thrive on referrals alone and I see no reason to disbelieve them.
Others complain they get none at all.
Now that might be because their service is poor of course.
But the number one reason why clients do not give referrals for good work is because they are never asked for them. Clients who would be more than happy to put you in touch with one or two of their contacts simply need the prompt of a polite request.
So I want to suggest that as part of your client review meeting (you do have review meetings don’t you?) you habitually ask for referrals.
Use an approach that feels most comfortable for you. I’ve heard one business coach suggest an assertive demand for referrals as part of a proposal in return for the privilege of using your services. Personally, I don’t feel comfortable with that. It’s not my style but it might be yours.
Another idea is to always ask for three referrals in the hope that you might get two. That also feels a bit tricksy but I’ve used it and it can work.
One really nice tip, that I must credit to my friend David Oliver, is to ask for a referral when you get turned down for work.
Imagine, someone has put you to the trouble of going to meetings and writing a proposal only to have to tell you they’ve decided to use someone else. It takes a particularly hard client not to feel guilty about that.
You can offer absolution by accepting the decision magnanimously, even empathetically, before leaving them with two thoughts:
- We’ll still be here in six months’ time if things don’t work out. Is it okay if we keep in touch just in case you need our help in future?
- Given you now have a pretty good idea of what we do, can you think of two or three people in your network who might be interested in this kind of support?
Make giving a referral easy
In asking for a referral you can make it a lot easier for your contact to come up with some suggestions if you give them a good idea of the type of person you want to speak to.
If you run a small interim management firm in the technology sector, for example, you might explain: “We’re looking to build relationships with IT directors and line managers in the financial services sector. Maybe they’re facing a major change or implementation project which means they need some extra support for a fixed period”.
Don’t be so specific that your contact will struggle to think of anyone, just provide enough guidance to spark off some ideas. I know one chap who says “I want to meet more people like you!”.
What exactly is a referral?
An odd question perhaps. But remember a name and an email address is little more than you can find on LinkedIn.
What you’re after is an introduction.
At the risk of pointing out the obvious, at the very least make sure you get the referee’s permission to say something like “Sheila Young at Fourth Wall recommended I get in touch because she thought you might be interested in our new research paper”.
What’s even more powerful is if Sheila will email or even call her contacts and facilitate an introduction. It’s not unknown for an ambassadorial referee to agree to a three-way meeting from which they tactfully withdraw at the midway point.
Thinking beyond referrals and introductions, there are many more ways your current crop of clients can help if only you ask, including testimonials, case studies and co-speaking at events.
Of which more in future blogs.