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This is my seventh year running Blue Corona. In that time, we’ve served well over 100 clients from many different industries (business banks, major manufacturers, b2b technology companies, etc.). But a real sweet spot for us is the home service industry (plumbers, HVAC companies, remodelers, roofers, etc.). If you run a $1-$10 million dollar home service company, I’ve got a special place in my heart for you (that’s a blog post for another time).
As a result, I’ve come to know a ton of guys that run home service businesses. It doesn’t matter where you live—Los Angeles, Chicago, Cincinnati, Philly, DC, etc.—if you need a good HVAC, plumbing, remodeling, or roofing company, I can probably connect you with someone!
So, a few years ago, when my mother called me with an issue related to her house, I didn’t think twice about referring her to one of my clients. I believe I did more than what a normal person giving a referral would do. I gave the referral information to my mom; told her exactly what to say, but asked her not to contact the company until I had alerted the owner and explained her situation. I emailed the owner and gave him the typical, “I’m going to refer my Mom to you. This is the problem she’s having. You don’t have to give her a big discount or anything, just take good care of her, make her feel special, blah, blah, blah.”
Long story short—it was a disaster. A disaster with a referral made to a friend is bad, but when it’s your mother (or a close relative), it’s… the… WORST!
The whole experience left my mom embarrassed and annoyed. You can only imagine how I felt. The worst part is that all of this went down at a time when I was traveling like crazy and so tied up with various Blue Corona initiatives that I never got a chance to give feedback to the owner of the company that screwed things up.
If you’re the type who gives a lot of referrals, I’m sure that you’ve experienced a similar situation–probably more than once. If you own a business and think that your company does a great job with referrals, you’re probably lying to yourself. In my capacity as President of Blue Corona, I know that I’m guilty of this myself.
My Referral Disaster
It’s easy to read some of the blog posts I’ve written and conclude that I’m some arrogant marketing punk who thinks he’s got it all figured out. I can assure you that this is hardly the case. I haven’t even written a blog post since last year—partly because I’ve got a killer team helping me out, but largely because I’ve been busy working to get my own “house” in order.
I hate to admit it, but I’ve got at least a few of my own “referral-gone-bad” incidents. There, I said it—I’ve botched some referrals. About the only thing I’ll give myself credit for is that I’m quick to admit that we’ve screwed up; I’m relentlessly driven to fix things, and I work more hours in one week than most people do in two.
My most recent referral screw up—and perhaps the catalyst that triggered this blog post—wasn’t a prospect referral; it was an employment referral made by one of my
key people linchpins. This may not sound like that big of a deal to you, but when you consider that Blue Corona is a “people business”—that is, our people and the services they provide are our business—and that we’ve grown 3,000+ percent over the past six years, I think you can appreciate the (potential) magnitude of my mistake.
Our ongoing success and continued growth depends heavily on our ability to attract, develop, and retain the best people. When a linchpin says, “I have a friend I think you should interview” and you treat the person they referred like just another interviewee, you fail.
And that’s e-x-a-c-t-l-y what I did. #mistake
The Process for Getting More Referrals
I’m in the process of improving our company’s approach to handling referrals (client and jobseeker referrals). And if you want to further accelerate your own business growth and simultaneously avoid a potentially massive, and often overlooked future landmine, you’d be wise to do the same.
Here’s what I’m going to do—and what I recommend you do as well:
- Admit that you’ve screwed up and accept accountability for any problems
- Closely examine and get a baseline for how the referrals are handled today
- Think carefully about the psychology of the referrer and the referee
- Create and test a new way for handling referrers and referrees
- Analyze the data and make adjustments (optimize)
While the specifics of how you handle referrals may vary based on the type of business you’re in, the fundamentals for generating more referrals are universal.
Step 1: Admit You’ve Screwed Up
The first step is to admit that your current referral process probably sucks and you alone are responsible for it. I wasn’t directly involved with both of the jobseeker referrals we botched, but the way things were handled (poorly) IS 100 percent my responsibility. I’m the president. The buck stops with me.
Some people will argue that the root cause of our botched handling of a jobseeker referral is a lack of clearly defined policies. I think it’s actually due to a failure to communicate and reinforce one of our core values—act like an owner. I hate lengthy policies. I’m not trying to build a company of robots—I’m trying to build a company full of linchpins. I want our people to be able to customize and vary their approach based on their own personality—their art and emotional labor—and the specifics of a given situation.
To me, the only way to do this is to give them overarching questions that relate back to our core values. Is whatever you’re about to do in-line with our core values? Is the action you’re about to take representative of a remarkable company; a company that is trying to be THE best? If not, you need to adjust whatever it is you’re about to do!
Step 2: Closely Examine & Get a Baseline for the Way Referrals Are Handled Today
Before it was brought to my attention that we totally screwed up some jobseeker referrals, I had no real idea how we had been handling referrals (of any type). My visibility into our referral handling was fuzzy at best. Unless you’re running a sole proprietarship, your visibility is probably just as fuzzy—or fuzzier—than mine was. Whenever I’m trying to make something better, I always collect data and get a baseline for how things are working today. I’m doing that right now. In our business, referrals connect back to our recruiting/hiring process (HR) and sales and marketing. So, I’ve got two different reports created that will illustrate and quantify how we’re treating both types of referrals today.
Step 3: Understand the Psychology of the Referrals
People give referrals for all sorts of different reasons. When most business owners set out to create a referral program, they focus on some sort of monetary reward for the referrer. I think this is a mistake. In my experience, the best referral givers are not motivated by money or stupid chotchkees. The best rerrals come from people that value the emotional reward(s) that come when you connect someone with a product or service they end up loving.
The easiest way to increase referrals from this segment is to do everything you can to make both the referrer and the referree feel like a VIPs and minimize the downside for the person offering the referral. You have to recognize that someone giving you a referral has WAAAAYYY more downside risk than upside potential—no matter generous your referral reward program is. Do you think a $50 gift card is enough to offset the emotional pain I feel when my mom is explaining how poorly she was treated by the company I referred her to? A $1,000 gift card wouldn’t be enough to make it worth it.
The best the company you’ve referred someone can do is exactly what you said they were going to do. That’s the expectation.
Step 4: Create and Test a New Way of Handling Referrals
Once we have our baseline data and we’ve spent some time getting inside the mind of those referring people to us and those being referred to us, we can formulate a test—a new way of handing referrals. We haven’t figured this part out yet for Blue Corona, but one thing is for certain—from now on, all the referrals we receive are going to get an “above and beyond” white glove treatment.
I think treating people—the people doing the referring and those being referred—like VIPs is far more powerful than a gift card or a token monetary gesture. Of course, it’s tough to go wrong if you combine the two. Jobseekers referred to us are going to get an experience so memorable that even if we end up not being a good fit for each other, they’re going to walk away with something of considerable value. They’re going to walk away thinking, “damn, those guys are good!”
Step 5: Analyze the Data and Optimize
Once our new approach has had sufficient time to run, we’ll look at our reports again. Are the number of referrals you’re receiving going up or down? Do you even know? Are the people giving you referrals happy with the result? Are the quality of referrals you’re receiving going up or down? All of this stuff can be tracked and quantified. Armed with the data and documented process, it’s not hard to make a tweak and continually improve things.
It really is that simple.
Final Thoughts & Takeaways
Small businesses—especially those without a strong Internet marketing program—frequently cite referrals and word of mouth as their top sources of new business. And yet, these same companies often do a very poor job of managing their referrals. VIP treatment and follow through is the exception—not the rule. You can spend money on PPC campaigns and SEO—and, if you really want to grow, you should. Marketing campaigns that work create exponentially more referrals as your business grows.
However, it’s a huge mistake to not take a closer look at how you’re handling the referrals you already receive. A lot of business owners fail to think about the referrals they’ve botched. A big part of the reason is because referrals gone bad aren’t often visible—out of sight, out of mind. When you think about it, it’s commonsense. The world is full of passive aggressive people that avoid direct confrontation whenever possible. If someone referrers a friend or family member to your business and you screw it up, the vast majority of people will never tell you what you did wrong.
In the worst case scenario, you never hear about the screw up, but a huge population of people do via negative comments and reviews of your company on websites like Angie’s List, the BBB, Facebook, LinkedIn, Twitter, Yelp!, etc. Coming up with an awesome way to manage referrals isn’t just a powerful way to generate more referrals and business growth, it’s also the best way to avoid negative word of mouth marketing!
The specifics of your referral management system should be customized for your individual business; however, the output had better be something that makes people feel great about giving you referrals—even when things don’t go as smoothly as you’d like. You want something that makes the referree feel like a VIP (to the point that they’ll share their experience on social media sites, at dinner, etc.).
Do this right and you’ll accelerate growth. Get it wrong and you’re feeding a tumor that could kill (or seriously damage) your business.
Ideas are good, but execution is everything. This is one of the most powerful lessons I’ve learned building Blue Corona. You get far more return from relentlessly perfecting the fundamentals than you do trying to engineer something overly complex.
About The Author: Ben Landers is the President and CEO of Blue Corona, a data-driven, inbound internet marketing company. Submit an inquiry to book Ben to speak at your next conference or event.
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