In my work with entrepreneurs, especially small business owners, in my country Nigeria, one re-occurring theme is their approach towards marketing. Each time I’m in a consulting or strategy session with a client and I ask the question: "How do you get clients?"
I hear almost the same answer: "Through referrals". So, out of curiosity, I ask a second question: "You mean from satisfied customers?" And then I get a surprising answer: "Not really, from my family and friends who know about my business."
Every time I get these responses, I no longer wonder why they are complaining about low or no sales. I no longer wonder why their business is not growing as fast as they wish it to. You cannot expect to grow your business, especially in terms of revenue/sales, if you simply expect your family and friends to do the marketing for you. As a matter of fact, you are not yet in business until you make a sale from a total stranger!
Two kinds of word-of-mouth marketing
Passive referrals:
This is a passive mindset towards marketing, popularly known as "man-know-man" marketing. It basically means a form of marketing based on networking or existing relationships or one’s circle of friends or connections. The underlying philosophy is this: sales are determined by the caliber of people in your network or the caliber of people you know.
Every time you depend on your connection, network or existing relationship with someone you know to make the sale, then you are not yet fully in business. The people within your existing network and the people they know are too small a target market to sustain your business. Are your family and friends and their friends of friends the only potential customers out there?
Active referrals:
This kind of referral marketing revolves around one idea: testimonials. What are testimonials? Testimonials are personal recommendations or favourable comments from customers who have bought your products/services and were satisfied enough to spread the word to their network. This is the essence of word-of-mouth marketing: testimonials.
To grow your business, you need a sustainable marketing strategy that will allow you to make sales from outside your network. Why? Because until you do, the real power of referral marketing will never be at work for you!
Referral marketing defined
As you must have been told, this is perhaps the best form of marketing, right? When without much personal efforts on your own part, the news about your business, products or services just seem to spread and eventually leads to more sales, right?
Not totally!
There is a big difference between referrals coming from customers than those coming from your network. Sales made through referrals from satisfied customers carry more credibility because it comes from a third party; people who know, like and trust your brand. While sales made through your existing relationships carry less credibility because it comes from a second party; people who know, like and trust you.
The level of interest a customer has in your business comes from their personal experience with your products/services and that carries more weight in the eyes of a potential buyer than your relational ties. When customers buy from you and enjoy a favourable experience as a result of using your products/services, the value of your brand increases.
To a large extent, they aren’t personally interested in you as much as they are interested in your brand –products/services you offer and their benefits. It is this positive experience that they talk about to their own family and friends or existing networks that compels these people to buy from you too. They are buying with an expectation in mind; to enjoy the same favourable experience as their friend or family member did.
Let me share my experience
During the profitable days of cyber café business in Nigeria, we were able to grow our business primarily through referral marketing. Satisfied customers simply invited their friends to come check us out and they in turn invited their friends. In the end, our customer base grew from 0 – 1,700 registered browsers as a result of word-of-mouth marketing.
Out of these people, less than 10% of them did we personally know or had any previous relationship with. They were complete strangers who heard about the cyber café from their network of friends and not our own network of friends. As a result, the power of third party endorsement was at work. They came with certain expectations based on their friends’ testimonials and those expectations were met because we had systems in place to ensure the same brand experience for every customer.
How to create active and not passive referrals
The right and most effective approach to creating a sustainable word-of-mouth referral system is through testimonials. Use the following 5 questions below to gather testimonials from your satisfied customers as recommended by small business marketing guru, John Jantsch.
- Why did you hire us/buy from us in the first place? (Here you are looking for clues to what helped them decide to buy, what built trust, what resonated in your marketing and sales processes.)
- What’s one thing we do that you love the most? (Stick to one thing and help them get as specific as possible.)
- What’s one thing we do that others don’t? (Again one thing – this may sound a lot like the second question, but what you are really trying to do here is get some industry comparison going – you might get some stories of how others have failed them in the past and there offer some interesting opportunities.)
- If you were to refer us what would you say? (This is your chance to have them describe what you do best as though they were telling a friend. This point of view can be very powerful and this answer might actually turn into a testimonial. In many cases that’s precisely what I’ve done with answers to this question.)
- Can you tell me about three other companies that you love? (This question does a couple of things. It allows you to better understand what they think best of class looks like and why and it helps you build a list of potential strategic partners. Think about it, your shared client thinks you both rock!)
