Book Summary: The Referral Engine by John Jantsch

“You won’t believe what they did!”

“Their customer service was so great that even......”

“I must tell you about........”

There are three types of messages we want to hear about our businesses. They are great referrals that can create a great business.

The Referral Engine by John Jantsch offers a systematic approach to establishing word of mouth as a comprehensive marketing strategy.

In a larger sense, it proposes a better way (and friendlier way) of doing business. The book shows you how to craft a strategy that compels customers and partners to voluntarily participate in your marketing, to create positive buzz about your products and services to friends, neighbors, and colleagues.

What more needs to be said?

Lesson #1: Fill In The Needs, Take Risks, And Don’t Be Boring!

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Reality #1: People make referrals because we need to

We rate and refer to products as a form of survival. We pass on what we know to others to build credit in the community. We refer to connect with other people. We refer to build our own form of social currency.

Plus, if you do something for me, I am implicitly obligated to do something for you.

Reality #2: All business involves risk

When we make a referral, we are putting the trust we have established with the recipient on loan to the person or company being referred.

People don’t get emotional and passionate about ordinary products, a satisfactory result, or a fair price.

They talk about things that surprise them or make them feel great about themselves and, in effect, remove the feeling of risk they might have about doing business with that firm.

Reality #3: Nobody talks about boring businesses

As Seth Godin has often said, “If the marketplace isn’t talking about you, there’s a reason. The reason is that you’re boring.”

To build a business, territory, or practice-based primarily on referrals, you must first discover or create the remarkable thing about you or your products, the thing that gets people talking, that almost forces them to tell others about you.

Boring people, products, and companies are hard to refer!

Lesson #2: Employees Should Know Better

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Your employees probably treat your customers the same way you treat your employees. Happy employees are much more likely to represent the brand in a positive manner.

Let’s face it: Companies aren’t capable of making emotional connections; people are.

Regular, institutionalized training is a core element of widely referred businesses. This begins with training in the daily routines and processes required to complete ordinary job functions, but it goes much deeper as well.

When it comes to building your marketing strategy, it makes sense to teach every new employee as much information about the organization's branding.

This ensures that everyone is familiar with the company's vision and message; ensuring brand ambassadors are created.

Whenever they interact with customers, smart companies ensure that each employee knows how to identify an ideal customer, how to introduce the company’s story, and which phrases prospective customers use as clues of their potential interest.

Lesson #3: The Four C’s of Marketing

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The age of the 4 Ps of marketing: Product, Price, Placement, Promotion has given way to the age of the customer. A new set of principles has been established in the hierarchy of marketing planning.

In the age of the customer, the 4 Cs are the keys to business success: content, context, connection, and community.

Content

Authentic content that educates or is otherwise seen as valuable to the consumer is the new currency of marketing. Customers have grown weary of marketing messages that are blasted at them in an effort to make them buy.

The solution is to provide content that the customer values and desires.

Context

The ability to position information within the context of a prospect’s life has become a core marketing tactic. In some cases, this can be accomplished by simplifying our messages and uncluttering our marketing communications.

Connection

The most remarkable businesses seem to innovate and create buzz by balancing high-tech connections with high-touch engagements, allowing one to inform the other.

By using technology to allow prospects to connect when and where they choose, they allow people to connect more deeply when and where they choose.

Community

In the wired world, the community is free to form around shared ideas, common interests, and strategic relationships unbound by distance.

With the ease of access to online tools, anyone including our prospects, customers, partners, suppliers, and mentors, or even competitors can form communities that publish information about our products and services.

Lesson #4: Convergence of Communication Channels

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Successful businesses fall into one of two camps:

Businesses that rely on the evolution of marketing-driven by social networking, content-rich websites, blogs, and businesses that rely on more traditional, off-line business building tools, such as face-to-face selling, in-person relationships, local community involvement.

Both of these models are effective ways to build a business and, depending on the industry you find yourself in, maybe exactly the approach you’ve taken or plan to take in order to grow your business.

However, there is an increasing danger in relying solely on one or the other.

Businesses that create the most buzz seem to have a knack for tapping and creating a convergence of these two models, places where online and offline strategies and tactics intersect and overlap, as an essential ingredient in their culture of referral.

The converged business uses every advance in technology as an opportunity to forge a deeper, more personal relationship with its customers.

Technology is used as a way to create larger networks, interact in ways that are most convenient for the customer, and engage customers more frequently.

Lesson #5: The Seven Stages of Referral

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There are seven stages of referral development and corresponding touchpoints along the customer lifecycle.

Know

This is the initial introduction to your company, and while it is commonly conveyed through your advertising messages, it is also the point at which a referred lead discovers you.

The best way to start the relationship is to communicate a clear brand or point of differentiation that is designed to attract your ideal customer and your ideal referral sources.

Trust

When a prospect is ready to learn more, you are approaching the trust hurdle. During the trust-building phase, your prospect may need to be nurtured for a time.

What kinds of educational opportunities, such as free reports, “how-to” checklists, and information-rich seminars can you offer?

Like

Once a lead is aware of your company, they can and should be led to digging a little deeper, to see what’s behind the ads.

This is often the point when your web presence or physical presence (store, offices, marketing materials, etc.) sets the tone for a deeper connection.

Try

One of the best ways to ensure that every customer relationship evolves into a referral relationship is to create a way for your customers to sample your business and in turn, give your business the opportunity to sample the customer.

Giving a customer the opportunity to trial your products before they purchase them could make them more comfortable with making a commitment and allow you to demonstrate how reliable your services are.

Buy

How you orient your customer once they say yes is a referral marketing touchpoint.

The way you fulfill the order, the way you deliver the order, how you communicate throughout the whole process, and how you communicate with your customer after are all different ways that people decide if they want to use your services again.

In this stage, expectations are everything. No matter what you think is good or bad, if it’s not what the customer expected, it can raise a red flag.

Repeat

The key factor in creating repeat sales, expanded product sales, and long-term loyalty are to make certain that your customers are getting the most value possible from your products and services.

When someone buys your product or service, commit to teaching them the proper way to get the most from it. Far too often we sell a product or service and just assume our customers are getting the results they desired or were promised.

It’s essential that your customer fulfillment process also contains a step that forces you to ascertain and review with your customer the value they received from your product or project. This is a great way to fix gaps in service.

Refer

At this stage, you should focus on making it very easy for your advocates to participate in your business, come together as a community, and tap your entire network.

You can create peer-to-peer discussion panels that allow some of your greatest customer fans to discuss solutions and challenges with prospects.

Or you can create customer advisory and referral boards that allow them to participate in the formation of your marketing campaigns and business strategies.

Lesson #6: Partnering: Referral by Proxy

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A fully developed referral system targets two distinct prospect groups. The first is your customer base or your “direct network.”

The second, the potentially richer, group is made up of other businesses that also serve your ideal customer who could be motivated to partner with you in some way to exchange referrals and support your customers.

While many businesses focus the bulk of their referral generation efforts on existing customers, the real untapped referral opportunity resides with strategic partners. Partners are an essential part of the referral engine.

The idea of partnering with businesses that have the same target market as customers is not a new one: it’s just gotten so much easier to do.

By using technologies such as online web conferencing and podcasting you can easily tap the knowledge and resources of a large group of experts and partners.

The Strategic Partner Network

This is a group of business owners who share your description of an ideal customer. In other words, businesses that sell to your customers and prospects.

This network quite often can possess far greater referral opportunities if for no other reason than sheer numbers. In addition, partner network members usually have a stronger motivation to act on your behalf.

In most cases, a referral is made by a customer because they bump into someone who needs what you do.

Strategic partners may find that it makes sense for them to actively promote your business or solution as a way to increase the value of the relationship they have with their customer base.

When you are talking to an existing client, the benefit of a referral is the opportunity to help that person, help a friend or raise their perceived value with a colleague.

Ask yourself: How could referring your business make your client’s life better?

That’s the proper way to think about referrals. Do that, and you will never be afraid to ask a client again.

The next time someone calls you up and says, “My friend said I should contact you,” immediately call the referral source up and ask them why they did so. You may have an idea, but it’s the actual words, while they still remember, that is important.

We go through life thinking we know what the client values about our business, but it’s often not what we think it is.

What makes you want to refer us?

What do we do that’s unique?

What do people say that makes you think of telling them about us?

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