Does Your Business Referral Engine Need Tuning?

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When you’re trying to launch and grow a small business, referrals are pretty damn close to manna from heaven…

So, when I heard John Jantsch of Duct Tape Marketing fame was coming out with a new book called The Referral Engine that lays out a step-by-step referral-generating process, I had to learn more. I read it. It rocked. But, as not just an entrepreneur, but a writer, I had more questions.

So, I asked John if he’d mind me grilling him “on the record.”

Here’s what went down when I held his feet to the fire…

JF: You’ve developed a reputation as a thought leader in small business marketing and a huge online audience around your Duct Tape Marketing brand, blog, books and programs. As someone who’s also a blogger and and author, I’m always curious, why write another book, especially with a mainstream publisher, when you have direct access to such a large online community?

JJ: Self publishing might make a lot of sense for many folks when the dollars and cents are the primary consideration. What publishing with someone like Portfolio does for the brand is provide reach and credibility far beyond what I have on my own. For instance, I want to build a global brand and the foreign language rights are being sold as we speak.

Many of the larger organizations that hire me to speak don’t spend their time on Twitter but do pick up books at the new release promotional table in a Barnes and Noble. Taking everything I’m doing with the brand and my lean staff, it makes complete sense.

JF: Referral Engine talks about generating referrals, one of the single most effective, yet often ignored ways to grow a business. Why do you think so little attention has been given to developing a more systematic approach to referral-driven growth?

JJ: I think two things are going on in businesses that don’t focus on referrals: (a) there is a fear of asking and (b) there is an underlying fear that perhaps they don’t provide the kind of value and experience that would warrant a referral. When referrals become a total mindset you go about fixing the gaps and that changes everything, including how you perceive your place in the market.

JF: You talk about something called “premium pricing” and the value equation as being key in generating referrals. In fact, at one point, you say, “I have yet to find a business that relies heavily on referrals and low-price leadership as shared strategies.” Can you explain a bit more about this idea and why it’s so important?

JJ: Referrals come in droves when you create something worth talking about. I suppose that can be low price, but only one person can really claim that and it’s not that much fun from a profit standpoint. When you get people talking because you are doing something amazing, innovative and unique, referred leads come to you actually expecting to pay a premium because someone they trust has explained the value of doing business with you.

JF: You outline 7 stages of referral development: know, like, trust, try, buy, repeat, refer. Sounds pretty straight forward, but when I’ve looked at implementation in a lot of small businesses, many of these steps end up being skipped. I’m wondering, in your experience, are they all really necessary? And, I’m curious, in your own experience working with hundreds of businesses, are there one or two stages that are most consistently missed…and why?

JJ: Yes I really think that they are necessary. Now, you can get buy skipping like and trust, but you often do so at the expense of attracting the ideal customer. Part of the purpose of these steps is to educate the customer, build a relationship and allow them to appreciate how you or your product can get them the greatest result.

As far as skipping – so many businesses attempt to go from know to buy. The “try or trial product or service” step is such a wonderful tool as it can become a nice profit center, but it makes it so much easier to step people up to a much larger sale through trust building.

JF: It seems everyone, at least in the world of social media, is throwing around the word “authenticity” these days. You have an entire chapter devoted to it, in the context of generating referrals, what do you really mean by “authenticity” and why is it so important?

JJ: I guess I’m talking about the entire business mojo here. It’s hard to be something your not, that includes attempting to create a culture that mirrors someone else. If your the cynical, dry witted, pain in the butt, experts in your field then embrace that and make it your brand and referral platform – people are drawn to honesty even if it’s not who they are.

JF: Another big focus of your approach to generating referrals for any kind of business revolves around what you call “Content as a Market Driver.” Why has generating content become so important as an element of the referral engine? And, what if your business is largely offline?

JJ: People have grown accustomed to finding information on anything and anyone. Even a largely offline business (not really sure there is such a thing, but let’s say most of your actual sales come face to face) must be able to be found when people go searching, must be able to build awareness and trust by educating and allowing people to sell themselves on your brilliance.

JF: A lot of the strategies laid out build on the foundation of content to create relationships and networks on a number of different levels. How much easier has social media made this for small businesses?

JJ: I really love social media platforms for small businesses because they provide another layer of engagement. Even those businesses that must rely heavily on face to face selling grab a competitive advantage when use tools like LinkedIn to build deeper relationships with existing customers and prospects. It makes everything happen much faster in my experience.

JF: One of things I enjoyed most about The Referral Engine, as both a former brick and mortar and now largely online entrepreneur, is that it’s not just strategy, it’s filled with tactics, processes and what felt like hundreds of websites in the form of both case-studies and resources. As a marketer, I’m pretty comfortable being fairly methodical with these things, but what do you say to a small business-owner who reads the book, sees a huge amount of value, but then feels a bit “aggressive” when it comes to implementation?

JJ: I don’t know really, mostly I’ve found that business owners are busy doing what that business does and are hungry for people that trust to lay out a step-by-step plans of action. That’s my brand I guess, simple, effective, affordable and always practical. (They can always go read Harvard books if they are looking for theory).

——————–

If you’re in business and you’re having trouble figuring how to intelligently structure a systematic referral program, John’s new book, The Referral Engine, is a must read.

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17 responses

17 responses to “Does Your Business Referral Engine Need Tuning?”

  1. Walt Goshert says:

    JF… great Q&A w/JJ.

    What struck me about The Referral Engine is something I realized while watching your recent video tour of your office.

    For many B&M businesses, coming to grips with Offline v. Online,and more specifically leveraging opportunities in their offline businesses online,especially when we’re talking about a traditional “Old School” technique like referrals, remains a paradox. IF… Big IF, they even take time(most don’t… too busy working IN the biz) to “strum the guitar”, seems like they’re caught too many times sitting in the middle of the floor studying the Mindmap Wall hoping the Buddha Wall will kick ’em in the butt. Or, perhaps it’s as you pointed out,they really want to short-circuit John’s 7 stages, and would rather simply “buy” Like and Trust as john answered.

    I know John is an E-Myth trained guy…

    Funny how when you’re being still and strumming on the guitar,(or hitting golf balls, or banging down a hill on the mountain bike…) you’re really working ON the business. Yet, most B&M peeps have no Mindmap or Buddha Wall. They’re too busy doing their “thing”.

    Oh yeah… not to abuse your comment section here, but my name links to my review of The Referral Engine. I included links to the 112 Case Studies, Business Examples, Resources, and Tools John liberally sprinkled throughout his book. Loved that… and it’s a great way to practice referring.

  2. Elysia says:

    Wow definitely picking that book up on Kindle.

    Thanks for the post JF 🙂

    • John Jantsch says:

      Elysia – Doh? Penguin, my very awesome publisher is in a bit of rift with Amazon over ebooks and is not publishing their new titles until the fight is over. Sorry about that – you can get iBook version 🙂

  3. Phyllis says:

    “I have yet to find a business that relies heavily on referrals and low-price leadership as shared strategies.”

    Wow, what a powerful statement and concept. Magic there for those who get it!

    • John Jantsch says:

      Hey Phillis – I’ve actually found people expect to pay a premium when someone they trust explains why they should.

      • Jonathan Fields says:

        I’ve found that same thing. It’s almost like the referral adds perceived value to the solution being offered.

  4. Also, when you cut your price, you often have to cut corners on the quality of work to make money, making your work/product less referral-worthy. A downward spiral.

    When you’re starting out it can be frustrating because in most cases a start-up business is blundering into new territory every day. Especially with marketing – so it can seem like good prospects to buy are scarcer than they are.

    I’ve focused on the internet a lot and one of the lessons I’ve learned is that it’s great to offer incremental levels of response between “buy” and “leave”. Usually this mid-point falls along the lines of people grabbing a freebie in exchange for an email address. It may not seem like much, but it tells you you’re doing something right when you get that “I’m not buying but I’m interested” feedback. Not only does it tell you something about your visitors, it tells you if your marketing is working, even if sales are not too good.

  5. I’m totally excited to read this book!

  6. In my line of business we have a high learning curve to begin with. Most people don’t know what we do, let alone know we exist. But once they do they love it, and wished they knew about it earlier. That’s when we turn them into our salesforce and walking evangelists of our company. I will definitely be picking up this book. Always interested in how other’s are growing their business.

  7. Richard says:

    Great post Jonathan – as usual! 🙂

    & JJ I’m really looking forward to reading this latest book of yours. I like your style – simple, practical, no BS – just go for what actually works.

    I’ve a degree in Marketing & frankly, pick any ten pages in your duct tape book & you’ll learn more about real life ‘marketing’ than 4 years in a business degree. You guys have any thoughts on why the heck business degrees are so full of BS? and irrelevant information??

    thanks
    Rich

    • John Jantsch says:

      Richard – my guess is, and this is not universal, many of the professors and folks that write the text books for those courses, have never actually felt what it’s like to generate real business for a real small business.

  8. Life says:

    For many B&M businesses, coming to grips with Offline v. Online,and more specifically leveraging opportunities in their offline businesses online,especially when we’re talking about a traditional “Old School” technique like referrals, remains a paradox. IF… Big IF, they even take time(most don’t… too busy working IN the biz) to “strum the guitar”, seems like they’re caught too many times sitting in the middle of the floor studying the Mindmap Wall hoping the Buddha Wall will kick ‘em in the butt. Or, perhaps it’s as you pointed out,they really want to short-circuit John’s 7 stages, and would rather simply “buy” Like and Trust as john answered.
    +1

  9. Mike Willner says:

    Jonathan – It is my understanding that you think many authors should self-publish because “you can’t justify giving up a huge chunk of money to a publisher when you know your book’s success lies entirely within your sphere of Tribal Author influence.” John, however, believes that what traditional publishing does for the brand “is provide reach and credibility far beyond what I have on my own.” And John has more reach and credibility than most. I assume that John wants this additional reach and credibility because he believes that in the long-run it will help him make more money (unless he doesn’t care about money, and he just wants to be more famous for famous-sake, which I doubt).

    So my take-away is this: If an author can get an established company to publish his or her book, then in the long-run he or she will have a broader reach, more credibility, and ultimately, will make more money than if he or she were to self-publish.

    Am I wrong?

    • Jonathan Fields says:

      Great question, Mike. What John was saying, and what I teach in my Tribal Author programs, is that the choice between traditional publishing and self-publishing is largely a factor of what your bigger business plan is. So, for example, if you’re looking to build a career speaking outside of your own events, consulting or being a traditional media personality, tradition publishing still matters. If you’re looking to build an info-product or private training empire, it matters less. And, if you just want to write and you have the knowledge and desire to build your own substantial platform, it matters even less.

      It’s really about what you are trying to build “beyond the book.”

  10. Molly says:

    Everyone at the uRefer office is very excited to read John’s book (we’ve already ordered multiple copies)! Our company has developed a SaaS to support the referral process- not a substitute for John’s 7 steps, mentioned above, but a supplement that is definitely very helpful to manage a large volume of advocates and referrals- as well as making it easier for advocates to actually make a referral. Thanks for the post, and John, we’d love to sit down and pick your brain.