Hope or Confidence: Which word best describes your referral marketing?

When you think of referrals are you (a) Hoping that some will show up in the lead report this month, or (b) Confident that your business will get a consistent amount, month after month?

This indeed is a $64,000 question.  Because hope is not a strategy and confidence is gained from clarity, control, and confirmation.

If you answered (A) – Hope, keep reading because there are three key elements that may be missing from your firm’s marketing efforts.

Ask any business owner, and especially consulting firm owners, what they would like more of and they reply “more referrals” nine times out of ten.  While most tech consulting firms want referrals, not every firm is prepared to establish systems for referrals and put in the work necessary to consistently obtain them.

Why referrals?

Heinz marketing reports that 84% of B2B decision makers start the buying process with a referral. That’s why referrals are an essential part of your marketing system.  They also report that companies with referral systems experience 86% more revenue growth than their peers, but only 30% of companies have an established referral system.

That’s why successful technology consulting firms are more likely to have a system in place for their referral marketing efforts versus leaving them to chance.

“But wait”, you say – “you can’t manage referrals like normal lead generation”.   That’s the typical reaction I get from consulting firm leadership when I talk to them about referrals.   They say things like:

• I don’t know if I’ll get referrals next month.
• I never know where my referrals will come from.
• I can’t control referrals – they just happen if we give good service.

Well, let me just say that’s completely wrong.  (Note: the real phrase that comes to mind is “that’s Bu**$h*t!”)

Referrals are likely the best leads you get, come at a lower cost, convert at a higher rate than other lead sources, and have a higher customer lifetime value (16% higher than non-referrals according to the Wharton Business School). They are also some of the lowest hanging fruit.

The root of the problem?

So why do so many technology consulting firms (MSP, system integrators, implementation experts) starve this fruitful source? Mainly because they (falsely) believe they cannot control referrals and they are something that just “magically” happens or doesn’t happen at all.

Let’s be honest: good will does not always convert to referrals.

Most tech consulting firms leave referral management to the whim of the individual salesperson or expect the owner or managing partners to generate them.  The sales management of referrals is often the minimal effort of asking about referrals in the monthly, obligatory sales meeting.  “Are you asking for referrals?” may be the only sales leadership-oriented reference to referrals the salesperson receives.

Many inbound marketing companies that will tell tech consulting owners that referrals are only for the start-up phase of your business and your marketing must mature if you are to grow.  While I believe in part of that statement, I think it is wrong to neglect or minimize the value of referrals in your marketing mix.  Lead generation for information technology consulting firms comes from three areas: inbound marketing, public relations, and referrals.  These three must be organized in your marketing strategy and all are strengthened by the strategic definitions of your business: ideal customer, message, differentiation, channel selection, and content.

So why do consulting firms so often fail at optimizing their referral leads?  There are three primary reasons.

1. Referrals are not earned.
2. Referrals are not asked for.
3. Referrals are not systemized.

You may look at that list and say this is an over-simplification of the problem. But I assure you those are the reasons.  Let’s take each individually and discuss the problem and the solution for each.

Earned

Earning referrals begins with delivering a customer experience worth referring. If you haven’t heard of the term “customer experience” you are already behind the 8 ball.

While almost every firm is familiar with customer service, customer experience is different from customer service in multiple ways.  Customer service is expected. It’s a normal part of customer-firm relationships and is usually driven by an event, often negative, as in a problem or issue.  How customer service is delivered will undoubtedly have an impact on the satisfaction of the customer, but it usually does not illicit referrals when delivered as expected.

Customer experience on the other hand, is a deliberate attempt to delight the customer, moving them from a consumer of your service to the status of company ambassador. You want to provide an experience that has them so jazzed about what your company does they won’t stop telling people about the experience.  Yes, that is a tall order.   But the result is so worth it.

According to an Oracle report, 86% of customers will pay more for a better customer experience, with a separate American Express report citing an additional 13% spend by customers who believe they will get a better customer experience.

If your firm’s average project is $250,000, 13% more represents $32,500.  If you want to increase your average deal size and profitability, then customer experience should be a component of your strategy.

A well-designed customer experience anticipates the customers’ needs, fills not-yet-known gaps in the customers’ path to value attainment, and delivers your customers to the status of highly engaged and appreciative of your company’s effort.

Most consulting firms concentrate on customer service and haven’t yet determined how to deliver an exceptional customer experience.  (Hint: That could be a competitive advantage for your firm! And can drive more referrals and profit.) 

Asked For

According to marketing research firm Hinge Marketing, nearly 70% of customers are willing to make a referral to a firm, but over 70% of those receptive to referrals are never asked.

While many firms like to wait until the finish of the project to ask for referrals, project completion doesn’t have to be the only time you engage with your customer about introducing you to others.

Assuming you are delivering a project that is worthy of a referral, you may want to integrate referrals into various points in a project.

Customer satisfaction spikes are a great time to introduce referrals. At the times of these satisfaction spikes (status updates, minor deliverables, test completions, etc.), ask for feedback and test the waters by asking if your customer is willing to refer you to others.  Ask if they understand the type of prospects that would be best referred to your company.  Test their knowledge about the breadth of your service portfolio.

Education is a key component of referrals success and an easy area to concentrate your referrals efforts in the early stages of a project.  Through the phases of onboarding and analysis, you can educate your customer about the ideal customer for your business and the breadth of your work (do they know all that your firm does?).

As you deliver on project milestones and begin the later phases of your project you could use the circumstances to teach the customer the processes you use to ensure introductions they make are quickly and thoroughly followed-up on.

You can also begin to invite them to events that reinforce your referral process.  Introduce the customer to other business owners that could be valuable for them to know and allow them to benefit from your network.  The more positive they feel towards you and your firm the more likely they will make a referral.

Obviously, successful project completion (and a delighted customer) is a great time to ask for referrals.  The “ask” can be subtle or direct.  The obvious truth: the chances of receiving referrals will be higher if you have previously educated and delivered value to your customer.

Systemized

Systemization of referrals is simply a means to integrate referrals into all areas of your business. To optimize your referrals system you’ll need to monitor, revise, and improve the various elements and timing of your approach.  Without a system in place to do this, you are left to the whims of “when I get time” or “after the next project”.

There are numerous ways to systemize your firm’s referrals marketing efforts.

Sales teams can set the expectation early in the customer experience by stressing the importance of referrals.  That’s made even easier if the customer came to you via referral in the first place.  Openly communicating the expectation of referrals establishes the importance from the start of the relationship.  It also makes it easier for your firm to later ask for referrals.

The marketing team can ensure they are providing adequate case studies and collateral that help the entire firm illustrate the persona of the ideal customer.  This makes communication of whom you would like referred to your firm exceptionally clear.  Also, marketing can design and execute referral campaigns and events that keep the idea of referrals top of mind for new and existing customers. Quarterly contests and awards provide the basis for on-going reminders and touchpoints, increasing the likelihood of engaging the customer.

As your delivery team works on projects with customers it’s important that the team recognize their role in referrals.  If onboarding feels effortless, project communication is beyond expectation, and value attainment (the real reason they hired you) is easily recognized the delivery team can bolster the likelihood of getting a referral. Obviously, this ties directly back to the concept of “earning” a referral.

It’s natural to feel that the time to ask for referrals is once the project is complete.  That can be accomplished in many ways including a separate meeting exclusive to the topic of referrals, an email series on providing referrals, and including referrals in post-project satisfaction surveys.

Summary

Highly successful technology consulting firms rely on referrals to grow their customer list. It’s the most cost-effective marketing and lead generation tactic they can employ.  Unfortunately, most consulting firms fail to establish a referral system that helps them grow.  Typically, they fail in earning, asking, and systemizing the process. They rely on goodwill and personal relationships that are often outside of their control.

Hope is a satisfying emotion.  It helps us visualize a better future.  Unfortunately, it’s not a useful business strategy and certainly not something you should build your referral marketing efforts on.  Confidence, on the other hand, is gained by a clarity of direction, control of the situation, and confirmation that you are doing the right things (results).  Confidence is only revealed when you plan and execute a referral marketing system.

While defining the business benefits of a referrals marketing system is appropriate, perhaps the best way to increase referrals is to move the goal post for your firm.  Some firms believe that winning the deal and delivering the project are the measures of good marketing and sales efforts. But think of the impact of making referrals the end result of what your firms delivers.  If everyone in your firm knew that referrals were a critical KPI of the entire company it would be much easier to implement the three steps outlined above: earn referrals, ask for referrals, systemize the process.

Referrals can be a critical measure of the success of your technology consulting business.  If you choose to establish confidence, you’ll see much better results than those tech consulting firms that rely on hope.