68. Referrals - A guide to this powerful method used to gain prospects and clients

Referrals - A guide to this powerful method used to gain prospects and clients [Everything Business Consulting Episode 68]

In this episode, we dive into Business Consulting, Coaching, and Advisory referrals.

The main questions we seek to answer are:

What is a referral?

What is a referral so powerful?

How does this relate to business consulting?

Why would we want a referral?

How do we get referrals?

What do you say to get one?

Where do you get a referral?

Quotes: “Nothing influences people more than a recommendation from a trusted friend” - Mark Zuckerberg.

References:

Referral marketing statistics sourced from Extole (extole.com)

Everything Business Consulting is brought to you by ConsultX, your complete Business Consulting Solution.

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Transcript:

Julius: Imagine getting handed high-quality leads for doing next to nothing. That is the power of a referral.

MC: Welcome to Everything Business Consulting, whether you are, or you want to become a successful and high-earning business consultant, coach, or advisor, this show is dedicated to help you. Here are our hosts, David Thexton and Julius Bloem. 

Julius: Hello, David. Today's topic we're going to dive into is that of referrals. What is a referral, you ask? A referral is an act of referring someone or something for consultation review or further action. David, can you tell us what a referral is and what it means in a business consulting context? 

David: Well, the way I look at it is, you as a consultant, do such a perfect, fantastic job with your client that either one or two things happens. Firstly, they voluntarily give you referrals, you need to go and talk to my brother, Jim, or there's a guy down the road that I met at the business association meeting. You do such a good job that they willingly give you referrals because people want to help people and you just get them offered to you. 

And the second part to that is that it puts you in a very good position to be able to ask them at the appropriate time, ask them that now that you know what I do, do you have any friends or colleagues or businesses that you know, that would make very good use of my services? You know what I do, you know what we do together, and how it all works and everything. Do you have somebody who you think needs my help? Julius.

Julius: So we started to dive into the power of referral, David, and Mark Zuckerberg it's the founder of Facebook, he's got a quote, and that quote is, nothing influences people more than a recommendation from a trusted friend. And I think that summarizes why a referral is so powerful. Now, referral marketing is the single most effective way that we find we can do marketing as a business consultant once you're established, and it's becoming, it is, really a must-have for any business to business or even business to consumer companies, both B2B and B2C. It's like a seal of approval, like a big tick, a yes, that this product or this service is really, really good. Word of mouth is the primary factor behind something between 20 to 50% of purchasing decisions.

You know, when someone suggests, David, you should buy this, you should get this, I tried this product or this service, you should give it a go as well. And that is why as a business consultant or a coach or an advisor if you get suggested to try something, you've got such a good hit rate. David, can you talk to what you've seen in terms of the success rates of referrals as a business consultant?

David: Oh, in my experience, they are a hundred percent, Julius. They're, a referral is money in the bank, from a consultant's perspective. And the thing is that because a business consultant or a Business Success Partner, because we are, sort of, newish. Like everybody knows what an accountant does, what a lawyer does, what a bank manager does, only a handful of people know what a business consultant does. So to get a referral from somebody who's using a business consultant, for example, you then, like I said earlier, it has absolutely money in the bank and it's a guarantee that you're going to get that prospect as a client. 

Julius: I came up with the statistic that I found after doing some research, and the statistic shows that business to business companies. So that is a consultant or someone in a similar industry, business-to-business companies with referrals have a 70% higher conversion rate and they also report a 69% faster close time on sales.

Which is, that's massive. If you're going to get more sales, get more clients, and you're going to close them faster simply because someone has made a recommendation, or referral to use you. That is really, really powerful. 

David: It, Julius, it fires off into all sorts of directions that does, because not only does it give you a massively increased chance of signing them as a client, this also is co-joined with your reputation, with the number of contacts you've made. Then, you may have a network yourself, and all of those things, they all flow in together. And I think that if you can do it properly, then you'll end up getting a conversion rate over 80 or 90%.

Julius: What we've found in our network, David, is that once you're established as a consultant, the referrals really start to flow. And that's when your business can really grow as a consultant because you've got these really strong leads coming in the door. And I found another statistic which backs that up, and that is customers who are referred to your brand or your service, are up to five times more likely to use you than another customer.

So that again just really underlines the power of being given a referral or asking for referrals or getting a referral from someone. So, David, can we dive into why we would want a referral? 

David: Well, because it's like a gold medal on your chest basically, that has been given to you by another client that what you're doing is good and you can be trusted and you know what you're talking about and, you have an immense amount of knowledge and you do what you say you can do.

That's really important being a business consultant or a Business Success Partner. That's why it's just so powerful and, it's worth cultivating that kind of, when I say a relationship with your client cultivating that so that you're able to get him or her to actually ring up these people and make an appointment for you to go and see them.

That's kind of at the leading edge of referrals is that they'll ring and say, Hey, you need to see this guy. You need to talk to this guy, he's really, really good, a guy or girl. Yeah, so it is so powerful and it saves you so much time. Because all of the time that's involved in prospecting and talking to people and having all those meetings and everything as you said, Julius, it's up to five times faster by having referrals, and it is for sort of normal prospecting. 

Julius: I also see David that you'd want to referral because the leads you get are such high quality. Now there's a lot of different ways you can generate leads in business consulting, and if you want to dive into that, we've got a really good podcast, that's episode number 48 of Everything Business Consulting, so go and have a listen to that.

But the reason it's such a high-quality lead is because the person that's giving the referral has an insight into what you do as a consultant. So they know the service that you offer and they also have some kind of an idea about the referee, the person who's being referred. They might know that their business isn't in a good situation, or they want to grow their business, or they really want to take it to the next level or whatever it is. So they're kind of connecting the dots here, and that makes it a really high, high-quality lead. They know what you offer as a consultant, and they know that this other person is a really good match, this business owner would work really well with you because they need what you provide.

So that's what I believe is one of the first and one of the most important parts of why we should be aiming for referrals. Now, the next part is because they've been referred by someone that they know, there is typically a trust in that relationship. So they trust that this referral is going to be of high quality and they're making the recommendation because it's going to work out for both parties.

It's going to end up in a positive situation. And really like we've talked about, that just means that it's more likely to convert and give a better end result. So what it accumulates in is that this method of acquiring leads has a low monetary cost to you as a consultant, it's really cheap.

It's almost, normally it's a free way to gain extra business and it's a free way of marketing, but the value on it is really, really, really high when you compare it to all of the other ways you, all of the other ways to generate high-quality leads or generate leads at all, this has to be at the bottom of the scale in terms of price.

And it has to be at the top of the scale in terms of the value, in terms of the likelihood to convert into being a business consulting client, would you agree, David? 

David: Yes, I do. And I was just thinking while you were talking that trust is partially transferable and that's how you do it with a high-quality lead because a lot of the work is done. Like in a normal circumstances, you'd have several meetings with the prospect up to the point of signing them up. And those meetings could take up to five or six hours over a couple of weeks and that's for you. 

You need to establish the trust before you can sign them up or before they will sign up, and a referral actually, as I said, it's partially transferring trust because somebody else trusts you. And they refer you and that's done part of the job, but you're still going to go through multiple meetings, but it makes those meetings easier and faster. 

Julius: Now I know David, you're an absolute master at getting referrals. So I want to dive into the way we get referrals, what you're saying, and ultimately where we're looking to get these referrals from. So we're going to start with how we get referrals, where would you start to look, and how would you get them, David?

David: Look at your own clients first. 

Julius: And some of these referrals then are going to start to come organically just because you've been able to help your clients, you've been able to do a good job in their business, but in most cases, you're going to need to ask them.

And you're going to need to ask them to give you these referrals. What would you say, David? What do you say when you want to get a referral from someone that you're already working with and, or you already know, and you want to get, leverage your relationship with them, leverage the trust that you already have, leverage the good job you've done. What would you say to be able to ask for a referral? 

David: I would wait for the right moment. And I would say to the client, I would say, Jim, now that you know what I do, can you think of any of your customers or your suppliers or any of your colleagues who own businesses, who would be able to make really good use of the services that I provide? And I find that works every time Julius. 

Julius: And how do you know, what are you looking for when you said the right time to ask that question?

David: Well, obviously you wouldn't do it during a consulting session when you're doing business planning or anything like that. You'd wait to the end and you'll probably do it in the one-to-one meeting. So during the month you should have at least one meeting with the owner of the business, for a kind of a review as to how everything's progressing and you talk about personal things and they would, you kind of do it in that meeting because you could lead into it.

Saying that I'm trying to build my business, or I want to build my business, and I was just wondering, and then you go into that question of asking them whether they know anybody. And if your relationship is very strong, and if your client is a little bit outgoing, you could even get them to ring the prospect or their colleague, and actually, make a time for you to come over and see them. Good consultants will do that probably about 75% of the time be able to get the appointment made for them. And like I said before, that's money in the bank, for you as a consultant. 

Julius: And how do you do that and how do you get the appointment made for you? 

David: You asked them if they could make a phone call and ring up the prospect, or their colleague, and make a time for me to come over and as the consultant, come over and visit them and have a chat and tell them what I do and find out a bit about their business. And like I said, if you do it right, 75% will do that for you. 

Julius: Remarkable. So where I want to go now is I want to talk about the different places we can get referrals from, and we've already talked about clients who know the services you offer and they're very familiar with it. That is one of the best places.

David: Yeah. 

Julius: But we also know from history that a referral doesn't have to come from someone who was a direct client, there's lots of other places and lots of other people in your life, both personal and professional who are going to know what you do, and you might want to leverage those relationships or even create relationships specifically for the referral. So David, can you start to go through this list with me and just dissect this? 

David: Sure. 

Julius: The first place that I would be looking at would be your immediate network, so your friends and family, how would you do that? 

David: Well, when you become a business consultant, it's always a good thing to get together and have a kind of a party or a gathering and put on a few drinks and some nibbles and things like that, and tell them what you're doing and give them a kind of a five-minute elevator pitch as to what you're doing and ask them to help and ask them whether they know anybody who could use the sort of services that you provide. And it's as simple as that. 

And then you just get a big pad of paper out and you write them all down and you'll probably get 10 or something like that. And you could go on and say, depending on how well that they know them, you could go on and say, could you give them a call for me and make a time? And like I said, 75% of people will do that for you if you asked them.

Julius: So that becomes a launch party, David, where you're leveraging your friends and your family, your social network to help get you started. Now on a similar vein, when I started business consulting, what I did was I actually made about a minute and a half or two-minute long video of myself to tell everyone on my social media channels, both Facebook, so on a very personal level and then on my LinkedIn profile as well, so on a more of a professional level, and this video basically was a little bit funny and fun. So had some interaction and it got some engagement with people, but it just got down and it told them exactly what I did. Hey guys, hey friends, guess what? I'm now a business consultant. This is what I do, I'm out there to help small, to medium businesses improve their profit, growth, and business value.

I'd love to have a chat with you or anyone you know, that's in business and wants to have a look and basically discuss my services. Let's link-up. So I made a video and that went down really, really well. There were people in my network, my friends and family that were sharing it all over the place. And I got quite a few referrals from that two-minute-long video. So that was a very powerful way for me to start. 

David: Well, that's the ultimate leverage, isn't it? The ultimate leverage. 

Julius: Yeah, it is. Well if you can connect yourself to all of the people that you're connected with, and they become your salespeople, they become your referral specialists. Then you're gonna make yourself really big, really, really quickly. You can get around far more people if you're supported by all of those around you. Now, the next place, we would look for referrals, David would-be colleagues. So this might be at your place of previous employment, a business you previously ran, what are you going to do there? And how are you going to do it, David? 

David: Very similar, you're going to approach them individually, obviously. And you're going to tell them what you're doing, they probably know because you've left that business and you've told them you're going to become a business consultant.

But you'll have a bit of an idea who they know. So by doing the same thing, explaining what you do giving them a little bit of an extended elevator pitch, as you just did before for a couple of minutes, or sending them a video and then asking them directly, who do they know who needs assistance with their business? And that tend to work very well as well. 

Julius: I worked in a company previously, where I was interacting with quite a few other businesses. And when I became a business consultant in those early days, I knew that there were immediately some other business owners, both with similar types of businesses and that were suppliers to that business that were going to need a bit of help to get them to the next level, or maybe they were struggling.

And they were amongst the first, they with my associates, I suppose, they were amongst the first people that I reached out to, to try and build up my lead list. Now, the next place we could look for referrals, David, would be networking and groups. Do you want to run us through that? 

David: License to print money, networking groups, the one that I belong to in Australia, it's called the Executive Alliance. And as you walked in the door, they had all these, almost like bulletin boards up, all the different colors, where those little plastic holders that hold business cards. And there was the orange group and the yellow group and the blue and so on.

And the first thing that I did on the first day that I was there, is I went and collected one of every business card and put a rubber band around it. I had 150 prospects there on the first day. And then I gave speeches or keynote speeches to the people in the group about every three months.

And quite often, when I came down the stairs, there'd be two or three people waiting for me. And also too, at those networking groups, I also, when I was giving the keynote speech, I would ask them for referrals. Do you know anybody that would use the services that I provide? And I would get another three or four people.

So, as I said, it was a license to print money. I don't want to be too callous, but it was like shooting fish in a barrel. But what I mean is there was this concentrated group of people, 150 of them, as opposed to one-on-one and I was able to quite easily harness them to give me referrals to go and talk to other business owners, Julius.

Julius: Well, that's very interesting, David, because I've heard you talk about using networking groups to acquire clients before, but I haven't actually heard you talking about asking them for referrals, because again, that's like leveraging yourself. If you're not only looking at 150 businesses in front of you, but you're looking at all of the businesses that they're connected to.

Well, that's a pretty big number off each one of those businesses and business owners is connected to 10, 12, 20 different businesses, you know, very quickly that becomes a single room where you have the potential to get in touch with thousands of businesses if you play your cards right. 

David: They had another thing in those big groups that they call speed dating, which I never, never liked to really, and they'd say, right everybody stands up, get your business cards ready, go and talk to as many people as you can in 15 minutes and give them your elevator pitch and give them your business card. And that is, you know, I never liked it, but it worked like wildfire. Hi, my name's David Thexton, I'm a Business Success Partner and I help to improve the profit, growth, and value of businesses.

And tell me what, and then they tell you what they do and give you a business card. So you wind up with a whole lot of people that you've already partially spoken to. And, they're kind of a referral, in a different sort of way, but, you end up going away with about 15 people, you've already made contact to them.

And one more thing I want to add about these business groups is that when you ring them up and you say, hi, it's David here from the Executive Alliance, we met the other day. You go straight through to the owner and you get that appointment straight away. Because it's like a badge of honor that you belong to the same group that they do.

So that's very valuable too. It's not so much as a referral, but you're using, and you're leveraging the relationship of you being a member of the same group that they are to get an appointment with them. 

Julius: Well, that's what referral really is, David, it's leveraging your network and using social influence, to, you know, get a lead or to get a sale. So it's very important and whilst it was a little bit different, it also has some similar elements. 

David: Yes. 

Julius: Now, the final part of referrals or the final place we would look for referrals is to specifically set up relationships and specifically set up groups for referrals. So, David, you've done this before and seen it done many times, what would you do to set up a group that is going to hand you referrals? 

David: Well, we encourage people to build groups of professional services and we call them the professional services group. And what that means is you get a lawyer, an accountant, you get a business broker, you get a signwriter, you get a website guru, you get all these people up to maybe roundabout 15 and you organize your own monthly meeting with them specifically for giving each other referrals. And you have a kind of a set of rules in this mini organization that every month when you meet, if possible, everybody in the group should try and give everybody in the group, a referral. 

And that is very powerful, like you may have a client that needs an accountant and a lawyer, so there's two referrals from you. You may have a client that needs a signwriter or a printer or a designer who can design things for them. And so there's where your referrals come from. And remember, you've got clients, so you use the group, the professional services group to hand out your referrals are the people that you work with already, and they do the same, the accountant may have 50 business clients and he may know that 10 of them are not doing very well and they need help. And there's his referral to you. He might have a client that is wanting to start a new brand, and there's a referral to the designer and so on. So you control your own group, it takes a little bit of work to set it up, but ultimately in the medium term, it's really powerful, Julius.

Julius: And the final place that we can do that same sort of strategy is to set up one on one referral relationships with some of those parties you just mentioned. So you might look to have a one-on-one relationship with your local accountants or perhaps bookkeepers or set up a one-on-one relationship with a banker or a business broker. Can you tell us what you've seen happen in the past, David, in terms of partnering with these sorts of people? 

David: My mind immediately goes to a person that we had here in New Zealand who had one of those relationships, and he got 20 referrals in 12 months, which ended up being about 16, 16 to 17 clients, and that was an accountant.

Yeah, accountants do that, bank managers know when their client is having trouble. Some lawyers do and so on, so on. So you can set up these individual referrals. They're probably really an affiliate, it's probably a better name for them, but the outcome of providing a referral is the same. 

Julius: And do these affiliates, do they get some sort of kickback or do they get looked after for providing these referrals?

David: I don't recommend that, but let's just say I was an accountant. If he was a good accountant or she was a good accountant, then you would be able to give them clients from your clients. Like I basically, in Australia when I was full-on consulting, I probably sacked over half of my client's accountants because they weren't providing the service that was required for me and my client to do a good job. So I started funneling them all into, I used to live on the Gold Coast, to a local Gold Coast accountant. 

Julius: And then what about business brokers? I know you've had some experience working with a business broker before. 

David: They're very good too. You need to go to them, you need to set up a deal. Business brokers tell me that they only take on around about approximately two out of five people that approached them to sell their business.

They don't take them on because the business isn't sale-ready, it hasn't been groomed. So, I did a deal, with the business broker that he gave them to me, for 12 months, the ones that he rejected, the three out of five, and I like groomed them. Grew the business to become saleable, and then I gave it back to the business broker, and that proved to be very effective as well.

Julius: So that's got a very strong incentive for the business broker because it means that they're going to get a business they can sell, and it's going to be saleable for a higher value as well. So it's really a win for them, it's a win for the business owner who's going to get more for their business and be able to sell it if that's what they desire to do, and it's going to be a win for the business consultant because they get to consult and help people in business. 

David: Yeah, it's only for a year, but it could go on further than that. Like you could find that the new owner of the business is prepared to keep you on and you've got yourself a long-term client, as opposed to it just stopping. It might stop after 12 months. Then when the business is sold, you start up again with the new owner. And that's that again, as a win-win for everybody. 

Julius: Well, it sounds like, and we know this, that referrals are an incredible way, a very powerful way to get handed leads that once the ball is rolling, they'll literally come from all directions.

Now they're of a high quality, and they've got that social proof behind them. We talked about that seal of approval from someone the lead has already got a relationship with. So they've already got that trust there, and like you said, David, that trust is transferred onto you. So you're already starting off on the right foot. In my opinion, it's simply the best way to get clients once you're established as a consultant. 

David: Yeah, I agree, a hundred percent. 

Julius: Well, thank you for your time today, David. For all of the show notes on this episode, you can visit consultx.com/episodes/68.

And please leave a review on your favorite listening platform, this really helps us to reach more people. And finally, don't forget, you can reach out to request a topic for a show or have your business consulting questions answered. You've been listening to Everything Business Consulting with David Thexton and Julius Bloem. 

MC: Everything Business Consulting is brought to you by ConsultX, a complete training, software, and community for business consultants, coaches, and advisors. ConsultX guides you through the entire process to success.

To find out more, visit consultx.com.