Examples of Referral Marketing
1.Business to Business Referral Marketing
David is an accountant and John is an attorney. Dave and John are familiar with and value the quality of each others work. At lunch one day, they decide to begin exchanging sales leads with each other. The next day David finds out one of his loyal clients may need estate work done. David refers that client to John and hopes that he will refer clients to his accounting firm as well. Both David, John, and the client feel good about doing business with each other.
2.Customer to Business Referral Marketing
Marketing 101 tells us that our existing clients are our most valuable asset in growing our small business. Lisa is a seasoned Realtor who’s developed a network of many satisfied clients; they know she does good work. To encourage word of mouth and to generate sales leads, Lisa offers an incentive to those who send her qualified sales leads. Carol’s cousin Dale is looking for a new home. Carol refers Dale to Lisa and Dale ends up purchasing a home through Lisa. Lisa pays Carol a commission for helping her generate sales leads. Lisa may opt to offer a non-monetary reward as well i.e. travel, charity, gift cards etc.
3. Referral Marketing with Three (Or More) Degrees of Separation
Successful referral marketers don’t wait around for opportunity to come knocking, they seek new referral opportunities everyday. Kevin is a financial planner and he receives a lot of new business from Ted, an accountant. The problem is that Kevin rarely meets people who need accounting services. Instead of waiting around for the referral relationship to break down, Kevin reaches out to his colleague Thomas, whose law firm has clients who often need accounting services. Ted receives an equitable amount of referrals because Kevin ensures Thomas’s clients consult Ted for their accounting needs. Kevin does meet people who need legal services and of course, in exchange for allowing him to be a liaison, Kevin refers those clients to Ted’s law firm. Kevin, Ted, and Thomas benefit from their referral relationships.
Every individual has a unique style of finding business referrals. Certain industries may be more suited to work within a particular strategy. A business network is as unique as the members it’s comprised of.
Tags: business network, business referrals, referral marketing
Thanks for breaking down the specific types of referral marketing. But hey, why choose just one? I think that mining all three sources of referrals is the best route.
Interestingly (or perhaps it was planned) you’ve written them in the order of how easy the are to develop.
Business owners WANT more referrals, so they understand the need of their business partners to receive referrals. In other words, if you spend any time around serious business networkers, you’ll learn how important it is to provide referrals to each other. Therefore, I think this is the easiest source of referrals to develop.
The second takes a little bit of work. Our customers might not be business owners or sales people who rely on referrals themselves, so they don’t think about it as much. You not only have to teach them what makes a good referral for you, but you have to start by teaching them how much you want and appreciate their referrals. And you’ll have to show them that you will treat their referrals with respect.
The final style, referrals with three or more degrees of separation, depends on multiple steps in the chain. You have to gain the trust of people who know people who know people who … Well, you see where it’s going. Still, this is definitely a good source of business.
Thanks for the excellent post.
Added to my favourites list and added to my blogroll.