Referral Programs - Do They Work?
For a while now we have been hearing from local business owners in the Hills that referral networking programs were somewhat missing the mark. You know the kind. You're told that you will be the only representative from your industry permitted in the group so if you show up every week, referrals are guaranteed.
You start with a lot of promise, but soon find the program is not only rigid in structure, but that along with the expectation of receiving referrals, comes an expectation that you are also to provide them to the others in the group. At first, you are able to come up with one or two referrals but soon begin feeling the pressure when you're asked to publicly declare the referrals you have brought along at each meeting. Soon enough you begin to wonder who else you possibly know that you could be referring to the others in the group, and, ultimately, once the obligatory 12 month membership period has lapsed, you thank your stars that you are out of there.
The problem seems to be that most referral programs focus on the quantity of referrals that can be generated by the group, as opposed to the quality of leads being generated. The aim should be to generate pre-qualified leads for others in your group that can more often than not, be easily converted into closed business. If you belong to a referral program, ask yourself not how many leads are being created through your association with the group, but how much closed business is being generated. We should be aiming to generate business, not just referrals.
I have found that there are 5 elements to a successful referral program:
- A culture of building relationships, not just selling - most people will have fears about referring business to someone they don't know. It takes time to get to know someone, especially in a large group setting so time is required to build the trust needed to refer. And by the way, until we have taken the time to get to know each other, how can we possibly understand what a qualified lead looks like?
- A focus on team rather than self - when it's every man for himself, the only one in the room thinking about you is you. Alternatively, when we take the approach of helping others in the team, then by default, we all win out in the numbers game. Eg., if there are 20 people in your team and everyone else is thinking of everyone else, then there are now potentially 19 people thinking about your needs, rather than just you.
- A focus on non-sales discussions - having a discussion in a group setting about something other than "who can you refer to me?" creates a relaxed, educational environment, where relationships can be built and knowledge can be shared. It is through these discussions that a deep understanding of each team member's personal and business character can be assessed and ancillary benefits such as great business advice and friendship can be attached to the value of the program
- Great leadership - leaders need to be skilled facilitators, allowing each team member an equal share of airtime. This elite position can provide an opportunity for leadership growth and for leaders to raise their profile. They need to be allowed to shine, injecting their own style into their team, and not be suffocated by a rigid meeting and program structures.
- Freedom of choice - all team members need to have a healthy respect for, and understanding of, each of their team members, but there should be freedom of choice in any members' decision to refer. Not every team member will be a referral match of all other team members, regardless of the industry they operate in.
If you belong to any kind of referral program, perhaps it's time to assess whether these 5 key elements exist in your program.
Nicole Baines, Sydney Hills Business Chamber Development OfficerGWP Magazine Issue #27, Nov-Dec 2009
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