Referrals are often the lifeblood of fresh, new, spritely subcontract Manufacturing Startups. We’re compelled to pay attention to what’s new and shiny, there’s something to talk about after all. If the growth of social networks such as Twitter, Facebook and LinkedIn has taught us anything, it’s that us humans love talking, connecting and being part of a community. It’s actually a very primitive need. Back in the stone age, it kept us alive, today it has the power to keep our businesses alive.

OK maybe that was a little bit of a leap. Simply talking doesn’t keep your business alive. I’m talking about the human compulsion to trade hints, tips and tricks in return for social currency. Whether it’s recommending an article, or recommending a good supplier, we get a good feeling when we help people connect. We’re wired that way as humans.

Talking often results in recommendation or referral, whatever the subject matter may be. This is because we are highly social creatures seeking that great feeling of self-gratification when you gain some social currency. So if we are wired this way, why do we find it so difficult to ask a customer for a referral? After all, that’s what the customer primitively WANTS to do…

Why we struggle to ask for referrals

For many, it will be through fear of the answer. At the end of the day, in the world of manufacturing and engineering, customers are entrusting their business in yours. With each referral comes a perceived risk, the customer is advocating for you and they have no control of the outcome. So the fear of being “fobbed off” when asking for a referral is very real. But this is more about your capability and the quality of your work. If you haven’t got faith in this then you may have bigger problems.

“...With each referral comes a perceived risk, the customer is advocating for you and they have no control of the outcome...”

What happens after you ask for a referral

Are you giving them something to talk about?

So you get passed the hurdle of asking for a referral, but what next? This doesn’t mean that your customer has turned into an additional salesperson! If you’re relying on word of mouth, you need to give people something worth talking about that naturally brings you into conversation. What’s special, or conversation worthy about you?

John Jantsch tells a story about a guy called Scott Ginsberg in his book “The Referral Engine”, in which he describes Scott’s approach. Ginsberg actually stumbled into his conversation starter. After leaving a sticky nametag on his jacket he found himself getting attention and people starting conversations with him. The tag must have made him look approachable. Ginsberg then committed to wearing a nametag everyday from that point forward. It became "his thing".

Consistency builds your brand

The power here though is not in those conversations started between Ginsberg and his direct audience. Ginsberg committed to this strategy and wore a nametag continuously on all pieces of clothing indefinitely, even getting a tattoo of a nametag on his chest!

This commitment and consistency built Ginsberg a brand of approach-ability and uniqueness. It wasn’t long before people were having conversations about “this guy who wears a nametag everywhere”. Now do you see the REAL power? He was worth talking about because he did something consistently and authentically. He is a genuinely approachable guy too!

Copying what works for others is NOT the answer

Now, as all quick fix marketers do, there’s a tendency to jump on the bandwagon. The results are compelling, Ginsberg was highly successful in achieving publicity, and most importantly referrals - because people were ALREADY talking about him. However, this doesn’t mean that everyone should rush off to Staples and buy a bulk batch of nametags. And the solution doesn’t need to be even half as qwerky.

The important thing to remember is that it’s about standing out in YOUR industry. That may be easier than you think. It’s often the simple little things that get a conversation started amongst your customers and your potential customers. Doing what everyone else is doing is NOT the answer. For that reason, I’m not going to suggest a list of things you could do to stand out, that in itself would be a self-defeating action!

“...The important thing to remember is that it’s about standing out in YOUR industry...”

It’s your job as a business owner, manager or salesperson to define your brand and deploy that brand in everything you do. Remember, your brand is how your customers perceive you, it’s not about logos or corporate headers. It’s about perception. What do you want your customers to say stands out about you?

Are you asking for the referral systematically in the first place?

When I say “systematically” do NOT read “tick box”. If you can’t define what you do as a process, you don’t understand what it is you’re actually doing. Even the most creative and loose processes still have an underlying process that defines HOW.

“...If you can’t define what you do as a process, you don’t understand what it is you’re actually doing...”

Asking for a referral is not necessarily a one time affair either. A meaningful referral system continuously (maybe even subliminally) asks for your customers advocacy in the form of a referral. This sounds like a lot of work if you’re planning on putting in the hard labour, but luckily for you, it’s the 21st century. Email marketing, direct mail, social media, your business blog; they are all sources of referral messaging. Badgering customers is not the desired outcome here, delivering value to them (that’s the social currency I mentioned), reinforcing your brand and giving them something to talk about IS the desired outcome.

Customer follow up should be a natural part of your business. If your ISO 9001 approved, your business should have a system. However, the process that ticks the box for the auditors simply won’t cut it for a meaningful referral system to work.

If you’re looking for a place to start your referral system I would seriously advise you check out our series on Email Marketing for Manufacturers. Email marketing is highly accessible and can increase the effectiveness whilst reducing the labour involved in running a referral system. Automated email follow ups and weekly email campaigns could be sufficient for your business to transform your informal, hit and miss word of mouth marketing into an effective lead generating system.

Check out part 1 of the Email Marketing for Manufacturers Series right here

Check out part 2 of the Email Marketing for Manufacturers Series right here

You can’t control if and when a customer is going to refer you, however you can drastically improve your chances of being referred. If you consistently build your brand (build a strong perception in the customer's mind) and ask for the referral through continuously following up, you can make referrals a source of valuable new business leads.

“You can’t control if and when a customer is going to refer you, however you can drastically improve your chances of being referred”

Referrals only work when you have a system to capture and nurture the leads

It may seem quite obvious, but this is where the system stumbles. The reason? Because the connection between a referral system and your lead capture and nurturing system isn’t smooth. Referrals are leads. As such they need to be captured at the top of your sales funnel and nurtured through to becoming customers, they themselves becoming referring customers in the future. The system of gaining referrals, marketing to your new leads and building credibility with leads who have been referred are intrinsically linked in this way.

If you’re not sure what the heck I’m talking about when I say “Sales Funnel” it’s worth checking out an article I wrote recently on the matter. It’s specifically directed at Subcontract Manufacturers. In fact, even if you think you know about sales funnels, check it out, you may be surprised to learn some insights that have previously passed you by.

Check out our article on Sales Funnels for UK Manufacturers right here

Referrals are a special kind of lead, and they should be treated as such. Their needs may be slightly different to your average lead who has stumbled across your website or your listing in a directory or search engine. They could have already established a level of trust in your business, purely because they’ve been referred to you by someone they already trust. However, their knowledge of your capabilities may be all but minimal.

It all starts with a name...

It all starts with capturing the lead when it arises and recognising that this lead is a referral. Armed with this knowledge and contact information you can send this referral on the journey from new lead to becoming a customer. It’s vital that this information is captured and managed in your CRM and any email marketing system you may be using.

A journey that satisfies needs...

When it comes to nurturing the lead, you may choose to use different language in your marketing emails and messages that meet the specific needs to leads that have been referred. The power of this level of personalisation is that it means you speak more directly to your potential customer, making them feel more understood, developing a relationship.

Just think, you could start the nurturing off with a communication that acknowledges that they’ve been referred and gives them an overview of your capabilities. You could then prompt them to reply, get in touch or select from a list which capabilities they would be most interested in hearing more about. Do you know what you do then? You send them down a path that communicates primarily about the capabilities they are most interested in!

YOU don't have to do the legwork...

The best bit about the above is that it can be largely automated, or very easily managed on 21st century systems like Mailchimp or Capsule CRM. Using a user profile on Mailchimp, you can even get the leads to progressively fill out more of their profile by asking questions like “which capabilities are you most interested in”. The user fills out the form and the email system then sends them the emails that are further personalised based on their expressed needs. You don’t even get involved!

The point I’m raising here is not to give you a tutorial in Email Marketing, Lead Capture or lead nurturing. (you can check out our other articles for that juicy information) The point here is that your referral system can produce leads whom you have advanced intel on. You know they were referred, and you know their state of trust is likely to be slightly higher than your average lead. However, as they didn’t necessarily “seek you out” they may not know the full extent of your capabilities. If you do not use this “intel” you are missing out on an opportunity to close the loop on your referral system, turning referred leads into sales in an efficient and effective way.

The Key Takeaways

Give your customers something to talk about. Don’t be an also ran, have a brand and be consistent with it. What do you want to be known for that is truly unique and all about YOU?

Systematically ask for referrals. Have a mechanism that asks for referrals and constantly reminds your customers that you want them to refer you to their peers. Don’t badger, add value in the process, remember it’s all a balance of social currency.

Don’t forget to close the loop. Your systematic approach to getting referrals should connect with your systematic approach to capturing new business leads and turning them into customers. Don’t forget this vital connection!

If you want to find out more about setting up a referral system that will send your new business lead numbers into the stratosphere, I would highly recommend “The Referral Engine” by John Jantsch. It’s a really great read AND as per John’s usual style, it walks you through the steps in detail with examples. It’s another bit of sales & marketing knowledge to add to your armoury!

Check out The Referral Engine on Amazon.co.uk right here

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