I spent the best part of a day last week at a seminar (I know what you’re thinking: surely he knows it all already, doesn’t he?) Run courtesy of one of my networking groups, NRG (shameless plug), the subject was, “How To Make Word Of Mouth Really Work For You.”
Since most of the small businesses I talk to claim that this is their primary method of gaining new business, I thought it would be worth an hour or three of my time interrogating the subject in a bit more depth.
Because although 80% of my contacts (that old Pareto Law again) glibly trot out the three magic words, as if by rote, I rarely get anything which passes for a methodology or an activity plan. It all apparently happens quite passively, almost by osmosis.
“The telephone just rings.” That’s not a made-up quote by the way. It has been said to me in all seriousness, more than once, as a full justification for the lack of a marketing plan, a new business plan, or indeed any sort of plan. And as long as that old phone continues magically to go on ringing, is the corollary, there will be no unnecessary worrying about where the next bit of business might come from.
I do sincerely hope that the utterers manage to exit their respective businesses profitably before that unhappy day dawns, as it assuredly will some day, because if they don’t, the leopards will find the habits of a lifetime – not to mention their spots – awfully hard to change.
Well, good luck with that, as modern parlance puts it.
Sorry about the headline: I do try to avoid business jargon wherever possible, but you have to admit, it does make for an arresting one, even if you haven’t a clue what it means.
The theory being propounded at my seminar (keep up), was that, while we all have CRM systems coming out of our ears and overflowing with contacts (you do, don’t you?) there is a decidedly limited number that we can meaningfully keep in touch with at any one time, perhaps as few as several dozen. Of those, even fewer will enable any in-depth contact, and when it comes to those magical beings who actively refer business to you, the numbers are in the low single figures.
Different sales organisations may use different terminology – traditionally suspects become prospects become clients become advocates – though of course it isn’t only clients who can deliver great referrals. Some of my best have come from my web-master (thanks, Denis) and someone I met just once at a networking lunch (NRG again).
At The Infinite Group, my business advice franchise, we call them raving fans, and if you can develop one or two, there’s no doubt about the massive effect it can have on your business.
The question is, when you’re networking with several hundreds of contacts through social media, as well as face-to-face events, how do you recognise the prospective raving fans from the masses who (hopefully) just think you’re a decent enough bloke?
According to the notes I made, a successful referral has an average initial value of £5,000, but an average lifetime value of £155,000, so it’s probably worth stretching your butt to try to figure out how to make this work for you.
I wish I had a magic bullet to help you here: if I did, I’d certainly have a better strike rate myself. Obviously there are the core communication skills: do they all actually understand what you do, who you want to talk to and why? And are you having meaningful one-to-ones with all the likely lads and lasses on your list – especially those with access to the right sorts of people?
But when it comes to recognising the four or five gold nuggets in the entire lode, I fear there may still be rather too much fools’ gold in evidence, before you hit eventual pay-dirt. It’s still a numbers game, and to mix metaphors, you do have to kiss a lot of frogs.
It’s worth reflecting, though, on the fact that the really important numbers are probably a lot smaller than you thought, with a disproportionate effect on the bottom line, if you get it right.
They say if you don’t ask, you don’t get, and this is surely true for referrals, barring the odd one that comes out of left field.
So how do you ask, without looking desperate, or sounding like Rick from The Young Ones (“Who likes me?”)?
If only you could bottle it…
David Croydon: 01844 238692 or e-mail dave@hilltopconsultancy.co.uk