I came across an article (Amp Up Referral Business) on the “Lowe’s for Pros” site that is an appropriate follow-up to my previous post about referrals.

The money quote (emphasis is mine):

Judy Guido, president of Guido & Associates, a consulting firm that helps green-industry businesses, sees a significant boost in revenues when referral programs are implemented. “Only 2 percent in our industry have any formal way to build revenue through referrals,” Guido says. “Those that do [have a program] generate 16 to 22 percent of their revenues through referrals.”

The article lays out a very simple principle: Set up a system to ask for and track referrals .

Sounds like a pretty simple method to gain significant competitive advantage.

Word-of-mouth referrals are often the most effective way to build your business.

But what motivates people to refer their friends or colleagues to your business?

In my experience, I’ve seen a couple of powerful motivators:

• To help friends, family and colleagues
• To share an extraordinary experience

Helping Friends and Colleagues
Encouraging this response can be sparked just by asking in the right way.

Over on John Jantsch’s new marketing forum there’s a thread about referral marketing that includes a couple of good suggestions about effective ways to ask for referrals.

One participant felt that a generic question like “Can you think of anyone who needs our services” is an ineffective turnoff, while asking something like “Have any of your friends recently complained / expressed interest about x?” is a much better way to ask a specific, actionable question.

I’m going to spend some time trying on varieties of a “referral question”

Then, I’m going to try to use it everywhere I can.

• Obviously, conversations I have with customers, pre-sale, post-sale, and everywhere in-between.
• I’m going to try to send personal cards and include a couple of business cards, along with the referral question
• My email signature

Sharing an Extraordinary Experience
The second referral motivator is to share an extradorinary experience.

This is, of course, accomplished by giving your customers something extraordinary to talk about.

This could be something simple—wearing protective booties when entering a customer’s house, for instance—or it could be the way you’ve structured your entire service—deliverying DVD’s through the mail, for example..

Your goal is to surprise them by blowing away (mis)conceptions they may have about your industry.

Selfish Motivators?
Many referral programs try to tap into a selfish impulse—“We’ll give you a free toaster for every prospect you send to us!”

However, I think many people are a bit offended at this crass appeal to them, as if they’d sell their relationships for a lousy toaster.

Done right, though, the selfish element can be an important element. One of the most effective word-of-mouth campaigns of all time—MCI’s “Friends and Family”—combined all of three primary motivators:

• selfish motivator—save on long distance
• helping motivator—help your friends and family save on long distance
• extrarodinary service motivator—free long distance!

Alone, though, I think an offer tapping into the selfish motivator underestimates your customer—and they know it.

Conclusion
Watch what products and services you tell your friends and family about, and see if I’m at least close to honing in on motivators.

And one way or the other:

• Ask for referrals
• And give your clients something to talk about!