Mastering the Art of Word-of-Mouth Sales How to Formalize a Referral Process to Generate New Business.By Jeremy Burkhardt Published: July 31, 2008 ⋅ Updated: April 15, 2019 This year I have asked thousands of custom integrators on four continents how they market their businesses. The response is almost always the same: The majority of our business comes from referrals. Word of mouth is the best testament that youre doing a good job. This being the case, most would assume that the majority of dealers are super aggressive, that they are great at referral generating, processing, and following-up on past customers by directly asking them to recommend their company. But they are not. I dont mean this as an accusation; its a fact that almost every dealer Ive meet readily admits they know this is true. But they are too busy to formalize their referral process. Sure, you are happy to talk to a potential client who was referred by a happy customer, but that is only a small part of a true referral program. Its like depending on the sign on your building to be the extent of your advertising and marketing effort. If you really want to grow bottomline business from referrals, then you need to be as serious and organized in this effort as you are about your sales, design, and installs. What types of decisions do you make based upon referrals? Think about it. Where you live, the car you drive, movies, books, restaurants, accountants, doctors, even the person who cuts your hair were probably all referrals. Its a natural inclination for people to ask someone, whose opinion they trust, for a recommendation on any number of topics. Why? Because we like to benefit from the experience of others. It makes us more confident and reduces stress over the decision. The Closer Your best business lead should be more than just the result of a happy coincidence. Waiting for your client to be hanging out at the country club on the precise day that his best friend is contemplating a new home theater is leaving way too much to chance. The first and possibly most powerful referral opportunity is as you are about to hand over the keys to the system after a powerful demonstration of the systems capabilities. Your company should have a system closer who discusses the final walk through with the client. For example: Dr. Martell, I am confident that your new home entertainment system is going to provide you with hours of enjoyment. As you know we are a small business (be humble) that depends on word-of-mouth to create new client opportunities. I am sure that you have friends, associates, and colleagues who could benefit from our services. Would you be willing to give me a few names of people to whom you would be comfortable recommending us? I am going to phone you in a month to find out what your friends and family think about this amazing system. Even better, have him invite a few people to the house to see and hear what you have done and let him introduce you there. Bring gifts, wine, cheese, crackers, and chocolates. This example may seem aggressive or awkward to some people. However, when you truly become a friend and confidant of your client, then they will want to recommend you. This is just the beginning. Referrals do not need to come solely from current customers. A referral can come from anyone who knows you or your business. Good PitchingCreate a canned pitch that explains what you do in a language anyone can understand. Focus on benefits, not technology. Most people dont care how it works; they only care about what it does for them. Make it a short paragraph. The goal is to tease people, not give them all the information they need to make a decision. Once you have written it, edited it, and tightened it up, have every employee memorize it. You may ask, Why do I need my people to be able to present my company and services? The answer is simple: they know people. Thats all you want. People who know people can multiply your sales efforts without costing you anything. It doesnt matter if its a junior tech because even that guy goes to the bank, the supermarket, and the movie theater. All it takes is for them to strike up a conversation with someone in line at any location and mention who they work for. When I was between 15 and 22 years old, I would turn around in line at every grocery store opportunity, show an AV magazine, and talk about in-wall speakers with the person standing next to me. I sold hundreds of thousands of dollars of gear by getting excited and asking, Have you ever seen these in-wall speakers? Music, home theater, and distributed audio are hot topics and are easy to talk about. It Pays to Refer Establish a reward system for anyone (staff or past client) who gives you a name that turns into a sale. It doesnt have to be a huge percentage, just enough to get their attention. Make it simple and easy for them to understand. Pay them in cash, gear, or with a company check. You will be blown away at the excitement that a few hundred dollars will create among the installers, the warehouse team, or the office staff. When you call a past client and say, I have a thousand-dollar check for you from the referral you gave us, they will almost always freak out. Now that the system is in place, its time to share it with people outside of your company. Remember that you just want people who know people. There is a dealer I know in Florida who, although being in a very depressed economy, doubled his business in 2007 and is on track to do so again this year. He attributes this success to just such a referral system, and his number-one referral generator is his mailman! Who do you know that could benefit from some additional income just for giving you names of potential customers? Your gardener, pool man, mechanic, or even the barista at your local Starbucks is a possibility. Anyone that you deal with on a regular basis who interfaces with people can generate business for you. Establish a defined, documented, and executable referral process and create a flyer or brochure that outlines the pitch and the incentive. Give it to anyone who shows the slightest interest. It makes no difference how many people take you up on your offer. It costs you nothing until the referrals turn into clients. Soon you will have more business than you can handle. Its the sort of problem that every company looks forward to having. Get your pitch down, follow up on referrals immediately, and watch your business grow beyond what you ever imagined. Jeremy Burkhardt is president of SpeakerCraft in Riverside, California. SubscribeFor more stories like this, and to keep up to date with all our market leading news, features and analysis, sign up to our newsletter here.