Tuesday, October 16, 2007

Beware: Proceed Only if Your Customer Loves You

When I applied to grad school, I needed three references. These reference letters were to be sealed and signed on the back flap to indicate that they hadn’t been opened (or revised and re-sealed, presumably by me).

That led me to think about references in the context of marketing and sales in a business environment. It’s common to include a reference list in an RFQ or when specifically requested by a potential client. But in what other ways could a reference person be leveraged?

Frederick Reichheld's well-known research indicates that the number one way to grow a business is via referrals. In the client satisfaction or customer experience world, the referring people are known as promoters (in opposition to detractors). These are the folks who would recommend you, your business, your work, to someone else. What if we could more proactively encourage our strongest relationships to spread the word? And with businesses relationships getting more personal and co-dependent, this tactic might not be so unthinkable.

Consider this scenario: An architecture firm, let’s call them AF Design, has a meeting coming up with a potential client (PC Firm) for a very large, significant, exciting, (enter your grand adjective here), project. PC Firm is interviewing several other companies to see who is the best fit to work with. The president of AF Design calls up John, the senior leader of one of AF's current clients. John and his well known an successful company, love AF Design and have worked with them for years. AF’s president asks John if he wouldn’t mind calling up the PC Firm and putting in a good word before AF’s meeting with them. John calls PC Firm, says a few kind words about AF, and leaves his number in case PC Firms wants to talk more after their meeting with AF.

Sure, I know this is not as simple as it sounds. I think there are some obvious things to consider:

Client relationship is special
First and foremost, the relationship of the business (AF) and the client they would like to make a referral (John)must be very close. In this example, AF must be doing outstanding work for this client, meeting all their needs and then some. Their relationship must be strong, deep and have many points of contact. It goes without saying, also, that John, in this instance, must be both personable and knowledgeable about the relationship between his firm and AF Design.

Timing is everything
Asking a current client to do this type of referral is very unusual. This is not a request one would make of a client on any type of regular basis. Also, being successful at this request would be made easier if AF had just completed a project in some exceptional way - for instance, 6 weeks ahead of schedule - or had done something out of scope without charging for it.

Furthermore, not every potential client is worthy getting this type of referral. It should be done on special occasions, when the potential project is critical to business objectives.*However, having never done this before, I would highly recommend doing this for a smaller potential account and test the waters to see how receptive a potential company is to this type of marketing.*

Give Guidance
When I asked the president of my company to write a reference letter for me, he said "no problem, but what do you want me to say?" Sometimes, people need a little direction. If your client is willing to do this type of referral, you might want to pass along a couple of points you would like mentioned. Some examples for AF Design are ways they helped grow John’s business, streamlined operations, cut costs off a specific design, etc - points that would be pertinent to the potential client. But make sure the referrer doesn’t feel pressured or that they have a job to do. The “coaching” call should be casual and brief, as should theirfollowing phone call to the potential client.

Know your audience (if you can)
The potential client receiving the referral – an unsolicited, out-of-the-blue referral, at that – should be the senior executive who will be at the meeting who will be making the final decicion. Also, if possible, AF should contact people within their own network to get a feel for what this person is like, to better sense if they would receptive to this type of referral marketing. I’d like to say that any information is better than no information, but wrong information is definitely not better than no information. So this is kind of tricky.

Non competing industry
It is absolutley, 100% critical that the potential client and the referring client are not competing for the same business. Asking McDonald's to recommend your company to Burger King is ludicrous. But asking them to recommend you to Home Depot is more acceptable.

There are probably more guidelines to this type of referral marketing, but I took a stab at at least starting the conversation. I’d like to know if there is anyone doing this already, how they approached it, and what the response has been. Every company is different. This is where a marketer’s intuition and gut play a big part.