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Word-of-mouth is the most effective form of advertising--but it's not
the safest. Some people approach referral marketing with an attitude that
all they have to do is get to know people and referral business will simply bubble up
like spring water. What they don't realize is that once trust evaporates,
so does the water.
In word-of-mouth (or referral) marketing, your integrity and your
reputation are on the line all the time. You can't hide behind an ad. In
the referral process, you're continually transparent; you've got to do
what you say you're going to do. You've got to be professional. Any flaw
in your integrity becomes instantly visible to everyone you're dealing
with.
When you give a referral, you give away a little bit of your
reputation. While giving a good referral will enhance your relationship, a
bad referral will hurt it. If the person you referred does a poor job or
is dishonest, your reputation is what takes the biggest hit. Your
relationship with the prospect will probably suffer, at least temporarily,
and you may even lose that person as a customer.
For example, even top-flight master networkers can inadvertently pass a
bad referral once in a while. I started a new company with two
partners--Mike A and Mike B. Knowing that we'd be doing a lot of business
printing, Mike A referred one of his clients, who owned a
business-printing company, to Mike B. A deal was made, but before long it
became apparent that the vendor was charging for services that hadn't been
included in the quote. Mike B called Mike A and complained. Mike A called
the business printer and complained. The vendor called Mike B and
apologized for neglecting to reveal hidden charges in the contract. Mike B
told him, "I'll accept your apology, but I think the bigger apology needs
to go to my partner, because he's the one who referred you. You've done
him a lot more damage than you've done me."
Since that time, we've done no business with that business printer and
would never consider referring him to anyone we know. It was later learned
that the vendor had cheated other people Mike A had referred him to and
that, like termites, the damage to Mike A's reputation stayed hidden until
it came to light in his own business referral. In the end, Mike A greatly
mitigated the damage by contacting and apologizing to each of the people
whose business had been harmed by the unscrupulous vendor he'd referred
them to. In this way, he was able to minimize the damage to his own networking relationships.
As you can see, the biggest risk in this referral was to the referral
giver's reputation and business relationships. Many
people hired this printer without a bid process because of Mike A's
reputation and clout. That's why referral marketing is dangerous, and why
the referral giver owes it to himself and others to know as much as
possible about the vendors he's referring to others. Take the time to get
to know the people you're referring. Make sure they have integrity; if
they don't, your reputation is at risk. Here's another important point:
Never give good referrals to people who don't want them or can't handle
them with integrity and professionalism.
Similarly, if the person being referred assumes he's got carte blanche
because he's a referral--a friend of a friend--he can do himself permanent
damage by performing poorly or dishonestly. When your business depends on
word-of-mouth, you can't hide behind a mass advertising campaign and bank on plenty of new customers
replacing used-up, disgruntled ones. Word-of-mouth is always working--if
not for you, then against you.
The same thing goes for the prospect. If you're expecting to get a
break--say a special price or a freebie--or if you try to take advantage
of a situation in which a friend referred you to a vendor she knows,
there's a strong chance you're damaging the vendor's relationship with
your friend by making her look bad. Rather than refer other vendors to you
and risk damaging those relationships, chances are the referral giver is
going to avoid you in the future.
As you can see, everybody in this three-way referral relationship is in
a fishbowl. Everything you're doing or communicating, everything you're
displaying, is part of your word-of-mouth message. Dishonesty,
incompetence and carelessness quickly become apparent to all. In
traditional advertising, a graphic designer can create your image--your
brand. In word-of-mouth marketing, your image is not only what's been
created for you, it's also the way you come to the table--even the way you
behave in roles outside of business. For example, if your child's Little
League coach is timely, well-behaved, professional and a good leader,
you'll be favorably disposed toward giving him your business when you
learn he's also a respected attorney. His professional demeanor outside of
business is likely to win him clients. Taking a similar approach in life
is likely to win you business, too.
Even for someone who's honest, skilled and dedicated, word-of-mouth
marketing may not be the best choice. If your business can ring up plenty
of sales based on your customer service reputation alone, if you're
uncomfortable spending the face time needed to
maintain good networking relationships and if you don't want to do
marketing yourself--traditional advertising probably should be your choice
of marketing strategy.
Remember, word-of-mouth is always working; it's just not always working
for you--especially if you're a jerk.
Called "The Father of Modern Networking"by CNN, Ivan
Misner, Ph.D., is a New York Times bestselling author. He is the founder
and chairman of BNI,
the world's largest business networking organization. His latest #1
bestseller,The 29% Solution, can be viewed at
www.29PercentSolution.com. Dr. Misner is also the Senior
Partner for the
Referral Institute, an
international referral training company. He can be reached at
misner@bni.com
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