Transcription for Chris’ Interview: Leveraging Customer Referrals to Grow Your Business
July 18, 2018
Interviewee: Okay, Hi. Should we start with the first question?
Interviewee: Why should customer referrals be an essential strategy for any business?
Chris: Right, em.. For almost all business, right? Trust is the most expensive commodity. So, the key advantage of having customers based on referral. Number one is that of course it comes with almost no cost, zero to low CPA right, cost per acquisition. It doesn’t cost you anything to get referrals. Others of course one of the key reasons financially. The second thing is that when a person is referred to a brand or to a service beforehand there’s already a higher level of trust that perceive quality. Right? So that is a good thing. And the third thing for the existing customers or the brand followers, who referred their friends or refer others to the brand. Actually we enforce the brand loyalty that will increase a chance of repeat business. And these are the 3 key advantages of having a strategy for customer referrals.
Interviewee: Yeah, ok, so why do you think many businesses fail in getting regular quality referrals?
Chris: Our bases are 4 things, right? first one is mindset, second thing is skillset, third things is the lack of mindset, second thing is the lack of skill set, the necessary skill set and that one is the lack of system in place. Last one is lack of the right tools. So, I’ll break them down one by one. Let’s talk about the mindset first. Now, if a business owner and his management team see their business as a transaction based business, alright, there is no reason for them to get referrals. Or if example let’s say if you have a business that is based on tourist alright, you may not have a very good location, you may not have to, chances are even if you don’t give a good service this person isn’t coming back. So it’s a one time business, so it’s a one time transaction. So business owner with such mindest will not bother to work on referrals, you see where I am coming from?
Interviewee: yeah yeah yes yes
Chris: yeah , yeah. yeah. So, the key is mindset, the key thing is to have a mindset of LTV (Lifetime Value of a client. So businesses with a mindset of lifetime value will focus on putting in place strategies and processes, the’rey focused on long term clients. So this is the first mindset that the develops the desire for referrals. Ok now, we will try to rephrase that sorry, businesses that focus on transactionsmar, short-term transactions, do not see referral as a priority. It’s always the mindset. So this mindset has to change, change to what? change to have the desire to do a business based on referrals, to do a business based on lifetime value of each client, that way every referral is worth a lot more. The desire.
Second thing, is the lack of the skill sets. A lot of people gabble into referrals, they have, the management team themselves do not have a successful experience with getting lots of referrals. So they do know how to train their people to be able to get referrals. To get referrals successfully, they need to do 3 things: either learn how to plant the seed for referrals, the second thing they need to learn to water their referral plant, and the 3rd things they have to learn to harvest their referral fruits. It uses analogy, and so there is this tree element to being able to get referrals successfully. Missing any one of them will cause businesses to fail with task of getting referrals.
The 3rd thing is having a lack of a system. A system allows consistency, system allows dependability. So, businesses who do not make referral into a process, into a day to day process. , management team who doesn’t have a monitoring system on how many referrals they get on a daily basis, on a weekly basis are likely will fail badly.
Chris: And finally tools. What I mean by tools. Example of, the use of a good CRM, alright, to engage the existing clientele, the user base. The lack of a good content. to engage them effectively. To give continual value to the existing database. All these can lead to, existing clients feeling neglected or ignored and as result, they stop giving you referrals.
So, using of the right technology, tools such as CRM marketing automation tools, having the right content. Is key to helping the existing database give referrals. Another thing is that, having the right tools such as an app, use of an app, alright, is ideally with the making it easy for people to refer. It is also important, cause the moment when a person has a positive experience that is the best moment to obtain referral from the person. For example, if I use example of a spa, so after a good massage when if there is an app, or their is a tool for the consumer to give a good rating concurrently that it will be the moment, when you can ask the person to actually refer their friends, to try this product so you have a come over campaign as well, to make it natural for this person to refer their friends. I will elaborate more later on that on question 4. Ok yep so the lack of the mindset, the lack of the skill set, lack of the system lack of the right tools, especially technological tools.
Interviewee: yeah so third question what is the psychology of asking for and getting referrals from the point the point of the person being asked as well as the one asking?
Chris: um ok um let’s start with the one who is being asked. now most most consumers do not mind sharing whenever they have a good experience so the key to referral is to make a consumer or customer give them a great experience. a good experience today is not good enough, good is not good enough. if I can use an example in the past, a passing mark would be 5 on 10, 50 upon 100 today the new passing mark is 80 upon 100, or 4.5 out of 5. you can see that happening in a space of hotel booking, airfare booking, or downloading of an app anything that has less than 4 out of 5 star, people tend to ignore overlook that app, they wouldn’t have bothered downloading it, so good today is not good enough. you have to give people a great experience. we are not in a product business, we are not in a service business, we are in an experience business, today. It’s all about creating positive experience because positive experience attract referrals. so thats the first psychology, the person must have a great experience and sharing is natural, sharing is caring right? so whenever a person have a good experience it’s only natural that that person wants to share, yep there’s the psychology they only have to be let naturally to refer easily with little resistance, i’ll elaborate that again in the later part of the question. Um let’s talk about the one so os in simplicity they do not mind sharing, referring of people to a service or product if they’ve got a great experience.
Chris: that’s the bottom line. so for the one asking, ok um it could be say a sales attendant in a shop, it could be the receptionist at the spa, or it could be a salesperson or an insurance person or a property agent for that matter. the person who’s asking first of all psychologically they would feel uncomfortable for most of them. Why? because they see asking for referrals as a form of, you know, being in position, vulnerable position of need. Um you know they feel like they might be they appear unsuccessful or they might be begging for help. the first mindset shift that the person have to have the one asking, is that stop seeing referrals as asking for help, rather see referral as an opportunity to reach out to more people to help them. I think that that’s very powerful the ability to switch the mindset of helping people rather than seeking help will; help the one who’s asking make referral a lot more natural. that would be the biggest mindset shift.
Chris:Second thing, second, I wanna add on to that as well, um for them to feel comfortable asking for referrals apart from being good at it, they have to see that whatever they do is of value to others. whatever they do is of value to others.
Interviewee: Ok. So number four what are the common practices in getting customer referrals in Singapore? and are they working?
Chris: um ok let us see, um if you were to look at many of the gym membership in singapore or spa, I’ve trained some of them, even those who sell vacuum cleaners or door to door. they do have a process, somewhat, in asking for referrals.however, the reason why many of them didn’t work so well um is that I call it the 4 whys. The 1st why is that, “why does the customer wanna help you?” you have to solve the first why. Why does, do the customers feel they need to help you? According to the book by Steven Covey, Dr. Steven Covey, um he mentioned about this concept of emotional bank, so whenever we do something positive, something good to a person, we actually bank into this person’s emotional bank. Alright so before we seek, before we ask, we need to first give. He thinks this is very important. So a job well done which i said earlier, giving a great experience, to the client, the customer is the first step, to answer why help you? Because people work on the principle of reciprocation, so when you do something good for me, it makes me want to do something good to you. right? Makes sense, right? So that’s the first why. Why help you?
The second one which is the more powerful one is “why help others?” so apart from giving the consumer a great experience if the salesperson or the person asking can lead the customer to see that by recommending their friends is not just about helping the enterprise or helping themselves but it is actually, they are helping their friends to benefit.
That would be the most powerful way to get referrals. ok um, many times I don’t see entreprise adopting this strategy or adopting this methodology. So, if you ask me what the common practices these are some of the common practices. They simply just ask but without using the right script that’s why they don’t get the right result as well. Ok, this is based on my observation.
Yep, um another thing is that um they do not have an attractive rewards that 3rd why is “why now?” right. Why now?
Chris: Why now, I can refer someone to use— from the mindset of the one giving referrals, right?
Well I can take my time, if I come across anyone I will let you know, so you have to give your reason to refer somebody else, now.
We need to have a desire and urgency, to do that we need to have some kind of reward, some kind of campaign, or even the concept of gamification which is a common word in the space of the ad or platforms.
Interviewee: So, how can a business increase the referrals in a systematic way?
Chris: Okay. So elaborate more on the 4 things right? Mindset, Skill set, System and Tools. Of course, first things first.
If a business wants to increase the referrals in a Systematic Way is to have a referral culture in place. Culture drives behaviour, so by having a referral culture in place, it develops the right positive mindset on referrals within an organization. That’s the first start.
So, right on your onset, when the person is recruited into the company, the person has to understand that referral is somewhat a way of life. The way of how some things are done, in the organization.
Along with that also to inculcate the, especially for the recruitment. For example, Successful organization often have a healthy referral based recruitment processos in place. So a company can only be as good as the people in it. A company— Some of the human capital specialist—if the HR department, they come to realize that employees that are referred to the company, cost less money and chances are, they fit into the culture a lot better. Right? So by having a culture of referral in the human capital does help inforce that culture.
To develop that, that’s another another set of—what do you call that, another whole chapter altogether. But in general, employees who have been—who have developed the attitude of gratitude, tend to be one who refer more people to other employees to this organization. Okay? So that’s the culture portion.
They need to eat, sleep, think referrals if they want referrals. That’s the first part.
The skillset, a business should be put in place a proven and tested referral system with your organization if they are good in developing one great if not, hire a referral expert consultant, it’s something I do actually. I go into businesses and I develop a system of referral within an organization which they can use it, I give them the license and I customize a script for them so it has been tested and proven. so every new staff, that come into an organization, will be trained exactly the same way, so they have to achieve consistency in terms of skill sets. alright? I wanna highlight one thing, Skills are developed—not taught. Which is why the next part is System.
System of developing skill set. Many organizations have a training system in place that do not have mastery system placed. And what I mean by that, that means that the lots of businesses are simply train once, and they expect the people to be able to do it.
It’s like you go to a cooking class of french cuisine, and you see the michelin star chef what do you call that thing? The cooking ones, and you expect the student to deliver the same result? Come on! No way, right?
So skills are developed, not taught. You need to be a monitoring system to make sure, the every staff actually mastered the skill set of acquiring referral successfully every time. Or at least majority of the time for the monitoring part.
Number 2, to have a monitoring system in ensuring that they get results on the daily basis, on a weekly basis. If you don’t get results weekly, you will get results weakly, w-e-a-k-l-y, they’re weak, so, that is the, that’s the monitoring part.
So you need to monitor two things, the mastery, then monitor the result on a regular basis, okay? Finally, in terms of tools, alright, that’s it. Is to use or adapt a CRM Singapore in place, ideally, depending on which businesses, we have an app that allow your customer to refer people easily, and ideally, putting campaigns and rewards. For everyone, the rewards, the referred someone, the person who refers get a reward, the person who got referred, also has a reward, then that way, it’s a win-win on both sides. Under those circumstances, the businesses will be able to get a lot more referrals and they can become systematic.
Chris: Yeah I talked too much?
Interviewee: No, no that’s okay.
Interviewee: So, what are the current trends in referral marketing now? And how is it different from the past?
Chris: In the past, many of the referral marketing strategy is done based on the human to human—you know, word of mouth. Alright? It is technically offline. Now with the explosion of the mobile users with an established internet usage, the referral have gone from all offline to actually online. One of the very powerful referral model is called affluent marketing? Have you heard of it?
So businesses who actually adapt affluent marketing are actually able to harness online to generate more traffic, to generate more leads to say a landing page, or to a website to download something, you know?
So, you have to put your traffic— your database. Yup, so you ask me what’s the key trend? Referrals have gone offline to online.
Interviewee: Yup, exactly.
Interviewee: Can you give examples of companies that have become successful because of outstanding customer referrals?
Chris: Let me see, I will give a few examples. Just for now, I just give two examples. How many examples can I give? Now I give one first.
Chris: Let me talk about this company called Hai Di Lau. Hai h-a-i, Ti d-i, lau L-a-u I think, is founded by a Singaporean Entrepreneur, who owns Breadtalk who owns Food Paradise as well as Bread Talk.
Interviewee: Yeah sounds familiar.
Chris: Familiar brand. Yeah. So this company is known for will use the word excellent, I will use the word absurd customer service—absurd customer experience. So when you give a client an absurd, unforgettable client experience, guess what? people talk about it. People simply talk about it, alright? So, this business has done so well they have expanded across different part of China. Become a leading brand in steam boat. Instead, they didn’t ask people for referral, the customers give referral naturally alright?
Examples in the Philippines. If—example if you have famous— example of you ask Filipinos where is the best lechon? Lechon they will tell you
Interviewee: It’s in Iligan City.
Chris: Okay, so most people will say Cebu right?
Chris: Why? People have gotten a better experience in the lechon in Cebu than any part of the rest of the Philippines. Right?
And that is referral, yeah, when I go to the Philippines. I ask what can I buy for my wife for my mom. An average filipino will always tell me “Chris, you have to buy the South Sea Pearl from China—from Philippines. Plus the Quality is really good, and it’s affordable” This is another form of referral, when I ask for “Where do I find for Sans Rival in Philippines?” They tell you, you have to try Conti’s is it? Brand Conti’s I think— Conti’s. Yeah it’s a traditional brand, So, successful companies with great experience as I said again, attract referrals naturally. These are first example.
The second example I wanted to give is an insurance company—insurance advisory group which I found it which I retired from. While peop—most consumer are very apprehensive dealing with insurance agent or financial adviser, I’m happy to say that because of strategies, the culture , the system is training in place. Those advisory group is able to generate 30 over thousand referrals every single year without fail is unbelievable.
An average of 50 referrals to a hundred referrals per month per consultant. At a given right perspective, an average of consultant in the industry would have less than 10 referrals a year. While this group has 50 to hundred referrals per adviser per month.
Interviewee: That is an outstanding number.
Chris: Yeah it’s unbelievable! It’s amazing. Why did— why so. Well again it’s because of the adoption of whatever its said above and still we find improvement. As a regional speaker and coach I’ve also— I’ve also developed all these system into other advisory group in banking finance sector and insurance sector and have seen similar results as well.
Interviewee: That’s is absolutely okay.
Chris: Maybe I give you one more, one more. If you look at another successful enterprise, will be dropbox.
I have read.
Chris: Yeah Dropbox and Google have very successful refercral systems by giving the user an additional space— you know, and that— that have also gotten a lot of referrals. And I will suggest to the reader of— your readers. To check out the fastest growing app— the fastest growing website around the world, with 1-300% growth year on year, you will realize these companies with very successful affluent marketing, successful marketing in place. The way to become the best is to study the best. Yup.
Are we good?
Interviewee: Yeah, actually that was the last question Chris.
Interviewee: Yes, thank you so much for having this interview.
Chris: And I’m looking forward to talk to you again.
Lovely! Have a great day!
Interviewee: Thank you so much Chris!
Chris: Thank you!