For many solopreneurs, a winning referral engine is keeping them in business in today's difficult economy. But many soloprenuers don't know how to get referrals - or they use referrals on a hit-or-miss basis and haven't built it into a system. If you're a solopreneur, it's time to get real about using a referral system to build your business. Referrals allow you to focus on the special services you provide while increasing your business by growing your client base. In essence, referrals are one type of highly-specific and targeted marketing activity whereby other people are helping you sell your services.
Howard L. Shenson, known as the consultant's consultant, said that the solopreneur should be able to derive 80 percent or more of her new business from referrals, follow-up, or add-on business from existing clients. Once you are able to do this, you have a fairly self-sustaining business. And that's definitely a goal worth shooting for!
Soloprenuers who rely on referrals find they have larger initial projects and a shorter sales cycle. So building your marketing strategy around getting referrals saves you time and costs very litte. But how do you start to build a winning referral engine?
By answering the following questions, you can create a personalized referral plan for your business.
- How many new clients do you want to add to your business? You must have a goal to shoot for - else how will you know if your referral engine is working?
- How soon do you want to add those new clients to your business? Give it a timeframe to move it out of the realm of wishful thinking and into the world of concrete actions.
- How much are you willing to spend to buy each new client? Marketing at its most basic level is the wise investment of time and money in return for getting new clients. You need to know exactly how much money you are willing to spend to get each client. Those monies are then distributed across all your marketing activities, including those for building your referral engine.
- How do you prefer to allocate that money in the form of a referral fees, a referral commissions, or a client rewards? (A referral fee is a flat rate that you pay to your referral partner for each new client you get by way of that partner referring out your services. A referral commission is also a payment to your referral partner, but it's based on the total amount of sales you get from the new client you received via the referral partner.)
- Identify the guidelines you wish to establish for your referral partnerships. How and under what conditions do you want your services to be referred out? How do you want to be notified that you were referred out? How and when will you pay your referral partners? How will you reward your clients for referrals?
- List at least 10 competitors with whom you might be able to create a referral partnership. People who are in the same profession as you, normally thought of as your competitors, are great sources for referrals. We all get inquiries from new prospects and clients about specialized needs they have for our skills. And none of us cover all the bases for our profession. It's good to have someone to refer your prospects and clients to at these times. And it's great when your competitors reciprocate by giving you referrals.
- List at least 10 professionals services (other than your own) that your clients buy on a regular basis. Identify at least 3 professional providers for each service you identify. In this step you're looking to identify complementary, but non-competing, service providers who also sell services or products to your target market.
- Contact the people identified in steps 6 and 7 to begin the discussion about setting up mutual referral relationships. Of course, not everyone will be interested, which is why you'll be talking with so many. Start with a casual agreement with the thought of moving it toward a more formal agreement over time.
- Decide what strategies you want to use to get your current clients to give you referrals. Then establish a regular schedule for activating those strategies.
- Implement your referral agreements and strategies.
Of course "the devil is in the details" in building a winning, self-sustaining referral system. So start slow, with low-risk, low-cost strategies and agreements. Make corrections to your agreements, strategies, and methods as you move forward -- making sure that you are always getting the type of high-quality clients you are looking for from your referral engine.
Go forth and build your business on a solid foundation of a winning referral engine!
