As a business owner wouldn't you just love to get all the new business you could handle through referrals from your current customers? Sure you would. Especially if those referrals not only needed your products or services but also were truly excited to be doing business with you.

Would that be great or what?

So do you have all the referrals you can handle? If you said “no,” you have lots of company. A lot of business owners I talk to tell me they would love to get more referrals but aren't sure how to ask for referrals. Or that the referrals they receive aren't qualified prospects.

Even if you do a superb job and have customers who are raving fans, you probably aren't getting as much referral business as you could. That's because it may be difficult for your customers to explain to others what it is that makes you so great. It's easy to recommend a restaurant because “they make the best margaritas in town;” but how do you recommend a mortgage broker or an accountant or a project management consultant?

Many of you, no doubt, know a lot already about word of mouth marketing. You've read books, attended workshops, and attend networking events. And perhaps you have enjoyed some success in building your referral base. But wouldn't it be great if you could accelerate the rate of referrals you receive? Wouldn't it be greater still if those referrals were highly qualified?

One approach I like a lot and am using with my own company is called the N.U.D.E. Model of Referral Marketing™. I like the approach because it's simple, makes intuitive sense, and doesn't require lots of time or money to implement.

I also like the N.U.D.E. Model™ because it’s based on evidence. In fact, the model was developed by a mathematician—not a marketer. Because it’s based on data (a lot of data), it’s highly predictive. The founder of this material, Scott Degraffenreid, has yet to have a client use this model and fail to achieve at least a 300% improvement in their referral customer base—most attain considerably greater. 

The N.U.D.E. Model of Referral Marketing is based on the fact that people like to give referrals because it makes them LOOK GOOD. When you recommend your favorite restaurant to someone you feel like you're giving them something special. When that person calls you and say, “Thanks so much for recommending that restaurant. We had a fantastic time!” You feel a little like a hero. And to your friend, you probably are a bit of a hero. Now think about how it feels when you can sincerely recommend a great realtor or an attorney or a doctor? And think of how you feel when you urgently need some service and you are referred to someone who is a "gem."  

However, there’s downside. If the referred business does a poor job…for example, when your friends visit the restaurant, their reservation get lost, the food is awful, and the waiter is rude…you, the person making the referral, lose credibility. This risk to our reputation and credibility is the reason why we won’t give a referral if we're afraid it will make us look bad.

Your customers must not only love doing business with you…they must also feel that you will do just as great a job for the referrals they send you. According to the model, there is a "recipe" that enables customers to give such heart-felt referrals. The recipe is simple, there are only four factors (“ingredients”) but when you have the right amount of each of the four ingredients, you create a condition in which this type of viral marketing can occur.

Once the four factors are in place, you create a "Looking Good" message. The Looking Good message is what your customers say to people as part of the referral conversation. For example, a beauty salon might use the Looking Good message, "We fix $10 haircuts." They could print the message on compact mirrors and ask their customers to give the mirrors to friends who complain about getting awful haircuts from cheapo salons.

The N.U.D.E. Model of Referral Marketing™ can be used by anyone desiring more referrals. Non-profit organizations, government agencies, and job seekers can all benefit by using the model.

The only caveat in using this approach is that your business needs to have enough unused capacity to handle the increase in business. Remember, businesses using this approach typically see a 300% increase in their referral base. So when your customers begin spreading the word, you’d better ready to delight the prospects being sent your way.

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This entry was posted on Thursday, June 29th, 2006 at 2:46 pm and is filed under Marketing Success Factors. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.