Aaron Hoos’ weekly reading list: ‘Referrals, ineffective advertising, and encouragement’ edition

Aaron Hoos: Weekly reading list

Here are some things I read this week — applicable to all the audiences I write for (entrepreneurs, financial professionals, and real estate professionals)…

  • 5 proven ways to drive more word of mouth referrals. It’s well known that word of mouth referrals are among the best and most profitable type of “marketing” there is. But it also seems like you can’t control it. But in this excellent article, the writer describes some ways that you can empower others to spread the word about your business. A must-read for everyone!
  • Free exchange: Ad scientists. In this article at The Economist, the writer talks about online ads and how an increase in ad results and sales may not necessarily meant that the ads are working. (The sound you hear is your whole world shattering). I’m spending a lot of time thinking about data, econometrics, statistics, and analytics in advertising and this was a really good (but alarming) read.
  • The dipper and the bucket: A leadership principle. In this article at Realtor.org, Scott Lalli describes how we all have a bucket and we all have a dipper. The bucket (which seems to be shorthand for our psychological/emotional well-being) can be full, which leads to contentment, or can be empty, which leads to dissatisaction. But it’s the dipper that makes all the difference, he says. Lalli says that the dipper can be used to fill our own bucket or to take away from others. It’s a good way to think about how our interactions can impact the people we connect with.

34 ways to get more referrals: The ultimate referral guide for financial and real estate professionals

Running your financial or real estate practice takes time and effort and money — and a good portion of that investment is spent on putting potential clients into your sales funnel and trying to turn them into paying clients.

Getting referrals makes for more profit because you spend less time, effort, and money to find potential clients.

So, how do you generate referrals? I’ve collected the advice, best practices, and ideas I’ve used and seen, and combined it with a comprehensive list of ideas collected from the web for a go-to reference on referrals.

Just before I get into the list, I want to highlight something that you’ll need to think about: There are two kinds of referrals but we often use the same word (“referrals”) to describe both. Some referrals occur when a client GIVES YOU the name and contact information of someone they think you can help, and you contact that person. Some referrals occur when a client SENDS someone to you. In the list below, I’ve included tips for both types of referrals.

HOW TO GET MORE REFERRALS

  1. Just ask for referrals: This seems like the most basic advice but it’s easy for a financial or real estate professional to skip the question. Yet asking it is so easy, it takes 10 seconds, and it can dramatically boost your business.
  2. Not just clients or friends: When we think of referrals, it’s easy to think of your clients or your friends and family as key referrers. And they probably will be. But they won’t be the only ones. You can get referrals from people who don’t become clients.
  3. Explore your internal blocks of asking for referrals: What keeps you from asking for referrals? There’s an internal block — some kind of mental list of objections — and you need to overcome it. Take a long look inward and overcome that internal resistance! Often, I think that internal block has to do with embarrassment at asking for something so seemingly personal as your client’s friend’s name and contact information.
  4. Prepare to address your client’s objections: Along with your own internal objections (above), your clients might have some objections about giving you referrals (instead of just referring people to you). If you are prepared for these objections, just as you would be prepared for any objections in a sale, you can handle them. Check out this article on the topic: Objections to getting referrals. In my opinion, one of the biggest things you need to do is outline what you will do and say when you contact that referral.
  5. Shape your client’s thinking: When you ask for referrals, be specific about who you are looking for. If you just ask “is there anyone else that you think I could help?”, you’ll be met with blank stares because they know a lot of people. However, you can shape your client’s thinking by asking “Is there anyone on your bowling team who I could help?” or “Do you know of anyone else on this street who I could help?” This was a tactic I learned when I was a stockbroker.
  6. Write a script: Yeah, we’re going old school with this tip! When you first started out, you probably had a script or two for every sales situation. Now’s your chance to write another script — this one is a “tack on” that you add to the end of any conversation — in which you ask for a referral. Make it fast and smooth and positive.
  7. List the benefits to your client: It’s easy to skip asking for referrals because we think it benefits us and the referral… but not the referrer. But that’s not true. Take a few minutes to think of the ways that your client benefits when they refer someone to you. For example, if you are a real estate professional, your client is helping their friends find the house of their dreams by referring them to you. That’s just one benefit… there are a bunch of other benefits.
  8. Know the two types of evangelists: There are two types of people who “evangelize” your business and send referrals. Learn what those two types are and read about how you can help your evangelists. Source: How to get your customers to talk about your business.
  9. Practice asking for referrals: Like everything else you do in your profession, asking for referrals is a skill that requires practice. So practice! Start by practicing in front of the mirror. Then practice in front of your spouse. Then practice in front of family and friends (who might actually do some referring!). Then, as one website suggests, practice in front of your low-risk clients. After all of that practice, you’ll be ready to ask anyone and everyone for a referral!
  10. Social media referrals: I’m only scratching the surface when I suggest that social media is a great tool for referrals. Use Facebook, Twitter, and LinkedIn to get referrals. But don’t abuse those sites: It takes time (just like offline) to build relationships, establish credibility, and finally to ask for a referral. Start by posting interesting, authoritative content and remember to recommend other people!
  11. Set the stage for your clients: Your clients lead busy lives so as they are going through their day, they don’t always remember to refer people to you. But you can set up triggers that will help them to remember. For example, say something like: “Next time you’re at the gym, can you mention my name to the people who play basketball with?” They might not remember at other times but there’s a greater likelihood of them remembering when they walk in the gym because you’ve planted the idea in their mind.
  12. List who you know: Chances are, you’re not tapping into the potential market you already have. I’ve heard someone estimate that we all know an average of 200 people. So sit down and list everyone you know. Once you’re done with the list, put it away for a day and then take it out and write down more: Your hairdresser, your dry cleaner, your dentist (don’t forget the hygienist and the receptionist). Heck, you probably know more than 200 people. Then go out there and tell them about your biz. (What does this have to do with a referral? Well, nothing in this step except that you are growing your own business while you are reminding yourself that your clients know the same number of people).
  13. Give to get: Remember that giant list of people you just listed? Why not refer someone to each of them. Your hygienist is probably looking for a house and your dry cleaner probably needs a new accountant. Send them to your peers. Some of that good referral karma will come back to you.
  14. Enable your customers to refer you: At the end of each visit with your client, hand out some business cards. Say something like, “You already know how to get in touch with me but here are some business cards in case you know of someone else who I can help.”
  15. Make referring normal: Clients don’t refer because it feels weird to them. But if you make it seem normal then it’s okay. For example, point out that most of your clients refer at least one person a year (or whatever your referral rate is). That sets the stage for you to say: “so who would you refer to me?”
  16. Be an expert: Pick a topic that resonates with your clients and their friends and become write a book on that topic. Imagine that you are a financial advisor and your client is talking to his friends about their retirement accounts. Their friends say: “I’ve been looking at ETFs” and your client says: “My advisor wrote a book on ETFs.”
  17. Be exclusive: This is a counter-intuitive way to get referrals without even asking for them! Tell your clients that you have strict guidelines about who you serve and that you can only help people who fall within the following parameters… then list a series of attributes of your perfect client. For example, you might say: “People refer their friends to me all the time and I love to help people out but you should be aware that I only take on clients who have a net worth of $250,000 or more.” Don’t make the parameters too exclusive; just make them detailed enough to appear slightly more exclusive than anyone else.
  18. Set a weekly goal: I love this one and I wish I did this when I was a stockbroker! This idea comes from Ray Silverstein’s article on Entrepreneur.com. Among his short list of referral ideas, he suggests setting a weekly referral goal. I like this because it decouples the idea of referral-asking from your interactions with clients. Of course you’ll ask clients but you’ll also need to (probably) ask other people for referrals as well. Strive to reach a goal then stretch yourself by increasing the goal.
  19. Contest idea #1: Have a contest among your clients for the most referrals. Give a prize for the winner. Be careful with this one because you might end up getting people who aren’t qualified to be your clients… but if you communicate the contest correctly, it might be a fun way to educate your clients on your desire for referrals.
  20. Contest idea #2: Have a contest between yourself and another professional to see who can get the most referrals. This makes asking for referrals fun and gives you a little extra incentive to remember to do it. The loser needs to buy the winner lunch. (Although if you both increase your referrals then you have both truly won).
  21. Redefine referrals: The word “referrals” conjures up a businessy feel. And asking clients if they have anyone to refer to you isn’t much better. I really like Dan Richards’ idea from Advisor Perspectives. He talks about “getting introduced”. Instead of asking your clients for someone they’d refer, just change the terminology and ask them if they would introduce you to someone you can help. It feels WAY less threatening.
  22. Be unique: No one sits around and says “my real estate professional was bland” only to have someone else exclaim: “so was mine!” People share things that are unique and memorable. Although you should avoid the chicken suit syndrome, you should find ways to be memorable in your business. You can get referrals just by being different.
  23. Create non-threatening referral situations: I hate referring my friends to professionals because I’m afraid that the professional will hassle them. But I would definitely be open to a situation where there was a seminar or workshop on a relevant topic and I was invited and strongly encouraged to bring a friend. (Make the event an exclusive event and only give out two tickets per person, or two tickets per spouse).
  24. Written reminders: Include a referral reminder in the footer of your direct mail and in the signature lines of your email. My favorite is: “A referral is the best way to thank me for my service”.
  25. Make the referral about your availability: This is the one I use most often when I want more business (PS, it helps if it’s true). Send out an email to your clients and let them know that you have some availability to take on one more client and before you open it up to the world, you wanted to give them an opportunity to reach out to their friends/family/peers/colleagues/contacts first. I love this method and I’ve never been disappointed with the results!
  26. Show up: I think this is one of the least-utilitzed ideas in financial and real estate but it’s so powerful. Become your client’s biggest fans. If they are playing softball, go to the game and cheer them on. If their kids are in piano, attend the recitals. Your clients will love it and, as you’re standing around at the end, they’ll introduce you to people. Those other people will see that you show up for your clients and they’ll look around and wonder where their financial advisor or real estate agent is. Sure, this might make you really busy but you’re out doing prospecting work.
  27. Another “sneaky way” of asking for referrals: This is the first time I’ve heard this idea and I love it! In Rain Today’s Rainmaker blog post, they suggest that professionals list out the qualities they want in a referral and then go over it with clients. I think this is a great idea to do regularly. Pull out the list (hint: DON’T call it a “referral list”) and go through the points with your client.
  28. Network with the hubs: Some people hang out in a circle of friends and coworkers and never really expand beyond that. And some people are hubs — especially entrepreneurs and business owners who serve a lot of clients. Get to know them. Tell them about your business and who you serve. Focus on peer-professionals (financial advisors, real estate agents, accountants, and attorneys) because they are likely to have clients with similar needs. But also consider your friendly hair dresser and barber because they have a captive audience for 15 to 30 minutes and those people spill their guts about their financial and real estate needs. Check out this excellent (but difficult-to-read) page on Tier 1 and Tier 2 Centers of Influence. This page has a bunch of great ideas about referrals.
  29. Make referrals a condition: I love this tip, mentioned by PJ Weiland at SuccessNet: “Make giving referrals a condition of doing business with you.” That’s brilliant.
  30. Thank your referrers: A simple thank you goes a long way. Express appreciation for the referral and invite them to send more referrals at any time.
  31. DON’T contact the referral: If you’re scared of referrals, you’ll love this one: Once you’ve asked your clients for referrals, don’t contact them. Instead, thank the client for suggesting those names and ask the client if they would tell them about you next time they see them. Although this takes the control away from you, it increases the likelihood that the referred person will get in touch. (Source: Inc. Magazine’s “3 Tricks to Getting Sales Referrals”)
  32. Incentivize your referrers: When someone refers someone to you, do something nice for that person. Send them flowers or a gift certificate or something. (Note: There are might be some regulations around this). This blog post from nimble.com gives some good, easy, and inexpensive ideas for incentives. If you’re not sure how much to spend on incentives, figure out the lifetime value of your clients. Once you know how much every client is worth on average, you know what you can comfortably spend to get quality clients who will be profitable quickly.
  33. Go on a referral frenzy: If you are out of the habit of getting referrals and you want to get started, schedule your own little referral frenzy — a short period of time when you commit to asking all of your clients for a referral. You can tie it around an event to help break the ice. For example, if the new year is approaching, why not contact each client and say this: “It’s almost the new year and I want to start out with a bang. That means adding a couple of clients to the list of clients I serve. Would you kindly recommend someone to me? Thanks in advance!”
  34. Motivate yourself: Figure out how much money you make from an average client. Then do the math. If 1/10th of your clients referred another client to you, your income would boost by 10%. So how many clients do you need to ask for a referral to get a 10% raise? Since the close rates on referrals are so high, you might only need to ask 40% to 50% of your clients. That’s right: If you just add a 2 second “who else do you recommend?” onto the end of your sentence for half of your clients, you could potentially boost your income by 10%.

100 small business strategy questions

Many small businesses are fueled by passion. They start because an entrepreneur has an idea (or is sick of working for a boss), they grow because their ideas solve a problem and somehow that solution is communicated to the marketplace.

Unfortunately, many small businesses fail… even ones that are seemingly successful and make profitable sales. The reason is, they’re simply existing day-by-day, sale-by-sale, without any real strategy or long-term vision to give their existence any direction.

If you’re an entrepreneur, answer these 100 small business strategy questions. The answers will help you to highlight areas of opportunity that you can exploit and areas of concern that you can mitigate. Bookmark this page and come back to it regularly to work through these questions every 3 to 6 months.

With your answers, create a list of to-dos that you can act on until you come back to these questions again. [Note: Since publishing this list, I have written individual posts about some of these strategy questions so I’ve updated this list with the links to those other posts.]

  1. What does your business do?
  2. What does your business sell?
  3. What does your business stand for?
  4. What parts of your brand truly reflect your current business?
  5. What parts of your brand do not (or no longer) reflect your current business?
  6. What are the top 10 benefits your business provides?
  7. Who is your perfect customer?
  8. How are you adding value?
  9. What are your products’ or services’ biggest flaws?
  10. How do you define a lead?
  11. Where are your leads coming from?
  12. What demographic are your leads?
  13. How are you creating leads?
  14. How are your competitors creating leads?
  15. How will lead creation change for your industry in the future?
  16. How do you define a prospect?
  17. What is your lead-to-prospect ratio?
  18. What demographic are your prospects?
  19. How is your prospect demographic different from your leads demographic?
  20. How are you turning leads into prospects?
  21. How are your competitors turning leads into prospects?
  22. What objections do your prospects have?
  23. What objections do you NOT have an answer for?
  24. How do you define a customer?
  25. What is your prospect-to-customer ratio (close rate)?
  26. What demographic are your customers?
  27. How is your customer demographic different from your prospect demographic?
  28. How are you converting prospects into customers?
  29. How are your competitors converting prospects into customers?
  30. What has caused you to lose a sale?
  31. How do you define an evangelist?
  32. What is your customer-to-evangelist ratio?
  33. What is your evangelist demographic?
  34. How is your evangelist demographic different from your customer demographic?
  35. How is your relationship with your customers?
  36. What were your 3 most successful marketing campaigns?
  37. What were your 3 least successful marketing campaigns?
  38. What marketing and sales activities are you using in each stage of your sales funnel?
  39. How do you measure company-wide success?
  40. How do you measure personal and/or employee success?
  41. How are you improving your relationship with your customers?
  42. How can you improve the process for receiving and acting on feedback from customers?
  43. How are you encouraging repeat sales?
  44. How are you encouraging upsells?
  45. Who else can use your products or services that you aren’t currently serving?
  46. What is your business model?
  47. What other peer-businesses use the same business model?
  48. What can you learn from peer-businesses that use the same business model?
  49. What other businesses (in other industries) use a similar business model?
  50. What can you learn from businesses in other industries that use a similar business model?
  51. Who are your top 3 competitors?
  52. Who/what are your indirect competitors?
  53. What does the most successful businesses in your industry do that you don’t do yet?
  54. Why would someone buy from you instead of your competition?
  55. When should someone buy from your competition instead of you?
  56. What are your competitors doing differently?
  57. What are your competitors doing better than you?
  58. What are your competitors doing worse than you?
  59. How are your relationships with your suppliers/vendors?
  60. How can your supplier/vendor relationships be improved?
  61. What does your organizational chart look like and what strengths/weaknesses are the result?
  62. What are the next 3 roles you need to hire for?
  63. What was the last thing you tested in your business?
  64. When was the last time you tested a price change and what were the results?
  65. What political changes do you see affecting your business/industry?
  66. What economic changes do you see affecting your business/industry?
  67. What social changes do you see affecting your business/industry?
  68. What technological changes do you see affecting your business/industry?
  69. What financial best practices have you implemented?
  70. How have buying habits changed in your industry?
  71. What trends are influencing buying habits?
  72. How will buying habits change in the future?
  73. How has your industry innovated in the past decade?
  74. How has your business innovated in the past year?
  75. Where does your business plan to innovate this coming year?
  76. How are you investing in your business’ growth (i.e. innovation, new equipment, etc.)?
  77. What is your plan to scale up your business?
  78. If you had to get rid of 90% of your customers, what 10% would you keep?
  79. If you kept 10% of your most profitable customers, what would that demographic look like?
  80. How can you increase your ideal customer base?
  81. How can you decrease your less-than-ideal customer base?
  82. Where are people talking about your business online?
  83. What are people saying about your business online?
  84. What is your plan if your industry suddenly received a lot of bad press?
  85. What is your plan if your business suddenly received a lot of bad press?
  86. What is your plan if your marketing went viral and you suddenly had 10x the customers?
  87. What contingency plans do you a have in place for natural disasters?
  88. What would happen to your business if you were unable to work?
  89. What has changed about your business since you started?
  90. How has your income trended since you started?
  91. How has your profit margin trended since you started?
  92. What plans do you have to increase income next year?
  93. What plans do you have to increase profits next year?
  94. Where do you see your business in 1 year?
  95. Where do you see your business in 5 years?
  96. Where do you see your business in 10 years?
  97. What strengths/assets can you leverage for growth?
  98. Where are your blindspots?
  99. What are the top 3 problems keeping you from advancing to the next level in business?
  100. What about your business, industry, or customers keeps you awake at night?

The evangelist equation: How to get your customers to fill your sales funnel for you

My hammock gave out in the spring of 2010. Squirrels had ravaged it while preparing nests for the previous winter. I’ve been meaning to replace that hammock but last summer was busy and wet (not conducive to “hammocking”). So yesterday I went outside and realized that the weather was perfect but I remained hammockless.

I posted on Facebook: “It’s beer-and-hammock weather. Sadly, I’m out of beer and my hammock was eaten by squirrels.

Seconds later, a friend messaged me and told me that she had just bought a hammock for her husband. She briefly described it and sent me a link to the seller’s website. Within minutes of posting my sad status, the sale was closed. I’ll be picking up a hammock from this importer this weekend!

SALES FUNNEL EVANGELIST IN ACTION

My friend was first a hammock Customer. She had purchased the hammock, was happy with the quality and price and service. Then, she became an Evangelist by sharing her success story with me. I will (shortly) become a Customer by purchasing a hammock.

This hammock importer’s hammocks have now become more profitable because she didn’t have to spend time and effort and money marketing and selling to me. I’m already in her sales funnel and I’m basically sold; it’s just a transactional issue at this point. My friend’s advice was enough to compel me toward a buying action.

Turning your Customers into Evangelists is critical for your business. Rather than expend the costly effort of marketing and selling to every single Customer, you can turn your Customers into an army of marketers and sellers who are working on your behalf.

Here’s how to do that:

THE EVANGELIST EQUATION

The right combination of elements need to be present in order for a Customer to become an Evangelist… and not just an Evangelist but an effective one that actually closes the deal for you. Those elements come together in the following equation:

Effective Evangelism = Trust + Satisfaction + Shareability

Where Satisfaction = Problem Solved + Perceived Value + Satisfaction with Service
And Shareability = Ease of Sharing + Context

Here’s what those equation components mean:

  • Trust: Trust needs to be established between the Evangelist and the prospective Customer. In order for the prospective Customer to act on the advice of the Evangelist, there needs to be a foundation of agreement between the two. In my situation, I know my friend is a very careful shopper who thoroughly researches everything before she buys.
  • Satisfaction: Satisfaction is actually made up of three components: (1) the problem was solved; (2) a sense of value was perceived between the price of the product and the degree to which it solved the problem; (3) a sense of satisfaction with the service received during the process.
  • Shareability: Shareability is made up of two components: (1) how easy it is to talk about your product or service in relation to the problem; (2) the context in which an Evangelist has an opportunity to share.

When all of those components are present, an Evangelist can effectively talk about your product or service with their friends and their friends will act on the Evangelist’s advice.

If any components are missing, your Evangelists might still share but the likelihood of success diminishes with each missing component. For example, a recommendation on Twitter about a great soup restaurant is still Evangelism but might not result in any new Customers if there is no trust between the tweeter and their followers or if there was no context for the recommendation.

TAKE CONTROL OF EVANGELISTS IN YOUR SALES FUNNEL

The truth is, you can’t control every part of the equation. You have little influence over the trust established between an Evangelist and their network. And, you have little influence over the context in which your Evangelist shares.

But, you do have a lot of influence over the other parts of the equation — the components that make up Satisfaction (Problem Solved, Perceived Value, and Satisfaction with Service), as well as one of the components that make up Shareability (Ease of Sharing).

Creating an army of Evangelists to help you market and sell your business is done by looking at each of the following components and improving/increasing each component:

  • Solving problems: Your product or service solves a problem or fulfills a need, even if you don’t think it does. Figure out what the problem or need is and make it clearer in your marketing.
  • Providing value: Customers who feel that they got ripped off will never return. Customers who feel that they got exactly what they paid for might return or they might not return. But Customers who feel that they got more than they paid for will be far more likely to buy again and turn into Evangelists.
  • Satisfying with service: Like the above component, Customers who feel that they received poor service will never return. Customers who feel like they received “normal” service may or may not return. But Customers who were surprised at how good the service was will buy again and turn into Evangelists.
  • Making your product or service easy to explain: Use clear, compelling, picture-words in your marketing, and use the same messages over and over. Make your business name and your web domain easy to talk about and share. Spread your presence around the web (Facebook, Twitter, etc.) so that people can share you far more easily.

The equation to turn your Customers into Evangelists is pretty simple. And it is made up of several components, many of which you have a considerable amount of influence over. The time and energy you invest into these components will be an investment into creating Evangelists who will fill your sales funnel for you.

Just read: ‘Create Brand Superfans’ at Harvard Business Review

The goal of your business is not to make a sale. Rather, the goal of your business is to earn profit from sales.

If the goal of your business was to make a sale, then you risk turning your business into a hamster wheel — where you sell one thing to one buyer and then start over trying to sell one thing to another potential buyer. You work hard but get nowhere because of the amount of effort you expend to make a single sale .

The goal of your business is to earn a profit and that is done through increasing your sales and decreasing the amount of effort you expend to make those sales.

One of the ways to do that is to sell to a Customer then turn that Customer into an Evangelist — someone who markets your business for you. A little extra effort is required and the result is more sales at less cost to you.

Many businesses sell and then jump on the hamster wheel to sell to someone else. But the most profitable businesses turn their Customers into a huge sales force of Evangelists.

In this article on Harvard Business Review, writer Matthew Rhoden describes 3 ways that businesses can turn Customers into Evangelists (or as he calls them, “Superfans”).

Create Brand Superfans – Matthew Rhoden – The Conversation – Harvard Business Review.

After you’ve read the article, think about your current Customer-to-Evangelist practices. How effective are they? Consider ways to step up this transformation process to turn your buyers into superfans. Even by tweaking a couple of your processes, and adding just one or two Evangelists, your business will be that much more profitable.