Recently I was lucky enough to be able to pick the brains of business networking and referrals expert Tony Altham to learn about the value of referrals to a business. Tony is the executive director of the Business Networking Institute (BNI) Staffordshire, managing business referral groups where he delivers coaching and training to help his members maximise their ROI through referrals and networking. He’s also the Managing Director of AdGiftsOnline, a promotional merchandise and gift company supplying businesses in the UK and internationally.
I was able to get some of Tony’s time to gauge his thoughts on the value of referrals, the elements of a good referral scheme, and some other burning questions on how to make the most of client recommendations.
Catherine: Hi Tony. Firstly, what is the value in having a referral marketing program in place?
Tony Altham: For me personally, as well as for the thousands of business people I know and work with, it’s the pipeline of regular enquiries that come to us and our respective businesses, on an almost daily basis. Strong contact networks with the right people who are genuinely interested in your success and who are motivated to help you achieve it, mean that opportunities come to us rather than us having to continually prospect and cold call for them.
My referral partners spread the word for me and I likewise do the same for them. Imagine hundreds of people listening and looking for business for you as an unpaid sales team. They pick up enquiries that I would otherwise know nothing about and I in turn do the same for them. Many of my biggest clients have come from my referral partners and I win far more of the business that is referred to me, because I’ve been recommended. A recommendation is an endorsement and referral jobs are rarely down to price alone.
One of the Mortgage Brokers I work with has estimated that he has a 171% conversion rate via his referral network. That might sound crazy, however he converts 91% of the referral enquiries that he receives into mortgage business (Domestic and Commercial) and he then receives further referrals and renewal business from at least 75% of all the first time opportunities that come to him from his contacts. By comparison, when he was buying leads he had a maximum 10% conversion rate and 90% of his initial time in dealing with those leads was unproductive, plus he paid out a lot of money in fees.
Catherine: If you were to start putting a referrals scheme in place tomorrow, what would your first steps be?
Tony Altham: I’d identify who my best clients are or are likely to be, then find out who else works with those people but importantly isn’t in competition with me, so we can potentially work together to help each other grow our respective businesses.
Following that, develop a clear plan of how I can make a difference for the people I want to work with and approach my new referral partner so I can help them to understand how to introduce me, while also learning how I can reciprocate with introductions to my clients and contacts.
Aim for small wins initially until you get to a level of confidence where an introduction becomes a recommendation and then develop the opportunities to collaborate with bigger customers on more profitable projects.
Although I do network online as well as my face to face meetings, I would also look for a local business referral group to visit with the aim of building a strong contact network that will enable me to multiply my time and resources with the help of other people. It’s what I know and I know it works consistently. The extra and often hidden benefits are that individuals get support from other members and grow in confidence so that they become more successful in business, sooner.
Catherine: What elements do the best referral programs have that make them successful?
Tony Altham: Structure, commitments, accountability and a clear and definite focus on business.
What I mean by this is that they provide a structure for business meetings and a formal business agenda. They establish commitments between the referral partners so everyone is similarly motivated to help each other succeed and they operate as a business that is focused on generating business. If you have a member of staff who is not helping your company or organisation, you find out why and then how you can help them with support and training. You take them from a position of can’t do to can do. The best referral organisations do this, however if you have a ‘can do but won’t do’ person on your team they are not a good referral partner and you cease working with them. This is the accountability element of the programme. It isn’t about I’ve helped you so you now owe me. It’s about commitment to the group and helping in any way you can.
Catherine: Are there any UK businesses that have really impressed you with their referrals scheme?
Tony Altham: There are hundreds of business networking groups and thousands of networking meetings available for people to attend. For those who really want to get out and meet new people there are no doubt events every day of the week and throughout each day, but there is a massive difference between ‘busyness’ and business.
Many years ago, when I started my career, I used to turn up at pretty much any event that I considered a networking opportunity and people would say that ‘I would go to the opening of an envelope’ which was interesting, because I saw them at all the same events I went to. It took me some time to realise the difference between networking and referral marketing, but once I did my business grew massively.
Now, I personally focus my time and energy on face to face marketing in BNI (Business Network International) because it’s the global market leader and provides the best business referral structure, the most comprehensive support resources and by far the most effective training for members. I’ve seen many other organisations come and go over the years and I’ve met people who think BNI is too structured, but they come to BNI when they realise that it’s the members using the structure that delivers the results and referrals that they so badly want and need.
Another key is that you want the best people in your network, so an organisation that invites applications but takes up references and doesn’t accept everyone, means it is better at delivering those very good people.
Catherine: How can sales and marketing work together to make a referrals program run smoothly?
Tony Altham: Previous research indicates that 98% of people in business acknowledge receiving business by recommendations and referrals at some point, however only 3% of those same business people develop a formal business and marketing strategy to incorporate the generation of business referrals as part of their business development plans. Sales and Marketing are complimentary and should work hand in glove together. When you develop a strategic approach to your referral marketing they do exactly that.
When you identify the key people you want to work with and be introduced to, a strong referral network enables you to enlist the help of the other members of your group by being specific about the introductions you are keen to achieve. In so many cases, one person will name someone they are really looking to work with and by being specific they make it easy for the others to help them get that introduction. Referral partners aren’t there to do all the work for you, but they are there to open doors where they can. They don’t need to know how to sell your business products and services, only to notice the opportunities and how to make the introductions for you.
When someone knows, likes and most importantly trusts you enough to place their own reputation on the line by recommending you, the stage is set for you to win more business enquiries and convert more of those enquiries at the profit margins you want to work for. Marketing is packaging the brand and services, identifying the target market and the sales is converting the enquiries received at your prices.
Catherine: We know that you’re a big advocate of face-to-face networking. What networking best practices that you’ve learnt can be applied to the world of digital?
Tony Altham: However and wherever you network, I strongly believe that manners and courtesy are critical. The same process applies whether it is face to face or online, in that you have to be seen, so you have to appear where the people you want to work with will notice you.
People need to know you as best they possibly can and they have to reach a stage of believing that you can and will do what you say you will do. You don’t connect with someone online and immediately ask them for business because it’s bad manners and discourteous.
Finally they have to trust that you will deliver on your promises. When you attain all 3 of these you have earned the right to ask for referrals with most people.
For more on generating new business from referrals, download and have a read through our e-guide: The Sales Director’s Guide to Winning Referrals