It was about a month ago, when Steve, one of my coaching clients, was at an industry tradeshow. A fellow exhibitors, an old friend Andrew, stopped by and noticed that Steve’s marketing materials looked different. They got to talking and Steve told Andrew how much more new business he was getting with his new marketing strategy.
That got Andrew interested, and before the conversation was over Steve had given him my contact information. Two weeks later Andrew and I scheduled a time to talk and within 39 minutes he had signed up to work with me to grow his business. Simple as that.
Ever get a referral?
I love them and I bet you do too. They’re usually 99% sold. They’ve heard good things about you and already know, like and trust you. All you need to do is give them what they want and sign them up.
So what’s the reason most business owners don’t get more referrals?
They don’t ask.
That’s it.
While there are a lot of ways to spend money on marketing, asking for referrals costs you nothing and can be the single biggest revenue generator for your business.
How big?
In my case, given how long most of my coaching clients stay with me, and that almost 100% of all referrals end up signing up, a single referral represents $50,000 to $100,000 in revenue.
But just to give you a point of comparison, I asked a couple of my clients to calculate the value of a referral for their businesses. As you’d imagine, the number varied depending on the type of business and the life cycle of their clients.
For Steve whose in the farming industry, a single referral was worth $15,000. For Mary, an IT consultant I work with, a single referral was worth between $100,000 and $200,000.
And guess how often either of them asked for referrals?
That’s right – never.
How about you? How often do you ask for referrals?
To help you get motivated, use the following two steps to calculate how much a referral is worth to your business.
1. Determine the average lifetime worth of a client your business. This is the total amount a client spends with you over their lifetime. For example, you may only spend $75 at a time with Amazon.com but if you do this every month for the next ten years, your lifetime value to Amazon.com would be $9,000!
2. Calculate the realized value.?If you had 20 leads, you could probably close at least one. If you had 20 referrals you’ll close a lot more, usually 50-100%. To be conservative just divide the lifetime value of a client by two and that’s the value of a referral to your business.
What number did you come up with? $1,000? $10,000? $100,000?
Now, remember what I said earlier was the biggest obstacle to getting referrals?
Asking.
All you need to get more referrals is start asking! If you’re hesitating, just remind yourself what each referral is worth to you.
Of course if you want to learn the proven system that works like magic every time to pull in referrals, it’s all detailed in the Insiders’ Club.
To your success,
Charlie
