I actually like my health insurance policy. I have a tolerable monthly premium, modest copays, free Tier 1 and 2 medications, and my agent responds quickly when I have a question. In talking to a friend recently, she had the opposite opinion of her health plan. She hated hers — high premiums, expensive copays and poor customer service. A call back from her agent took a week or never happened. So, I told her to call my agent and see if he could help. She did and she bought a policy from my agent a week later and was very happy. It had a lower premium with better benefits.
Now, you answer your phone and the caller says, “I was talking with your customer Bill and he said I should give you a call. I’m interested in your services.” Golden right? A steady stream of referral business can ignite the growth of a small business and with that personal connection you gain new valuable customers. Business people want calls like this every week. But there is always a way to wreck this pipeline of new business.
My friend told two others about her new health insurance plan. Both of them called my agent and ultimately bought health plans. Do you see the trend? It’s exponential. From one happy customer, my agent has three new accounts. But it will get even better. One, two, four, eight or 16 new customers could come from my single endorsement followed by their follow-on endorsements.
Here’s how he wrecked his chance to acquire eight, 16 or more customers. He never called to thank me for my referrals. He didn’t send a note of thanks. He didn’t give me a $15 gift card for Starbucks. Not even a thank you text. Nothing!
He took a magnificent way to build a referral pipeline and squandered it. I probably won’t send another referral. My friends won’t send referrals. We feel my agent is taking us for granted and he wrecked his opportunity to develop a robust referral business.
Here’s another personal example: My wife and I are buying a new house and shopping for a mortgage. Our Realtor, who was referred to us by a friend, gave us a recommendation for a local mortgage broker. I called the broker and after trading phone calls, I texted her. She texted back, gave me a link and told me to go to her website to apply online for a mortgage. What was she thinking? There’s Lending Tree, Quicken Loans, Rocket Mortgage and 50 more websites that come with no brick and mortar that she has to build into her rate, closing costs, etc. She never contacted us again and we went online and were approved for a mortgage in a week by a company that had award-winning customer service with lower rates and closing costs. The broker’s response killed her chances of another referral from us which could have added four, eight or 16 new customers.
Now, how do you, as a small business owner, avoid these referral-wrecking behaviors?
Successful companies create a detailed strategic plan to develop referral business. It’s not enough to do the opposite of my insurance agent and my local mortgage broker. A proactive plan to consistently execute will earn you four, eight, 16, 32 and more new customers.
Do you have a story about good or bad referral situations? Tell me your story by email. (My next column will lay out a strategic plan to build a robust referral pipeline in a systematic way.)
Ed Reedholm is a local consultant and entrepreneur. He has grown several companies using the concept of building deep relationships and maximizing a firm’s productivity. He can be reached at 719-963-1440 or firstname.lastname@example.org