New Business Referrals – Chicken or the Egg?

Are referrals hatched or do they just appear?

I just started reading The Referral Engine by John Jantsch, author of Duct Tape Marketing, the legendary guide to practical marketing for the small business.

I’ve seen John speak on a couple of occasions and I can tell you one thing – the man knows marketing. What’s more, he comes at it from a very authentic place. The advice he dispenses is often what he’s employed to raise his Duct Tape Marketing business model to fantastic levels of success, or advised his customers to employ to their own benefit.

I just cracked the book. In chapter 1, John begins to outline the basis for his argument, which is that businesses should create a system around the generation of referrals by their customers, vendors, friends, family and any other sentient being in a position to throw a friendly word-of-mouth.

Consider that in a survey John conducted on referrals fully 63.4% of businesses responded that they derive new revenue from referrals, yet only 21.1% had a system in place to stimulate new referrals. That’s leaving a lot of new business opportunities on the table, my friends.

One thing I wonder, and hope to find out as I read through The Referral Engine, is why some companies receive more referrals than others. John does a terrific job explaining the nature of referrals, by the way. It turns out that, as humans, we’re predisposed to give them. It has something to do with our Darwinian survival mechanisms. Referring helps us to survive and operate as a high-functioning member of an extended community. [I’m probably not doing John’s explanation justice so just buy the book already!]

What I’m wondering is this: if only 21.1% of businesses have formal reference programs yet some companies are a smashing success at generating referrals, what makes some companies more referable than others? Is it because of the referral system John refers to, or something inherent in the company itself that makes it more biologically pleasurable to refer?

If giving referrals is a biological necessity, as John points out, hardwired back to our human survival genes, do some companies make exercising that referral reflex more predictable? Companies like Apple and Southwest have made brands into referral weapons of mass construction in the marketplace. Try and go against Apple in cyberspace and it’ll feel like the Four Horseman of the Apocalypse have ridden roughshod over your Facebook profile.

Chicken or the egg?

Do you know why some companies receive referrals more than others? Does it go back to the old adage: which came first, the chicken or the egg? Could it be that some companies do such an outstanding job pleasing their customers that they trip the referral reflex in their customers more frequently?

Does it begin with creating a memorable experience for customers, whether in the form of a product or service, so that more people are apt to speak about it? Could it be an intangible quality such as ‘fun’, ‘humor’, ‘hip’ or ‘high-brow’ that gets people talking around the water cooler? Or maybe it’s just the commonality of the topic itself such as the name of a good restaurant to go to for Valentine’s Day or what cruise line to take on a spring vacation to the Bahamas.

One thing’s for sure, I’m looking forward to learning what John has to say about this and many other aspects of referral marketing. I have Duct Tape Marketing on my bookshelf and refer to it frequently so I have no doubt The Referral Engine is going to be similarly engaging and fulfilling.

Wait a minute. Did I just make a referral of John’s new book? Now how did that happen? Was it because of John’s outstanding content and the experience I gained reading Duct Tape Marketing last summer? Or is it because he’s sending out a subliminal referral request to me to start engaging in my primordial penchant for handing out referrals?

Darn that John Jantsch! Oh, he’s good…