I met with one of my clients yesterday and we talked about his target market, I had a conversation with a friend who runs her business and we talked about her target market.  I had a phone call with a potential referral partner  to discuss our referral strategy and we talked about our target market.

It seems that Target Market is an important subject, and one that every business should focus on clarifying.  So why does it seem so difficult, for businesses and solopreneurs to identify a target market?  Not having clarity on this topic creates a whole host of problems;

1.  You spend your marketing money using an ineffective shotgun approach that nets low value results.

2.  You find yourself networking at completely inappropriate places.  If I sell cars and I know that 65% of all new car purchasing decisions are made by women, then I am going to go network with women and other businesses who sell to women, not a room full of men.

3.  You end up having the wrong conversations with the wrong people at the wrong time.  Because you are looking for anybody who needs your services you waste a lot of time talking to everybody even when they are the wrong somebodies.

4.  You cannot develop a good referral partner and you end up with a lot of sources who are referring you low level, low value leads.  A good referral partner has the exact same target market as you do, you are focused and you have a strategy for developing referrals.

5.  You miss great opportunities because you are so busy taking care of the low value clients and customers that your high value opportunities are passed by.

10% of your clients create 80% of your income and 10% of your clients suck up 80% of your time and generate little income, why would you use shotgun approaches that only net you more of the latter?  If you focus on the top 10%, spend your time and money seeking more of them, the other 80% will just show up and you will be able to regularly clear out the bottom 10% thus freeing up your time to nurture the top 10%.

“In this economy, developing a strong referral strategy is a fast, easy cheap way to build a strong business,” Palzewicz said. “Referrals are more important than ever because people are more careful where they buy and the words of satisfied customers, especially customers that are their friends, can be very powerful and more impactful than any other type of advertising.”

As is my habit, I was reading blogs, press releases, and other material on networking, when I ran across the above quote in a press release. I become very frustrated when I read information that is incorrect or misleading, not intentionally misleading but written by someone who really does not understand what the referral process is.  McDonald’s is fast, easy and cheap, but you cannot apply that to a solid referral strategy.

 “In this economy, developing a strong referral strategy is a fast, easy, cheap way to build a strong business.” Nothing could be further from the truth. While networking might be considered fast easy and cheap, building a referral process takes time, it is a skill that must be learned, and requires a budget of time and money. When a client comes to me and wants to develop a referral strategy they must have a developed network that we can then develop into a proper referral strategy for their business.  McDonald’s is fast, easy and cheap, but it is not the first place you want to go if you are looking for a high quality meal.  While it is nice to sometimes have low level leads from fast, easy and cheap networking, it is not the way to sustain your business.

Let’s take a look at why the words of Fast, Easy, and Cheap cannot be related to developing a referral strategy.

 Fast – A solid referral strategy is based on a relationship built on trust. Trust takes time, you have to be willing to take the time to build the trust. People are not going to refer business to someone whom they do not trust to make them look good. How long it takes someone to trust you depends, ask yourself, do you trust fast?

Easy – Once you have your systems in place for your referral strategy, it does feel pretty easy. Getting those systems in place and maintaining them is not easy, fast, or cheap. If building a strong referral strategy were easy, there would be a lot more very successful businesses generating high quality referrals. I know this is not the case by the number of businesses that hire me to help them implement a strategy and systems.

 Cheap – Another big myth. If you are going to develop a referral system you must set a budget of both time and money. It is not cheap to belong to multiple organizations, have one to one meetings over coffee, lunch and even dinner, set up and implement a system of rewarding your referral partners, pay for travel to events and meeting, and get educated. Is it cheaper than running a TV Ad over and over, yes, is it cheap, no!

Anytime you go at something with the idea that it is fast, easy and cheap, you are bound to disappointed with your outcome.  Developing a referral strategy that works takes time, money and effort, but when it starts paying off, it pays in a big way.

In this economy everyone is looking for fast, easy, and cheap ways to build business, but if you apply that concept over a long period of time you are left with less that desired results.

I love to help people be more successful with their networking activities.  Most of us are networking because we are looking for more referrals for our business.  Unfortunately over time people come to realize that it takes more than meeting, greeting, and exchanging cards.

Here is a list of common issues that business people have around generating referrals for their business.  This is not a complete list, but does cover many of the issues.

• I spend more time networking than following up on referrals.
• I find that I give a lot of referrals to people but get very little in return.
• I don’t know the right place to networker.
• I don’t know the right time to ask a person for a referral.
• I get a lot of low level leads that do not amount to business.
• I often don’t have time to follow up on the referrals I am given.
• I tell a lot of people what I do, the they just don’t seem to understand.
• I don’t attend networking events because I really don’t know what to do when I am there.
• I feel like I have a lot of visibility but it is not leading to referrals.
• I don’t know the value of an appointment.
• I try to build a power team but no one follows through.
• Following up after a networking event often falls through the crack.
• I cannot figure out why some people will not refer business to me.
• I don’t know exactly who is in my contact sphere.
• I don’t know who I want my next customer to be.
• My database is unorganized and not sortable.
• I would rather just make friends and hope they buy from me.
• My referral partners do not participate at the same level I do.
• I don’t know how to qualify a referral for others in my network.
• When I have a one to one it becomes too social.
• When I get a referral, it often does not convert to business.
• I cannot get my fellow network members to educate me how to refer them.
• I am not sure how to educate my network.
• I am spending too much of my time with low value prospects.
• I cannot get clarity around my target market.
• My referrals are unpredictable.
• When I get a referral, I am often disappointed in the quality of it.
• I spend too much time working on my network versus in my network.
• I don’t understand the six steps of the referral process or if I am missing any of them.
• I don’t understand how to move a person into a  proactive referral relationship.
• I get some referrals from my clients but that is about it.
• I know I need more business by referral and I just don’t know where to start.
• I am confused about the role that Social Media plays in my network.
• My company has offered reward for referrals, yet get few of any quality.

Building your business by referral is Simple, but it is Not Easy.

The first step to getting quality referrals is the trust step. All to often this is the one step that everyone tries to rush and it is the one step that is not controlled by you. While there are things that you can do that builds trust, it is actually up to the other person to decide when and if they trust you.

Until you have trust with others, there is no way that they are going to risk their reputation or their best clients with you. Every time you receive a referral from someone they are in fact lending you their credibility, their reputation.

What are the steps that you can take to build trust with your fellow network members? Think about what it takes before you trust another person. Do you trust fast, until someone proves they are not worthy of your trust, or do you trust slow, people must prove they are trustworthy first. What actions motivate you to trust?Here are some very simple things that build trust everyday.

First, do what you say you are going to do. This seems simple enough right? But all to often people over extend themselves or they say yes to things that they are really not interested in doing. If you say that you are going to do something for someone right it down on a task list, put a date and time next to it and getting it done.

In a survey of over 12,000 business people, participants stated that follow up was a key activity if they were going to pass referrals, when people did not follow up promptly they did not trust them to pass referrals to them.

Don’t talk about you, ask questions and show interest in learning about the other person.

Listen to the person who is talking to you, don’t look at your cell phone, don’t look over their shoulder, pay attention, show respect for their time and information.

Be positive, people who have a smile and positive attitude are the people we want to be around. They are likeable and we trust them quicker.

Lastly, whenever possible, give a lead, referral, connection or information. Practice the givers gain attitude, it will take you a long way in building strong trusting relationships.

Take your time, be authentic and people will trust and want to refer you. They will know that they can trust you to make them look good with their clients, family and friends. For more information on building trust I recommend the book.

If you get a chance pick up The Speed of Trust by Stephen Covey, he gives a systematic approach to building trust with a list of the 7 Secrets to building trust in your life.

Trust, I recently reviewed a book on trust, I am not sure how many people read it but I will say in the world of referrals, trust is the most important aspect of the referral relationship.

I read blogs and articles all the time talking about your elevator pitch, your message, your handshake, your networking activities and blah, blah, blah.  While all of this is great information for “Networking” and developing your “Word of Mouth” marketing it is not the thing that will get you the level of referrals that you are looking for.  The reality is when it comes to referring you,  I don’t care how good your message is, if your handshake is the best and you are the best networker in town!

What I do care about is this:  IF I give you a referral, when you are done with that referral will I still look good in the eyes of the person I referred?  My reputation, what people think of me and about me is important to me. The number one reason that people do not pass “Qualified Referrals” is the trust issue.  They do not want to risk their name.

With very little trust I can give out all kinds of leads, because my name is not closely tied to the lead, it will not have a major affect on me if it goes bad so I don’t mind taking the chance.

I had to learn this the hard way,  I referred a person to one of my very good friends, we will call him Joe Smith.  Joe owned a very successful printing company who employed several hundred people.  One day Bill asked for a referral to Joe, I did not know Bill very well but he seemed OK,  so I referred him to Joe.

Bill was late to the first meeting, Bill did not follow up after the meeting in a timely manner, in fact Bill dropped the ball in many ways with Joe.  The very next time I saw Joe was at a cocktail party and of course the conversation came around to business and here is the comment that Joe made to the entire group, “Don’t let Hazel refer you to any of the Yahoos in her network, what a joke.”  Ouch!  Not only was I hurt by Bills poor performance, my entire network was now unable to be referred to Joe who actually was in need of many more services that my network could have provided.

Lessons learned:

1.  Only “refer” those whom your know well and have a high level of trust with.  I do not have to worry about my reputation when I put the referral in the hands of one of my trusted referral partners.

2.  Stay involved with the referral.  Had I bothered to follow up with both parties during and after the referral I would have known what was going on and could have saved my reputation as well as my networks. All to often we pass referrals and never think about them again.

3.  Give feedback to the person you referred, they may or may not be aware of the issue and at the very least they should know why you are not going to refer them again.

Sometimes the best lessons are the hardest lessons.  If you are getting a lot of low level leads from your network, ask yourself what you need to do to increase your trust.  Take time to build trust with people and you will find that the referrals you get are of a much higher quality.

How many times have you done a one to one, or met with someone and meeting finishes with this statement….”Let me know if there is anything I can do for you.” Or “Is there anything that I can do to help you?”

We simply say, send me leads, or referrals or we say something like this “I can’t think of anything right now, but I will let you know if I do.” What a lost opportunity. People can help you in more ways than just passing referrals or leads, here are a list of things that you can do for one another that will help each of you.

1. You could put an article about my services in your newsletter, I will do the same for you.
2. You could invite me to a networking opportunity that you may be going to.
3. You could nominate me for an award it would build my credibility
4. You could attend an event with me; it would create visibility for both of us.
5. You could display my information or products in your office or store.
6. You could mention me in your blog.
7. You could read my blog and comment, and then link to my blog.
8. You could introduce me to your network
9. You could write an article for my newsletter
10. You could invite your best client to our chapter so I could meet them.
11. You could WRITE me a great testimonial that I could used in my materials.
12. You could put my brochure or information in your client mailings.

There are so many other things that we can do for each other that will add value to our business. Instead of always asking for a referral, ask for something else. People are more than willing to help you, just give them other opportunities. Give me a list of other things that you would value and could ask for.

REMEMBER: If you ask others to do it for you, then you must be willing to reciprocate.

How many times have you loaned something to someone only to have them return it damaged? How do you feel? Angry, disappointed and yes hurt, after all it was your item and you trusted the person that you loaned the item to.

We loan our credibility to others regularly when we make a connection for others or pass a referral to them. Each time we make a connection or a referral we are allowing others to borrow our credibility. Unfortunately many times that credibility is brought back, nicked and scratched.

So, when you go in on someone else’s credibility, what are you doing to return it better than when you borrowed it? What steps do you take to increase the credibility of the person who gave you your last referral or last great connection? How do you bring a persons reputation back better than when you borrowed it?

Remember, if you borrow it, return it better than when you got it!