CHAPTER 10
THE KALEIDOSCOPE

THE DISCIPLINE AND FOCUS FOR PERMANENT REFERRALS

REFERRALS FROM COLLEAGUES

I’m using the term colleague here in a nonclient, nonbusiness sense. I’m using the term to embrace people who don’t have direct business relationships with you. We’ve discussed them in portions of other chapters, but I thought a few dedicated pages in our focus on “permanent referrals” made sense.

You’re providing collegial referrals on an ongoing basis. Not long ago, the woman who runs the teleconferencing service I use and the man who runs the automated listservs for my multitude of newsletters both dropped me a line and thanked me for referring so many people to them. A man who runs a source for press interviews wrote to tell me that he was delighted to be mentioned in one of my books.

All of these calls surprised (and pleased) me, because they were unexpected and also indicative of the undoubted reciprocity that was going on. I realized that I should be thanking people more often, as well.

Who are these people? Well, they can surprise you. Here are some examples that pertain to consultants and other professional services providers that may surprise you in terms of their effectiveness and omnipresence:

• Reviewers of your books on Amazon.com and similar venues. Find out how to contact them (Google, LinkedIn, and so forth) and provide a brief “thanks” for their courtesy.

• Blog mentions. I use vehicles such as Google Alerts (which is free) to learn daily where my name and trademarks are being used. So if Alan Weiss or Million Dollar Consulting was used on the Internet the day before, I can investigate. (By-product: I can also see when someone else has “appropriated” my work, and I can also find out what the competition is up to.) There is almost always the opportunity to leave your own comment, and I thank people for their favorable mention of my work. This encourages further mention in most cases.

• Mentions in newspaper articles. When you’re mentioned in a newspaper article (online or hard copy), you’re tacitly being referred by highly credible third parties (both the reporter and the publication). Make it a practice to compliment the reporter when the piece is published, keep the reporter on your contact list, and suggest new ideas for similar articles with your participation. I’ve been contacted by reporters years after the original interview because reporters maintain meticulous lists of contacts and sources.

• People who endorse you during appearances. When you’re making a speech or delivering a workshop, there are often people singing your praises who have been in your groups before, read your work, or otherwise availed themselves of your value. It’s a good idea to “seed” your events with these “live” referral sources by offering them complimentary admission.

• People who provide services for you in general. The key is to ensure that this myriad of support people is sufficiently knowledgeable about what you do to be able to refer you to others effectively. You can accomplish this by giving away free books, articles, Web site locations, and so forth. I’ve never considered my books as huge sales generators (although I got lucky with a few of them). Rather, I see them as highly effective marketing devices that I give out with the same flourish that others use with business cards. Which people does it make sense to educate? More than you’d think:

What do these people have in common? If they’re supporting you, they’re supporting others like you, and they have a vested, competitive interest in helping all of their clients in any way they can.

You may conclude that these types of referrals are strictly within the community and the local business potential. However, you probably don’t work solely in the immediate community; in fact, you probably work outside of it most of the time. Similarly, these other individuals will often have interests and contacts outside of the immediate community. They may be part of larger businesses, or commute to another city, or have colleagues all over the world.

Moreover, the kind of support people I’m referring to here generally work within narrow economic strata. If you have achieved a certain level of success, then their clients are generally your peers, so they are working for other executives and professionals.

We’ll talk a bit later about stimulating these dynamics by providing referrals of your own.

But before we conclude this topic, I’ll suggest some action plans for you.

1. List those individual service providers who most probably also work for potential clients and recommenders and talk to them casually about your work, just as they’ll be happy to talk to you about theirs. (If they’ve already benefited from referrals that you provided, then ask them how those referrals have worked out.)

2. Provide them with some effective material in a brief form that they can use if someone else asks about you. For example, if someone says that he has a client who has often mentioned that he needs help in one of my areas of expertise, I’ll give that person two books—one for herself, and one to pass on to her other customer. You can’t expect this person to market you, but your materials can help market you.

3. List those service owners who probably also work with potential clients and recommenders. Leave your book or materials in their businesses if there is a space to do so. (Recently, in my huge suite at the Ritz-Carlton in Berlin, I noticed a large wall of books. I had more than I needed for the program I was delivering, so I placed two of mine neatly on the shelves!) Many of these businesses compare notes in chambers of commerce, Rotary meetings, service clubs, and so on.

4. Focus on events where key people assemble—such as special events nights at social clubs or trustees’ meetings of a nonprofit—and provide your value at every opportunity. It will be seen as your contribution to the cause, but it will inevitably serve as a showcase for your talents to those who may refer you to others.

Some of the best referrals I’ve ever had surprised me, because I had not been doing anything aggressive, but was merely keeping active in a variety of areas, and understanding that anyone around me who expressed interest in my work was worth talking to and giving something to.

WEEKLY ROUTINES

Well, what about the nitty-gritty, granular trench work that needs to be done on a regular basis? When you start to implement the practices we’ve been discussing, you have to put a plan of action in process.

I often ask people whom I mentor to keep a log of their time use over two weeks, and compare it with what they thought was occupying their time. They usually think that marketing and delivery are predominant, but what they find are huge “time dumps” dedicated to administration, e-mail, social media platforms, and general distraction.

So if referrals represent future revenue, then they must take a priority in your planned priorities. Here are my recommendations, with flexibility for your own particular practice, disposition, and prospect list, for things to do on a weekly basis, in no special order:

1. See the Man

The police have traditionally broadcast “see the man” at certain addresses to direct their patrol cars. You need to physically (not virtually) meet with people who can help you. Therefore, each week, you should be scheduling

• Networking opportunities

• Meetings with current clients during which you ask for referrals

• Meetings with past clients to seek referrals

• Interactions with social and civic colleagues at clubs, events, charitable affairs, and so forth

2. Raise Your Voice

Seek out opportunities to be interviewed in the media. This includes broadcast, hard-copy print, and electronic. You may not appear every week, but I’m suggesting that you pursue this every week. If you simply wait for it to happen, well, what happens when you merely wait for the phone to ring? It gets quite lonely.

• Suggest interviews to talk show producers.

• Join and respond to reporter inquiry services (for example, PRLeads.com or ExpertClick.com).

• Find very popular bloggers who might benefit from an interview with you (be discriminating here; tiny audiences of unknowns won’t help you).

• Find panel opportunities where you can spread your value and be perceived as a peer of respected colleagues on the panel.

3. Pound the Keys

Use your initiative to contact people (or invite contact with you) through hard and electronic copy that you initiate. Do not consider social media to be an effective aspect of this. You don’t want your voice lost in the din of the masses. Make yourself a unique source of value.¹

• A monthly newsletter that goes to both clients and prospects is de rigueur, including client guest articles (which are, in fact, referrals).

• Create a blog to which people come (and can utilize RSS feeds) that includes testimonials and referrals in the postings and in constant margins of the publication.

• Mail to your overall database (as we’ve discussed at length) frequently, explaining new value and inviting referrals.

• Create intellectual property in the form of published articles, booklets, manuals, books, and so forth.

4. Pay Your Dues

Use the phone and e-mail to thank people who have helped you. Today, my bookkeeper of 10 years (who accepted a full-time controller’s position) was replaced by a new one who was recommended by my tax accountants. After we had agreed on working together, she said, “Who recommended me? I want to call and say thank you.” Two acts stimulate referrals more than all others: providing referrals yourself for others (which we’ll discuss in the next segment) and thanking people who have provided them.

• If the person isn’t financially involved in the new referral business and is not a current or past client, think about a gift or a favor.

• If the source is an independent one that can duplicate the referral many times over, consider a finder’s fee (discussed in an earlier chapter).

• Send a handwritten thank-you note, not an e-mail, whenever possible.

• Keep your referral sources up to date on your progress with the person you referred.

5. Hit the Pavement

A woman asked today on my online forum what she should do: a client had happily referred her to three peers and copied her on the letters, but it’s been 10 days since the letters went out, and none of the recipients has contacted her. She, of course, should have contacted the referrals within a few days of the letters’ going out!

• Pursue referrals professionally but diligently, using the correct language from templates earlier in the book (“Paul has never given me bad advice about who can benefit from …”).

• Travel expenses are a cost of doing business, so give people who are clearly buyers options for how you can visit them.

• Go to professional and trade association meetings where you’re likely to meet people who are prospects mingling with people who have been your clients.

• Create breakfasts or luncheons where you deliberately “seed” clients into situations where prospects are present to learn and derive value.

Time is not a resource. You have 24 hours in every day, but the manner in which you spend it is the key. Time is a priority issue. It’s very important that you assign time to the areas mentioned previously (and others that you may find effective) to ensure that you are adequately pursuing referrals every week. Some efforts will take many weeks or even months to reach fruition—writing a book, for example. But if you don’t begin it today, it’s not going to happen tomorrow—or ever.

Build into your weekly calendar, Filofax, PDA, or whatever you use specific activities and times to accomplish these pursuits. Measure your effectiveness weekly by calculating the time you’ve actually spent. If you’re successful in a frequent and focused pursuit of referrals through these disciplined sources, you’ll find that you’ll also generate referrals while you sleep, which I’ll demonstrate at the conclusion of this chapter.

PROVIDING REFERRALS FOR RECIPROCITY

Another technique I’ve touched upon to stimulate referrals is to provide referrals. This creates an obligation and reciprocity with many people (although not all!). I noted earlier that both my teleconference and database providers were very appreciative of my spontaneous referrals to them.

Many people have commented that I’ve sent them more business than any other single source. I never accept referral fees, even if the situation would permit them. That’s because the referral in the future from that source is the value in which I’m investing—the ROI.

The more you stimulate key sources, the more you can expect favorable treatment in return. It takes some deliberate and disciplined approaches to create these dynamics, and they can be made part of the weekly routine we discussed earlier. Here are four essential steps in providing referrals that are perceived as high quality by those who can provide high-quality referrals in return.

1. Identify Your Targets of Opportunity

Start backward. That is, who are the people who are in a position to provide you with the highest-quality referrals? Are they current clients, past clients, community leaders, nonprofit executives, search firm partners, or professional association colleagues? Who are the people you want to target?

You can see immediately that while you may be freely providing referrals to your doctor or your accountant or your designer every day, these may not be the highest-priority reciprocity targets for you, so in addition to those courtesy referrals, you need to deliberately build in more.

2. Whom Would They Most Like to Meet?

Who are those people’s buyers? You must provide quality in order to stimulate quality. Are they trying to meet wholesale buyers (for example, corporate executives), retail buyers (for example, individual consumers), or specialized individuals (for example, newspaper editors)?

This step is the pivotal point for what follows. Once you know your target, what people would constitute the ideal buyers for that target to meet? The last thing you want to do is to waste the target’s time with nonbuyers or inappropriate ones. Put yourself in his shoes. For example, an auto dealer doesn’t want someone who is merely looking for a car (ideally), but wants someone with an excellent credit rating who is looking for a top-of-the-line (highest-margin) model. The managing partner of a large accounting firm doesn’t want to meet a finance director in a small business, but rather wants to meet the chief financial officer of a Fortune 1000 company.

3. How Will You Round Up the Usual Suspects?

Now you search your databases and lists and find the most likely suspects. This is a far higher-quality exercise than merely finding names. (Remember the earlier story about a woman who felt she had a great lead for me because she had read a story in a magazine about a European company that needed help?) This is a quality, not a quantity, exercise. A couple of high-potential names are always better than a slew of hit-or-miss lists.

You should be looking at

Your client list

Your vendors

Social friends

Network acquaintances

Your subscription lists

Professional association colleagues

Club and activity colleagues

Frequent e-mail contacts

Choose people who fit these criteria:

• Are clearly buyers for the target you have in mind.

• Have a need currently or one that can be developed commensurate with the target’s offerings.

• See you as a credible and impartial source.

Now you have high-potential buyers for your targets. Obviously, the more targets you have and the larger your own network, the easier this becomes.

4. How Do You Maximize Your Contribution?

At this point, you want to make the most obvious connection you can. You don’t want to merely give either party the other party’s name and say, “I think this would be helpful.” You want to obviously establish the connection. (Note that it’s not impossible for both the referral and the target to be people who can reciprocate in the future, a sort of referral double whammy.)

Try to make the introduction in person. This can take place at a conference, an event, a community activity, a business trip, a social affair, or somewhere similar. It’s always better to put people together in person if at all practical.

If distance or logistics preclude a personal introduction, then call your target and make the introduction by phone, establishing a good time for both people to talk and securing both their schedules and their preferences. This takes a bit of legwork, but it’s well worth it because it adds immeasurably to your perceived value in the transaction. Too many casual introductions wind up with people playing phone tag and eventually attenuate. Set up a phone call and confirm with both.

Try to avoid e-mail introductions. They’re easy, but that’s the problem. By simply introducing Betsy to Jason with a “cc” (isn’t it quaint that we still use “carbon copy” and “blind carbon copy”?), you’ve cheapened the quality of the introduction to something you simply did casually when you had time. There is no deliberate attempt here to forge a quality relationship.

Be personal at best; use the phone at worst. And then follow up. Find out if a meeting has been scheduled, what the result was, and so on. You can do this under the auspices of trying to provide better and better referrals for your target in the future.

I’m not being mercenary in suggesting that in addition to the referrals you provide out of courtesy and caring, you should also be proactively working on referrals that will result in dramatic reciprocity.

THE REFERRAL REFERRAL (NO KIDDING)

I’m going to return to Hal Mapes, my case study in Chapter 1, to remind you of the exponential effect of referrals. Once a referral becomes a client, that person becomes a source for new referrals. Thus, if Hal had 200 insurance clients who gave him 6 names a year (1,200 referrals), and he closed 10 percent of them for new business (120), then the following year he had 320 clients and 1,920 referrals.

Once you start to extend this to the fourth and fifth years, you actually have a legal pyramid scheme, in that everyone “wins” and there are numbers to support the proposition. This is why I’ve been harping on the premise that referrals are future revenue, and therefore just as important as present revenue.

Let’s see how this would work for you. You can record your answers right here in the book (if you don’t like to mess up a book, then please buy another one to keep pristine!).

1. Record your current number of likely referral sources:

Clients: ___

Colleagues: ___

Friends and family: ___

Professional associations: ___

Civic and social clubs: ___

Vendors, suppliers, professionals: ___

Other: ___

Referral Sources, Total: ____

2. If you were to ask each person in this list twice a year for three names, estimate the percentage that would respond and multiply your total by that percentage:

___percent times Total ___ above equals
Net Total: ___

3. Of the net total, take 50 percent as those referrals who are legitimate buyers and who agree to talk to you:

50 percent of Net Total ___ equals High-Potential Total: ___.

4. Of the high-potential total, apply what you feel your reasonable or historical or improving business close rate would be. (I would suggest that this number will be between 40 percent and 80 percent for most of you):

My close rate ___ percent times the high-potential total ___ equals Closed New Business Total: ___

5. Multiply your closed new business total by your average sales revenue:

Closed new business total ____ times average revenue per sale $____ equals New Referral Revenue Estimate: ____

6. Now take your closed business total ____ and add it to your original total number of referral sources ____ for Next Year’s Total Referral Sources: ____

Let’s say that you have 100 current contacts, and that half of them give you six names, meaning that you’ll have 300 potential referrals. Taking half of them, being conservative, means that you have 150 high-potential referrals. If your close rate is 40 percent (near the bottom of my scale), then you’ll create 60 new clients (if your close rate were a dismal 10 percent, you’d still have 15 new clients). This means two things:

1. Your new revenue potential, if your average new business contract is $20,000, will equal $1,200,000.

2. Your next year’s basic referral sources will equal 160.

Now, cut all this in half. You’ll still have $600,000 in new business and 115 new referral sources.

I know what you’re thinking: this is crazy. He’s exaggerating. But that’s why I held these equations until the end of the book. I didn’t want to scare you away with your potential good fortune. And none of this counts spontaneous referrals not instigated by you!

This is the power of referrals. This is why the book is called Million Dollar Referrals.

Let’s examine the variables to demonstrate how conservative I’ve been and how much you can actually control these numbers:

• First, you must be diligent and thorough in developing your current contact list. That means your doctor, your attorneys, prospects who did not become clients, family members, Little League committee members—everyone you can think of. Remember, your mindset has to be that you have tremendous value to bring to people, not that you’re “bothering them” or “trying to make a sale.”

• Second, you have to ask. If you don’t ask, you don’t get. And you have to ask not only for names, but for high-quality names, people who represent your true potential buyers, not just someone in the bowels of the organization. You have to position this as a win/win/win to encourage the other party to participate. You must practice the techniques I’ve created to stimulate this, such as providing referrals in order to create reciprocity.

• Third, you have to diligently, professionally, and relentlessly pursue the referrals. You can’t play phone tag or send off a lonely e-mail. You must make contact to try to validate that the other party is a buyer, and if so, establish a personal meeting. Again, the mindset has to be that you have great value that you’d be remiss not to offer.

• Fourth, you have to have the closing skills to create a business relationship. Consider what the numbers given here would be if your closing rate with buyers were 80 percent and not 40 percent!²

• Fifth, you have to institutionalize the process, so that it’s ongoing and second nature. By the fourth and fifth years, you will be dealing with a seven-figure business and beyond.

The variables you control here include the numbers of contacts, closing rate, average number of referrals, average size of your sale, repeat business, and so on. In other words, I’m being highly conservative regarding how much future business rests in your referral system because repeat business from new clients isn’t factored in, nor are spontaneous referrals that develop unasked and unsought.

I hope you can appreciate what happens when you put to work the skills and mental attitude that I’m suggesting throughout this book. Your business will never be the same, and your ability to grow becomes progressively easier and less labor-intensive. You’ll be able to choose your clients and your lifestyle.

That’s not a bad return for asking for three names.

REFERRALS WHILE YOU SLEEP

The route to a seven-figure practice is the one that leads to you. You can’t develop that kind of business by knocking on doors or by networking. You must draw people to you. Once you do that, you have access to a global community of potential buyers across oceans, time zones, and cultures.

The goal of this book has been to help you create a “referral culture” around your practice so that you can easily elicit referrals and spontaneously be the beneficiary of them, leading to a dynamically growing firm. This is a possible dream. Every day, your contemporaries are recommending movies, restaurants, doctors, attorneys, car dealerships, masons, chimney sweeps, and snow removal services for three simple reasons:

1. They believe in and have used the product or service personally, with salubrious results.

2. They have friends, associates, and colleagues with similar interests and needs in their own lives.

3. They want to be of help primarily to their colleagues, but often also to the person they are citing.³

Thus, there is a client evangelism that arises, only very indirectly for personal gain. It is one of the purest forms of Samaritanism you’ll encounter: the honest intent to put together others who will mutually benefit.

This means that all parties must be in “good standing.” In other words, if my accountants do good work, but they are sometimes rude or late, I may not refer others to them, figuring that I can put up with the discomfort, but that others may well be put off. Similarly, if my accountants are great, but if I find the person who is asking me about accounting help to be a blowhard who is constantly taking over conversations, why would I want to help him out? Finally, if I’m a lousy client of the accounting firm (I pay my bills late or constantly complain about the charges), or if I’m perceived as the blowhard, then neither of the other parties is going to solicit my referrals or accept them.

So what we have here is the three-way good deal shown in Figure 10.1.

Figure 10.1 The Good Deal

This dynamic must persist and be self-perpetuating if you are to gain “referrals while you sleep.” Your referral sources must believe in you, have had great experiences with you, have you in mind, and believe that you can help the third party’s condition.

The referral must believe in the source’s credibility, see you as a viable alternative, gain access to you readily, and like you.

Here are 10 steps to think about implementing or improving as soon as you end this chapter to maximize your opportunities with referral sources:

1. Keep your name and value in front of them on a regular basis.

2. Thank them promptly every time they refer someone.

3. Keep them apprised of additional value and offerings that you develop.

4. Ensure that they realize who the best referrals for you are.

5. Respond promptly to any request that they make.

6. Give them continuing value, personally.

7. Keep track of them so as not to lose contact with them if they move.

8. Maintain a high public profile in terms of media and publicity.

9. Invite them to events even if it is improbable that they can attend.

10. Provide them with referrals whenever possible.

And here are 10 steps to maximize the chances that a referral will do business with you:

1. Be accessible by phone, e-mail, regular mail, Skype, and so on.

2. Maintain a website with high credibility (not sales emphasis).

3. Ascertain that the referral is a buyer, then volunteer to visit.

4. Cite the referral source and the nature of that relationship.

5. Don’t focus on what the referral wants, but rather on what he needs.

6. Focus on the referral’s results, not your methodology.

7. Be highly responsive, demonstrating your service standards.

8. Provide value in the initial discussion.

9. Keep the referral apprised of offerings beyond what was cited.

10. Find low barriers to association (the left side of the Accelerant Curve).

Remember that all referrals can become superb referral sources themselves, since that’s the manner in which they came to you.

Most of all, I want to leave you with one of our continuing refrains in this book: you must consider both current revenue and future revenue. The immediate business or project is your current revenue, but the referrals that emanate from that current business are your future revenue. You must jettison the mindset that referrals are some sort of “extra” or attractive aspect that you’d like to get around to. That’s like saying you’d like to “get around to” a proposal for current business.

You require a proposal to close current business. You require referrals to close future business.

Referrals of the scope and nature that we’ve discussed comprise both art and science. The science is in the discipline, questioning, and follow-up. The art is in knowing when the time is right, the mood is appropriate, and the conditions are correct. I’m telling you that the art is ready for you far earlier than you might have otherwise believed.

So right here and now, you have a doubly powerful marketing approach, acquiring current and future business together. I hope I’ve helped a bit in that pursuit.

But think about something: how was it you came to know about me?