entrepreneur | The Age of the Customer

Five Things to Do for a Successful Referral Strategy

For as long as businesses have tried to get customers to buy their stuff, a referral has been the holy grail of prospecting. Like the mythical chalice, a referral is golden.

To emphasize the power of referrals, allow me to introduce “Blasingame’s Prospect Entrée Spectrum” (BPES), which is a way of valuing the method used to get in front of a prospect.

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The BPES is on a scale of 1-10, with a cold call being a 1, and the unqualified referral a 10. The difference between scoring a referral and making a cold call is, to borrow from Mark Twain, like the difference between lightning and a lightning bug. Let me put a sharper point on that: In the Age of the Customer, cold calling is a fool’s errand.

Asking for and getting an appointment is a 5. From 2 to 5 on the spectrum are varying degrees of quality of connection that you attempt without a referral, like networking. From 6 to 9 represents varying quality of referrals. For example, a 6 is a casual referral with one of two qualifications attached: either the referrer doesn’t know you well, or doesn’t know the prospect well. The goals is to demonstrate you’re worthy of a full-throated, unqualified referral — 10 — which is almost money in the bank. When you hear someone say they’re working smarter, not harder, it means they’re earning lots of referrals, including an increasing number of 10s.

Here are five things to do to sustain a successful referral strategy:

1. Ask for referrals as a way of life, not just a means to an end.

2. Help customers give you referrals by teaching them how to tell others about you and your business. Instructions must be short and sweet, like an elevator pitch.

3. Be worthy of a referral. Take good care of the referred prospect, even if you don’t make a sale.

4. Thank the referrer every time, in person if possible, regardless of the result of the referral. Remember, getting a referral is success.

5. If you want to get referrals, give them to others.

On that last point, in Ecclesiastes 11:1, King Solomon wrote, “Cast your bread upon the water and in time it will come back to you.” Three millennia later, Ivan Misner, my friend and founder of Business Network International (BNI) gave us a handier way to remember the law of reciprocity. Ivan simply says, “Givers gain.” Beautiful.

In the Age of the Customer if you’re not asking for and getting referrals, you’ll have to work much harder than is necessary just to survive.

Write this on a rock … Seek the holy grail and Perfect 10 of prospecting – the unqualified referral.

The Blasingame Small Business Banking Rule of Thumb

For many years, I’ve made recommendations to small businesses with regard to their banking relationships called: The Blasingame Small Business Banking Rules-of-Thumb:

Photo courtesy of Notes From A Chair Blog

1st Blasingame Small Business Banking Rule-of-Thumb
A small business should have at least two banking relationships. If you’re turned down for a loan at one bank, you have another place to go where the person already knows about you and your business. One primary reason for this rule is because if only one banker knows you and your story, when he or she gets fired, promoted or otherwise leaves the bank, Murphy’s Law will dictate that it will happen when you most need a favorable banker.

2nd Blasingame Small Business Banking Rule-of-Thumb
At least one of the banking relationships should be with an independent community bank – that means locally owned and managed – and preferably your lead bank. I’m not picking on big banks, it’s just that most small businesses need to be given a little extra consideration for their character and past performance, which is typically not as forthcoming in a large bank.

Loan decisions made by large banks have two elements that may not give a small business this extra consideration:

1) The actual decision is made by a loan committee in another city, by people who probably don’t know the business owners

2) They rely heavily on what is called “credit scoring,” which is a computer program – each bank has its own proprietary model – that receives quantifiable information and produces a numerical “score”. If this week the bank has decided only scores of 18 or more are accepted, a loan request under 18 will likely be rejected. I’ve never heard of a credit scoring system that includes a variable for the applicant’s character.

Over the years, my Rules-of-Thumb have proven to be valuable to many small businesses. But since 2008, with all of the problems associated with big banks, those who have followed my advice were much less likely to find themselves without access to credit. This was because every independent community banker I spoke had emphatically said they had never stopped lending to their small business customers.

Recently, I talked with two presidents of independent community banks about working with small businesses and the health of the banking industry. First, Mike Menzies, who is not only the president of the Easton Bank and Trustin Easton Maryland, but he’s also the new Chairman of the Independent Community Bankers Association (ICBA). Mike’s also a long-time member of my Brain Trust. Secondly, there is Charles Antonucci, President of Park Avenue Bank in mid-town Manhattan.

They agreed with my advice.