Quantifying Referrals

In our book, Business by Referral: A Sure Fire Way to Generate New Business, is about our comprehensive, systematic approach to running a referral based business.Referral marketing is the practice of building a base of customers, clients, or patients by obtaining support from specifically targeted personal and professional sources.

This three part series of articles outlines the three central quantitative steps involved in a referral marketing campaign. Part 1 provides a structured approach to allocating both the time and the money you can bring to the campaign. Part 2 shows you how to set goals for your efforts � the number of referrals you expect to get and the income you expect to generate from them. And part 3 guides you in tracking and evaluating your results, and in using the numbers to fine tune your referral marketing campaign for even better returns.

-------------------------------------------------------------------------------- Part 1: Budgeting for Referrals Most of us enjoy the give and take of business friendships and associations. We get together for lunches and seminars and conventions, and we appreciate the value of knowing people in a variety of places and associations. But how many of us count the minutes and hours we spend on this kind of communication? How many of us keep track of the referrals that come our way as a result, or of the eventual return in dollars and cents on this time investment? Suppose you were considering an investment or procedural change that might enhance your business advantage � for instance, a new kind of customer tracking database software. What would you want to know before making wholesale changes in your business operations? Probably the following things: First, how much would it cost? Next, how long would it take to implement? Third, how many new customers and repeat customers would you realize? Fourth, how much extra profit would it generate? This is what our systematic approach to referrals is all about. You need to determine, up front, how much time and money you can afford to devote to the purposeful gathering and cultivation of contacts. As does any effective business plan, systematic referral marketing requires you to allocate the resources you intend to apply toward your effort. Specifically,you need to estimate how long it will take and how much money you must spend to get the referrals you need.

Time is of particular concern in this context. Referral marketing is time intensive; it calls for a lot of personal contact, not just via telephone, letters, and e mail, but face to face, perhaps the most effective form of communication. You can sell yourself in whole person more effectively than as words on paper or sound bites over optical fibers.

At the start of your referral marketing campaign, take care to allow enough time to carry out your plans. If you don't, you risk spending too much or too little time on a particular effort, abandoning your efforts too soon, realizing little or no return on your time investment, or losing control of your time altogether.

Dr. Ivan Misner is a New York Times bestselling author. He is also Sr. Partner for the Referral Institute, an international referral training company. Dr. Misner is also the Founder & Chairman of BNI (www.bni.com), the world's largest referral organization with thousands of Chapters in dozens of countries around the world. His latest book, Masters of Success can be viewed at www.MastersofSuccess.biz. He resides in Southern California with his wife and three children and can be reached at [email protected] .

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