Many companies perceive referrals to be out of their control—as something that just happens whenever they get lucky, like finding money on the ground.
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Author and marketing guru John Jantsch, our latest podcast guest, is flabbergasted that more companies don't instead use referrals as an active revenue channel.
"A lot of times people go, 'I don't know, people just come to us occasionally,'" he says on Marketing Smarts Episode 539. "But what are the goals for this? Just like any channel, what does success look like, are we measuring it?
"If we take referral generation, what we're really saying is what is the intentional act of viewing that as a significant channel, just like you might paid ads or your email marketing," says John. "Really looking at that as just what it is, a channel that you need to pay attention to, nurture, and create demand for."
That's quite a different outlook from the common tell-your-friends-for-cool-swag approach. It means going to current customers and asking them directly, right?
Not necessarily: "In some very valid cases, going out to a customer and saying, 'Tell people about us,' or, 'Could you introduce me to some friends,' is just not good; there's not a flow to it, it doesn't make sense, it's not relevant."
Instead, you have to look at referral generation as something that accompanies the entire customer journey—that starts before the customer even becomes a customer.
As John explains: "Referrals happen, quite frankly, in the trust-building stage; they happen when somebody fills out a form or calls your business; they happen when the actual transaction happens; they happen in the communication that follows the transaction."
Sounds like something you can be intentional about. Who needs luck?
Listen to the entire show from the link above, or download the mp3 and listen at your convenience. Of course, you can also subscribe to the Marketing Smarts podcast in iTunes or via RSS and never miss an episode.
George B. Thomas: I'm super excited because today I get to sit down with a long-time marketing pro. Mr. John Jantsch is going to be with us today, and we're talking about the power and importance of a B2B referral generation program. John talks to us about what the heck a B2B referral generation program is, how to get started, what success looks like, and he gives us some great words of wisdom, a couple of books along the way, a MarketingProfs event that you can dig deeper into, and all sorts of amazing great items. Before we get into the episode, let's learn a little bit more about John Jantsch.
Dubbed the Peter Drucker of small business marketing tactics, John Jantsch is the creator of Duct Tape Marketing, a system that has been used by countless entrepreneurs to grow their business smoothly and sustainably. He is the author of four popular books, including The Referral Engine: Teaching Your Business to Market Itself and Duct Tape Selling: Think Like a Marketer, Sell Like a Superstar. With over 4,000 blog posts and articles on every aspect of marketing, Jantsch's site Duct Tape Marketing has been recognized by Forbes as one of the 100 best websites for entrepreneurs. Huffington Post calls him one of the top 100 must-follow on Twitter. His Duct Tape Marketing Podcast has been called a must-listen by Fast Company Magazine. Now he's here for you on the Marketing Smarts Podcast. As you can see, he is a seasoned pro.
That's enough shenanigans and making you wait for this episode with John Jantsch on referral generation programs. Let's get into the good stuff. You should be excited? Why? Because I'm excited. You might even continue to ask, Why is George excited? Or you might be thinking, George, you're always excited. I am excited today because I get to talk to a professional and you get to listen in on the conversation. I'm talking to John Jantsch today about the power and importance of a B2B referral generation program. At the end of this podcast, you'll know if this is right for you and your B2B business, or maybe it's something you share with a friend.
John, how are you doing today?
John Jantsch: I am doing great. It is so good to see you and hear you, you have such a great beautiful radio voice.
George: It's funny, I've heard that before. When I first started podcasting, I thought my voice sucked. So, a little life lesson along the way, sometimes your biggest weaknesses end up being your greatest strengths. I don't know who needed to hear that today, but take that and run with it. John, pertaining to the conversation today about the power and importance of a B2B referral generation program, what the heck keeps you up at night?
John: I think the thing that probably keeps me up at night the most is that I talk to business owners, B-to-anything, and they always tell me, "I get most of my leads by word-of-mouth or by referral, or by people talking about us on social media." The follow-up question is, "That's awesome. What do you do about them?" And they say, "Well, nothing. It just happens accidentally. We really don't do anything to generate referrals." I wrote a whole book based on that frustration, quite frankly. If you know a channel is your best channel, and then you're not figuring out how to amplify it, that's a real missed opportunity.
George: I love that we're having this conversation. First of all, I'd be remiss if I didn't ask for the listeners, what's the book?
John: It's called The Referral Engine. I wrote it in 2008/2009, but what's cool about it is this is an evergreen topic. I didn't talk about generating referrals with TikTok. It really is agnostic to any of the channels. The topic and the principles will live on forever.
George: I know I'm going to go get the book, whether I can download it or buy it, because as a business owner, I have learned that referrals are a major thing that needs to be paid attention to.
One of the things that I love to do on this podcast is level-set, meaning I understand that out there somewhere it's somebody's day one. When we use terminology like referral generation, they're like, "Huh?" Let's level-set and get you to answer what the heck is referral generation as we continue the conversation today?
John: Sure. You think about lead generation. It's certainly very related to that. Referrals are the act of getting somebody, in many cases a happy customer, but it can also be strategic partners, to talk up your business, or maybe even go farther than that and say, "I'm going to bring George in to talk to you guys today, you should listen to what he has to say and buy from him," and that type of thing. That's a referral. If we take referral generation, what we're really saying is what is the intentional act of viewing that as a significant channel, just like you might paid ads or your email marketing. Really looking at that as just what it is, a channel that you need to pay attention to, nurture, and create demand for.
George: I love this. My brain is going about 57 different ways of how do I create the process, how do I measure the process, is there anything in my CRM that is helping me to manage this, but we can't go into the deep end of the pool yet.
We make time for those things that we find important, so I have to ask the question now that the Marketing Smarts listeners know what it is. Why the heck is it important for B2B marketers? By the way, I love that you said B-to-anybody earlier. Why is it important for marketers to pay attention to this referral generation, and not just like lead generation or demand, what does this enable that maybe these other things that we've been doing don't do?
John: There are some really significant benefits. Number one, your ideal customers are the ones that are happy, satisfied, love you, usually they're the ones that are going to refer. Guess who they're going to refer? Somebody who is like them, probably an ideal customer, so you're not wading through going, "Not a fit."
The other thing that happens typically in a referral situation is they don't come and say, "Can I get a deal?" It's like, I know exactly what you did for my friend, it was awesome, that's the solution that I need, I trust you immediately, so I'm willing to pay a premium for what it is that you do.
Lastly, lifetime value just increases significantly. There are all kinds of statistics and studies that show that somebody who came to you by way of referral is about 22% more likely to stay with you and be with you, and also generate referrals.
George: That's so fun because the referral generates a referral that generates a referral, and it's this reciprocal flywheel situation. Two things you said that I was like, yes, please give me more of that; not asking for a deal and extended lifetime value of the customer. That in itself could equal millions of dollars for your organization, depending on how much you sell, how many widgets or how much those widgets cost, those products or those services.
I do want to start to dive a little bit into the deep end of the pool. My brain goes into systems of how do you do this thing. I really want to ask, and maybe this is selfish for me, but the Marketing Smarts listeners are getting to tune in. How do you actually start using a B2B referral generation program at the company of the listeners, what do they have to put in place, what do they have to think of, where does your mind go?
John: The first thing is mindset. A referral is the logical destination of a great customer experience. If you think about the customer journey, a lot of people just stop at the funnel. We have for years used something we call the marketing hourglass. If you think about the shape, the funnel is there. There's nothing wrong with getting somebody who needs what you do to know about you and then a percentage of them to become customers. But that's where a lot of people stop.
To me, successful B2B marketing in general needs to say what happens when somebody tries us, what happens during the buying experience, how do we retain or get repeat business, and what are we going to do to generate referrals from every single one of our customers. If you take those stages of the hourglass—which for us are know, like, trust, try, buy, repeat, and refer—then you actually build that into your overall marketing plan. It doesn't just happen accidentally, or you don't one day in a quarterly plan meeting go, "What are we going to do to generate referrals?"
Referrals happen, quite frankly, in the trust-building stage; they happen when somebody fills out a form or calls your business; they happen when the actual transaction happens; they happen in the communication that follows the transaction. That's where referrals are actually generated from customers. If you look at this end-to-end customer journey first, then you start planning. Maybe even planning backwards. What if you sat around in a room and your first question was, "How could we get 100% of our customers to refer us?" Would you change anything along the way?
George: First of all, that's the question I would say that you sit down with, "How can we get 100% of our customers to refer us?" The reason I connect to that so deeply, I think, is because that is going to put you on a path of how to delight your customers along the way in which they are activated to talk about you.
I also love how you just blitzed past the stages of the marketing hourglass. Ladies and gentlemen, that makes this the first rewind point of the episode. You should rewind, have your notepad and pen, chalk and a wall, some spray paint, I don't care how you note it down, but you probably want to get those stages and start to think about that.
I also love this idea of the hourglass. My brain immediately went to the top part is your funnel, but then you as the organization are actively doing something to flip it over and now bring those customers back through what I'll call a secondary funnel or set of actions and those phases that you mentioned. It's such a good visual.
John: Can I also put a plug in for MarketingProfs for people that belong to the membership? I've actually done a session, so somewhere deep in there if you Google the customer journey, or however the search works, I did something called Rethinking the Customer Journey, and I really unpacked that pretty deeply.
George: Speaking of which, if you're not part of the community, you should head over to Mprofs.com and sign up for sure, and also dig into that content. I know where I'm headed after this episode. Will you be there?
I mentioned a second ago about flipping that hourglass and activating those customers. Anytime you start to flip something in an organization, you never know. My question that I want to go to here is what leadership, stakeholders, departments should actually be involved when building a B2B referral generation program so that everybody is ticking together and has the same mindset shift you mentioned a couple minutes ago?
John: If you think about those stages, know, like, trust, that's kind of Marketing's job, develop the trust that somebody wants to go a little bit farther. Try to buy, that's usually Sales. Then repeat and referral, quite frankly, have a lot to do with Customer Service, Customer Success, Delivery, Fulfillment, whatever you call it in your organization. In many organizations, we all know the frustration of Sales and Marketing aren't on the same page. The salesperson is like, "I actually don't know what happens after somebody says they want to buy." Getting that throughline through at least those three departments is essential.
George: I love that. When I think about what John just said, Marketing Smarts listeners, the action item would probably be the head of those three departments coming together and actually having a conversation and talking about how you can implement this at your business.
John: Yes. I've done that very thing as part of a strategy engagement. Let's just talk about it. What actually happens? What is the journey? What would be an ideal journey? What is the existing journey, but what would be an ideal journey through all of these stages?
Quite often, things happen in organizations, systems get built, SOPs are used, and nobody is talking anymore. We're like, "Wait a minute. We don't want the customer to do that next. When did that happen?" So, just revisiting these things can have a lot of value.
George: I am a big advocate of revisiting the processes and program with the mindset of potentially blowing some stuff up, because that's how we can actually make change in our organization.
One thing I've learned about doing these podcast episodes and talking about different topics is some companies will land in the camp of "that's not for me," or "it doesn't sound like it's for me." I have to ask, are there companies that are better suited for a B2B referral program, or a referral program in general, or do you fundamentally believe that if you're a company who has customers, they should be thinking about this?
John: This is actually very limited to a small group of companies that can use this. It's really companies that want to grow profitably. That's really the only group that should be paying attention today.
George: If you don't want to grow, if you don't want to be profitable, go ahead and tune onto your favorite radio station. I'm just kidding. We're going to keep going.
John: Let me throw in there, a lot of companies will say that this isn't for us or we can't do this because our customers are X, or we reach them this way, or our high ticket price just precludes us from doing this, because a lot of people's view of referral programs are like, "Tell people about us and we'll give you $10 and a hoodie," and that doesn't work for a lot of B2B companies where it's a consultative sale, it's a high ticket item.
You just have to really think about your real goal is to build a trust building platform for referrals. You don't have to do the automated thing that you maybe see a CRM tool doing or something. You can have a very professional high dollar referral program if that's what really works for your organization.
George: I love this. My brain connected a couple of thoughts. I like to simplify things. Birds of a feather flock together. If you sell a million dollar widget, the person that bought your million dollar widget is probably sitting in a room with other company owners that could use your million dollar widget, so don't let that be a stopping point for you.
Speaking of stopping points, one of the things I love to do on the Marketing Smarts Podcast is figure out or diagnose hurdles that might get in people's way. Obviously, you wrote the book about this, you've helped people through the process. What are some of the hurdles you've seen B2B marketers, or marketers in general, face while trying to start using a referral generation program, or they're using it and all of a sudden they get a flat tire, hit a pothole, or just wreck the whole system?
John: The biggest one is I think they're too limited in their vision of how they would actually generate referrals. Everybody just simply defaults to the way to get referrals is to go ask my customer to give me a referral. For a lot of people, that's very uncomfortable, that feels like I'm begging, that feels like I'm desperate, all of the things I hear.
Quite frankly, if you know you provided a tremendous value to somebody, not giving them the opportunity to bring that same value to their friends, neighbors, and colleagues, you're really doing them a disservice, so let's get over that head trash. In some very valid cases, going out to a customer and saying, "Tell people about us," or, "Could you introduce me to some friends," is just not good, there's not a flow to it, it doesn't make sense, it's not relevant.
What you have to start thinking about is ways that you can actually tap two audiences, providing value for people that also influence your customers is one, and number two, the entire strategic partnership opportunity out there. Who are the other non-competing businesses that also supply, support, or have as customers your ideal customer?
In many cases, that's where the real gold can be. Getting a business that has thousands of your ideal customers to bring you in and do a webinar, or speak at an event, or even just provide an e-book or facilitate a roundtable, there are many ways you could do it, is a way for you to be introduced and it's an implied referral. You're not asking for referrals, necessarily. You're providing value, and for that you're going to get exposure.
I know we don't have the time to do this, but I could unpack three or four tactics just like that that are very potent for a B2B environment because they get past that idea of I'm just going and asking my customers.
George: That's so good. A couple things hit my brain. You have to ask yourself, are we being selfish by not having a referral program? Could we be impacting more of the world, more of the universe, making a bigger dent, and getting people past their own problems and to their aspirational point from a professional standpoint? I love that part.
The other thing that came to my mind, and I'm going to go off the beaten path for a second again, because when I heard you talking about these two different kinds of veins that you need to pay attention to, the word collaboration came to mind. I'm super curious how important is or how does collaboration fit into the idea and the mindset of this referral generation program?
John: It's huge. What you're doing is you're shifting it from transaction to let's collaborate to add value to other folks. I'll give you an example. This obviously is very B2B.
There's something I call backing a client's ecosystem. In my case, I provide marketing strategy quite often, so we'll rewrite somebody's entire strategy and that's what we do for them. I know for a fact that person that we're working with also has an accounting firm, also has a legal team, also has somebody that is advising them on people, maybe even an executive coach that is advising that executive that we're working with.
I know that if I go to each of those professionals and say, "I want to share with you the branding positioning, the marketing plan, the change in direction that we are advising our mutual client so you'll be more prepared to understand how to advise them, or what they're doing, or why they're doing it." Every time I've done that, first off, it's a great value add for our client because we're working as a team, we're collaborating. All of the professionals that serve them are collaborating now with maybe one objective in mind, instead of advising people, "You shouldn't spend money on that. You shouldn't do that without understanding."
Every single time I've done that, it is such a unique experience for the people that are involved. They immediately say, "We have three or four other clients that need this, too." Referrals come from it, but the whole goal is to provide more value to my customer. If you do those kinds of things, referrals will happen.
George: I love that so much. If you just think about how to add value to my customer, referrals will happen. I love this idea of collaboration. As I get to do these interviews and I get to input the information that smart people like you give me, I go in this case, if you can just make it less transactional and more relational, that's where you're going to get into the good stuff.
John: Yes. Absolutely, 100%.
George: We talked about the hurdles. Being in Colorado, probably on a mountaintop with snow somewhere, I'd like to paint a picture of what does the mountaintop look like, or the Olympics first place gold medal success. If we think of we've started, we're implementing, and now we're driving a referral generation program, how do we know, what does success look like?
John: Obviously, that's one of those consulting answers of it depends. I would say when I feel like somebody is being very successful is that they haven't just given this an event mentality. They've kind of baked this in, and not just in one way. I talked about your customers, and I talked about strategic partners as an avenue. There are at least three or four tactics or programs that you should have going at all times. Just even staying top of mind with your customers that you appreciate referrals is one.
It's not just here's one thing we can do. It is really a mindset. It's how can we look at this as a significant channel? Experiment, like you do in any channel, figure out what works. Measure, obviously. A lot of times people go, "I don't know, people just come to us occasionally." But what are the goals for this? Just like any channel, what does success look like, are we measuring it? I would say that, frankly, if you were going to take the gold standard one KPI, how many of our customers are referring us could probably be it. Obviously, you have to be paying attention in order to measure.
George: I do want to go off the beaten path one more time.
John: I didn't know we were on the path ever, but go ahead.
George: We're just on a conversational journey. I think it's important for the audience to know. If you're going to measure the success, are there things that you have seen companies or that you suggest companies put into place that make it easier to report the success or to visually see 54% or 72% of our customers in the last quarter sent in referrals, 22% of those referrals closed for XYZ business? Where does your mind go on the measurement side of this?
John: It's a tough one because it might be multi-departmental, you might be counting on salespeople. Like all attribution, sometimes it's I don't know where they came from, and sometimes the customer can't tell you. But there are a lot of best-practices.
Always be asking. One thing that I love to do is if somebody is referred, we treat them differently. Maybe put them in a different nurturing program. We want to make sure they understand that they are significantly different. Obviously, UTM tracking can be done if you do have a program where your customers are actively sharing information.
In the end, it's like all data collection, it has to be something that is thought through so that you can be getting everybody on the same page and emphasizing how important it is.
George: I love that. We got another action item for the listeners; get together, collaborate with your team, and what are the things that you need to build so that you can measure the success as you move forward.
John, this has been an absolutely amazing episode. I've learned tons. We have a book that we can go to next. We have a MarketingProfs thing we can go watch next. I just want to ask one last question. I love this question because smart people, their journeys, helping other folks through this. What are some words of wisdom that you want to leave the Marketing Smarts audience? It can be around this referral generation program conversation or just some life lesson that you've learned. What are some words of wisdom that you want to share with the audience?
John: The one that I find myself sharing more often than not, and some of your audience may be on big teams in big organizations, it might not be as relevant for them. Do less, but just do it better. Instead of coming up with 19 objectives for this quarter, 17 of which you will not get to, let's come up with three. If you listen to this show and you're thinking we need to do this, this, and this, pick one, two, three, and go execute. Ideas are a dime a dozen.
George: Marketing Smarts listeners, did you take lots of notes? I have to ask, what is your one thing, your number one execution opportunity after this podcast episode? Make sure you reach out and let us know in my inbox or on Twitter using the hashtag #MPB2B.
I also have to ask are you a free member of the MarketingProfs community yet? If not, head over to Mprofs.com/mptoday. You won't regret the additional B2B marketing education that you'll be adding to your life.
We'd like it if you could leave us a rating or review on your favorite podcast app, but we'd love it if you would share this episode with a coworker or friend. Until we meet in the next episode of the Marketing Smarts Podcast where we talk with Patrik Wilkens about how digital creators, you the B2B marketers, should navigate the Metaverse, I hope you do just a couple of things. One, reach out and let us know what conversation you'd like to listen in on next. Two, focus on getting 1% better at your craft each and every day. Finally, remember to be a happy, helpful, humble B2B marketing human. We'll see you in the next episode of the Marketing Smarts Podcast.
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Published on March 30, 2023
John Jantsch, the creator of Duct Tape Marketing, a system that has been used by countless entrepreneurs to grow their business smoothly and sustainably. Dubbed the Peter Drucker of small business marketing tactics, John is the author of four popular books, including The Referral Engine: Teaching Your Business to Market Itself and Duct Tape Selling: Think Like a Marketer, Sell Like a Superstar. Featuring over 4,000 blog posts and articles on every aspect of marketing, the Duct Tape Marketing website has been recognized by Forbes as one of the 100 best websites for entrepreneurs.
LinkedIn: John Jantsch
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