Impact Learning Systems


The Experience is the Brand (Part 2) Malcolm Carlaw

How many refer­rals have you been get­ting lately? Refer­rals are a good indi­ca­tor that your cus­tomer is hav­ing a very good or excel­lent expe­ri­ence. There's good research indi­cat­ing that invest­ing in your cus­tomers expe­ri­ence is worth the effort. So what should you do?

One of the delight­ful moments that occur in our office is when a cus­tomer refers us to a prospect. It's delight­ful because it makes every­one feel good about their con­tri­bu­tion to that customer's expe­ri­ence. The sales­per­son feels val­i­dated in build­ing a strong cus­tomer rela­tion­ship; devel­op­ment feels jus­ti­fied in tak­ing the time to pro­duce an excel­lent prod­uct; the imple­men­ta­tion team is proud of achiev­ing or exceed­ing the client's expec­ta­tions; and the sup­port team is qui­etly con­fi­dent in the knowl­edge that none of it would have hap­pened with­out their help.

Refer­rals are a good indi­ca­tor that the cus­tomer has had a good expe­ri­ence. In a Strativity's 2009 Cus­tomer Expe­ri­ence Bench­mark Study they found a direct rela­tion­ship between a company's invest­ment in cus­tomer expe­ri­ence and the num­ber of refer­rals the com­pany received.

The more com­mit­ted the com­pany to the customer's expe­ri­ence, the more referrals.

While refer­rals are not a guar­an­tee, slightly over half (51.4%) of com­pa­nies that invested heav­ily in their cus­tomers expe­ri­ence refer­ral rates of 10% or more.

It seems a self evi­dent relationship between cusomer experience and customer referrals1 The Experience is the Brand (Part 2)ques­tion, but why do com­pa­nies invest in the whole cus­tomer rela­tion­ship thing? Well, in short, refer­rals are about ten times more effec­tive than other mar­ket­ing tools and are a lot less expen­sive. In the Stra­tiv­ity study, they found that cus­tomers were less likely to leave than those who had a so-so expe­ri­ence. See The Road to Cus­tomer Loy­alty for more dis­cus­sion on what dri­ves loyalty.

How­ever, get­ting refer­rals is not as easy as just spend­ing money. In a business-to-business set­ting there are a vari­ety of fac­tors that come into play. The customers:

  • Trust of the sales person
  • Sat­is­fac­tion with the sales relationship
  • Per­cep­tion of being special
  • Opin­ion of the prod­uct or service
  • Over­all per­cep­tion of their cus­tomer experience

So what are the invest­ment steps that will lead to a high per­cent­age of refer­ring cus­tomers? Here are five steps, most of which are not very expen­sive, that will increase your refer­ral rate:

1. Set up a refer­ral program

When a cus­tomer refers some­one, they are plac­ing a lit­tle bit of their rep­u­ta­tion at risk. Honor and build on that rep­u­ta­tion. Don't take advan­tage of it.

  • If you are in a business-to-business envi­ron­ment, find ways to make your cus­tomer feel spe­cial that don't involve elab­o­rate gifts. Build a refer­ral rela­tion­ship out of respect and or mutual self-interest.
  • If you are in retail, gifts and dis­counts in exchange for refer­rals are fine. It is accepted and even expected that price is the pri­mary cur­rency of trade in retail. How­ever, you still have to deliver.

2. Pro­vide your ser­vice and sales peo­ple with good peo­ple skills

Sales and ser­vice peo­ple that offend prospects and cus­tomers aren't going to help your refer­ral pro­gram.  This can be cor­rected through cus­tomer ser­vice train­ing and sales train­ing. Peo­ple skills can be taught. When com­bined with a lit­tle coach­ing, cus­tomer ser­vice train­ing and sales train­ing can have a tremen­dous impact on cus­tomer communication.

3. Over-perform on your promise

Good peo­ple skills can't make up for a bad prod­uct. They can help, but ulti­mately you have to deliver.  The old adage of "under-promise and over-perform" comes into play when you are talk­ing about referrals.

4. Walk your talk

In a March Blog, Hazel Walker sug­gests the giv­ing to get approach.  She sug­gests that if you want to make a mil­lion dol­lars, help some­one else make a mil­lion dol­lars. Make a refer­ral a week. It's good advise. Also see Mon­ica Postell's dis­cus­sion in an ear­lier blog on Give to Get.

5. Get the word out

One you have the mech­a­nisms in place to deliver a cus­tomer expe­ri­ence that will lead to cus­tomer refer­rals, tell peo­ple about it. Wal­ter Carl, the founder of Chat Threads has done some inter­est­ing stud­ies on word-of-mouth mar­ket­ing.  In an advo­cacy cam­paign for a Pre­mium Pet Food brand, he was able to track con­ver­sa­tions through two waves.

He started with 5,000 peo­ple who told, on aver­age, 12 other peo­ple, result­ing in an addi­tional 61,167 peo­ple.  In the sec­ond wave, the 61,167 peo­ple each told 3 peo­ple, result­ing in an addi­tional 173,101 peo­ple.  In total 293,268 peo­ple heard about the prod­uct (5,000 + 61,167 + 173,101 = 293,268). It is unlikely that you will get these results, but you could try.

As I men­tioned in  part 1 of this series, the expe­ri­ence you pro­vide your cus­tomer is your brand. If you make it an excep­tional expe­ri­ence, your cus­tomer may be will­ing to become an advo­cate on your behalf.  It is then your respon­si­bil­ity to give him, or her, the oppor­tu­nity to do so safely.  Refer­rals are an expres­sion of trust. Deliver for your cus­tomer. They have deliv­ered for you.

Mal­colm Car­law cur­rently serves as the Exec­u­tive Vice Pres­i­dent of Impact Learn­ing Sys­tems, a com­pany ded­i­cated to pro­vid­ing world-class cus­tomer ser­vice and sales train­ing to front-line agents. He speaks reg­u­larly at trade shows and indus­try con­fer­ences. He holds an MBA in orga­ni­za­tional devel­op­ment and finance. Mal­colm is an avid pho­tog­ra­pher, enjoys inter­na­tional travel, and man­ages to keep his orchids bloom­ing most of the year.
2 The Experience is the Brand (Part 2)
Mal­colm Carlaw
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  • Self Esteem

    Thank you so much, there aren't enough posts on this… or at least i cant find them. I am turn­ing into such a blog nut, I just cant get enough and this is such an impor­tant topic… i'll be sure to write some­thing about your site

  • Self Esteem

    Thank you so much, there aren't enough posts on this… keep up the good work

  • Lead­Gen­er­a­tionGuy

    very cool site thanx… this stuff is right up my alley!

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