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Great Read for Small Businesses and Startups: The Referral Engine

Posted by Bob Warfield on May 10, 2010

I loved John Jantsch’s book, “The Referral Engine“.  Like the book jacket says, it’s about teaching your business to market itself.

It’s funny, but I expected the book to be about something else from the title.  I guess I had visions of multi-level marketing when I heard the word “referral”.   While the strategies and tactics the book espouses would be very effective for MLM, they will also be effective with any business.  In fact, a great many very successful businesses are doing just exactly what Jantsch proposes.   What’s really different here?

There is a growing consensus (finally), that the Old School marketing approach of simply browbeating customers into buying is no longer working very well.  Send them enough spam, make them watch enough Super Bowl ads,  control the shelf space at the super market so they have fewer choices, and they will buy.  Businesses with this mindset (and it is still the prevailing view) think that their biggest problem is figuring out how to extend the consumer enough credit to buy even more.  But as I said, it’s not working.  Newer generations are growing up savvy to it and older generations are tired of it.  The Internet above all has made it easy for everyone to see more choice and to tell each other what they think about the companies they deal with.  Carpet bombing ad campaigns are seen as less and less effective in the wake of all this.

Jantsch provides an alternative with his Referral Engine concept.  His proposition is that great companies have great customers who will help you get the word out.  The book is all about how to treat customers so they care in the first place, and then how to get systematic about enrolling their help.  Like a lot of great business books, it is a quick read, but one that is chock full of great idea bites.  You’ll want to either keep a highlighter handy or plan to go back through the book to find ideas directly applicable to your business.

Since getting into the whole Internet thing professionally, I’ve made a real study of the Social Dynamics.   There is a “give to get” mentality there that is needed for best success.   People often ask me what the secrets are to doing business on the Internet, and there are two things I tell them.  First is that there really are no big strategic secrets.   The Internet is just people, so treat it like you would people and you’ll be okay.  The second is the “give to get” thing.  Authors like John Jantsch and Seth Godin (another of my favorites) have made give to get into a real platform for doing business.  Companies like 37Signals or Smugmug have built this mindset deep into their cultural DNA.  For many small businesses, operating this way is entirely instinctive.  It may not occur to them that everybody doesn’t automatically know how to do it. “The Referral Engine,” simply deconstructs “give to get” in a very readable and approachable way to try to break it down into a system that one could implement for their business in a systematic way.

What are real world examples of give to get?  We’re all familiar with companies like Zappos or Netflix.  They’re definitely in the give to get business in terms of how they treat people.  But one could conclude that these are very large companies that have the benefit of huge budgets.  Will it work for smaller companies?  Of course!   Jantsch illustrates numerous examples throughout the book.  Stories like:

– A remodeling contractor that would offer to throw an Open House so the homeowners could show off their new remodel after every project.

– A painting contractor that sent each customer that referred another customer a hand-written thank you note together with a lottery ticket. 

– A window washing company whose employees did such a great job customers always felt compelled to tip them.  Whenever that happened, the employee would pull out three referral post cards and ask the customer to address and sign them on the spot.

So much of the referral business is knowing when to ask and how to ask your customers for referrals.  As all of the examples above point out, it’s give to get.  You can’t ask until the customer is feeling generous.  When you do get to that point, there is a very narrow window of time, and you have to ask in a way that provides maximum convenience or even more giving to the customer.  Importantly, each section of the book ends with a point-by-point action plan framework any business can use to give it a try.

Highly recommended!

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