Business Networking and Referral Marketing

Presented by:Martinsville-Henry County Economic

Development Corporation’sOffice of Small, Minority, &

Entrepreneurial Business Development

What is Referral Marketing?

• When starting your business, where did your first clients come from?

• Did people already know you and trust you because of your prior business with them?

• Did you use your network of contacts to gain business for you company?

• If yes, then you are referral marketing.

Network of Contacts

• Collection of social capital that you accumulate everyday!!!

• Family, friends, business associates, suppliers, members of your social groups, Church groups, neighbors, Chambers of Commerce, networking groups (like Lisa’s!), etc.

• In-Rolodex Selling.• Metcalfe’s Law: The value of a network is

directly proportional to the square of the number of its connections.

Getting Quality Referrals

• Requires you to plan and organize your contacts into manageable parts.

• Not all contacts will be equally profitable (e.g. Family Members and Friends!).

• Prioritizing and targeting your best contacts within your network is a useful investment of your time.

• Five step process.

Step One: Identify and Prioritize

Order your contacts:1. People in your current Contact Sphere.2. Satisfied Clients and Customers.3. People whose business benefits from yours.4. People with who you do business.5. Business co-workers, present and former.6. Members of business groups you belong to.7. Fellow members of social and religious

organizations.8. Family, friends, teachers, mentors and coaches.

Step Two: Identify Patterns and Break Down into Subcategories

• Notice the patterns that develop expose the strengths and weaknesses of your network.

• The quality of this list is in direct proportion to your current networking skills.

• Break the list down into three sub-categories: – Your Information Network: Those people who can help

you with knowledge, experience, and expertise.– Your Support Network: Those people who can offer

emotional, physical, spiritual, and financial support.– Your Referral Network: These are people who have the

resources and connections to pass you potential referrals.

• From this list, focus on customizing your network to your market.

Step 3: Determine Your Contact Sphere

• To determine your Contact Sphere:– Look at sources readily available to you (Rolodex, daily

planner, PDA, etc.). – Look at your supplier list.

• Make contact with the professionals you listed in Step 2. • Establish a reciprocal relationship with the businesses that

have a best fit with yours. Compatible but noncompetitive.• Offer “bird dog” fees when appropriate. Formalized referral.• Become a “Referral Hub”. A Referral Hub is someone who

has an extensive resource list of referrals and shares them generously. This takes time and a deep conviction to becoming an exceptional referral marketer.

• “It’s not who you know, but rather, it’s who they know.” You have no idea what your network can offer until you start making the connections in a formalized manner.

• 6 degrees of separation (or in Martinsville 1)!!!

Step 4: Establish a Contact System

1. Select your referral partners. 2. Recruit your perspective referral

partners. 3. Educate your new referral partners. 4. Give your referral partners the tools to

take action. 5. Initiate contact with prospects your

referral partners give you. 6. Reward you referral partners.

Step 5: Expand and Diversify Network

• This is also known as “filling the gaps”.• Look through Steps 1-4 and identify areas where

you need to make contact but do not have the network.

• Fill the gaps through:– Existing contacts/referral partners.– Trade Associations.– Chambers of Commerce.– Informal Networking Groups (Lisa!!!).– Professional Networking Groups.

• Make sure any professional networking group restricts access through non-competitive membership.

Social Media: Facebook, LinkedIn, and Twitter

• Today social media is a must for any business (product or service based) no matter the size.

• It is a virtualization of network and referral marketing.

• Asynchronous communication with individuals or groups of individuals who choose to follow you and your company.

• Viral: Messages, announcements, coupons, advertisements are passed around instantaneously.

• Test market and customer feedback.• Example: Rising Sun Breads

Thank you!!

Cian RobinsonRobinson Ventures, LLCcianrobinson@robinsonventures.comW:276-880-7088 (must dial area code first)C: 716-308-7357Social Networks:Professional: Linked In, PlaxoPersonal: Facebook, Skype