Why Don’t My Customers Refer Me Automatically?

By: Dan Kennedy on: September 6th, 2015 7 Comments

You’re considered a nice guy or gal. You got kids, a mortgage, a car note ‒ pretty much like everyone else. You do a good job, at least in your mind. Your customers all seem satisfied. So you’re probably wondering how come your customers don’t just automatically refer you to family and friends.

There are two very broad reasons for this.

First of all, almost nothing happens automatically except for bad things. Think about that new car warranty you got. You know once it expires things will start to go wrong with your vehicle. It’s like clockwork. And, of course, these things all worked fine when the warranty was in place. But once the warranty expired, you had that car in the shop on a regular basis. You probably got to know your mechanic real well. And he got to know you pretty well, too, considering you were helping to pay his mortgage and feed his kids.

The second reason is it’s not their job. Your customer is not your sales person. Their job is to give you money and they are fulfilling their end of the bargain. They’ve got other things to do.

Most business owners just don’t understand why their customers don’t automatically refer them. But giving a referral is a much higher threshold of risk and pain than it is to continue to patronize your business.

In fact, people will continue to patronize businesses even if they don’t do a very good job. It’s a matter of habit, and they figure the devil they know is better than the devil they don’t. It’s just plain inconvenient to seek out someone else, so they stay where they are even when they’re less than satisfied or pleased.

You probably have a favorite restaurant in your neighborhood. It’s not part of a chain ‒ more likely it’s owned by a family or someone who takes real pride in the place. You go there regularly. You and your wife both love it. You end up recommending it to some friends.

Time goes by and you haven’t seen your friends. But sure enough, the next time you do see them the first thing they bring up is that crummy, hole-in-the-wall dive of a restaurant you referred them to.

This is a loud-and-clear reminder to never make that mistake again.

Sometimes referrals happen only by request. “Hey, I’m new in the area. Where do you take your cleaning?”

That’s a question most of us will answer, but we’re not about to go around telling people about our dry cleaner. That’s a very high threshold.

Another reason why customers don’t refer is because there is no motivation in it for them. No reason for them to do this. Their feelings about your business are pretty neutral, ambivalent. They consider what you do for them to be “okay” or “fair”. Not exactly a ringing endorsement, but you’ll do.

You mistakenly think their continued patronage is a sign of ecstatic approval for which you are entitled some kind of extra reward ‒ like referrals.

You are kidding yourself. You are projecting something that really isn’t there at all.

Plus, there is no system or mechanism or process in place to refer someone. So even if I appreciate the services of my accountant, barber, landscaper there is nothing in place that I can act upon.

The last reason why you don’t automatically get referrals is expressed gratitude. Let’s say one of your customers actually overcomes all of the obstacles previously mentioned and actually sends you somebody.

What happens? They are not recognized and rewarded for this behavior.

Or maybe they are recognized with a half-hearted thank you, or an email or some cheap, off-the-shelf “thank you” card.

So the person who provided the referral thinks “That business owner really doesn’t value this. Why should I bother?”

When you actually recognize and reward, you get more of the behavior you recognize and reward.

Have you ever provided some referrals, not been recognized, and actually stopped patronizing the place or person you recommended?

This can and does happen. Things can go bad quickly. When someone provides one or more referrals there is an expectation of some sort of expressed gratitude. When this doesn’t happen there is disappointment, sometimes even bitterness.

A prompt thank you is expected. Not something that happens weeks or even months later. If the thank you is delayed it either has no impact at all or it could spark bad feelings.

Every business person understands the need to spend money to get new customer off the street. But for some reason they think referrals should be free.

Sorry, but it doesn’t work that way.

What you need is a Referral Machine. It’s something that’s intentional. This means there is a process in place that happens the same way every time. It is an investment. Most businesses have no problem spending on external marketing but don’t believe in internal marketing. A Referral Machine costs money to build, and there’s an investment to be made in running it continuously. It’s also integrated meaning it is a regular part of a business. It’s integrated for both customers and staff. It’s a part of your culture.

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Dan Kennedy is internationally recognized as the 'Millionaire Maker,' helping people in just about every category of business turn their ideas into fortunes. Dan's "No B.S." approach is refreshing amidst a world of small business marketing hype and enriches those who act on his advice. For more money-making marketing tips, tactics and strategies, go to www.GKIC.com

7 Responses

  1. Haim says:

    Just in time.
    Thank you Dan.

  2. Nicely said, pretty concise and thorough as we have come to expect from you.
    Also I have learned today that you are going to be dripping your work out as a blog and will be more likely to open your email.
    But the price point is too high. $29 or $37 and it would be on it’s way to me.
    2 sets for 49 would have me send a copy for a friend.

    I need more for $197.
    Sorry Dan, wanna arm wrestle?

  3. Ramon V Elizarraras says:

    Hi: Dan.
    Reading your blog reminds me of what they say in Mexico for each of the examples you enumerated. And I tought you would lime to know so you can add it to your repertoire.

    The devil you know is better than the devil you don’t..
    Now In Spanish
    Mas vale Malo por conocido, que bueno por conocer.
    Translated word by word
    The Bad Guy you know, is better than the good guy you want to meet.

  4. Salko says:

    That business owner really doesn’t value this. Why should I bother?” That statement is very much the bullseye of your post. Successful businesses are very much cocky and they feel that they deserve to make money rather then earn it, they lose their primary objective they some how seem to have forgotten how they got there, who placed them there. They don’t seem to understand that the bigger they are the harder they fall, not one single business on this planet is indestructible.. Like governments it’s the people who vote them in and it’s the people who vote them out.

    One very quick example of one particular auction in my area, in the beginning they were great, offered fantastic service for a reasonable price. They were a hit but as their business grew into an empire filling their floors on a regular basis with customers they begun to get cocky, raising their prices without any justification, making ridiculous demands and even threatening to throw people out who made a bid that was too low for their liking. Today this auction’s floor is almost empty. Another I know has closed it’s doors. Take heed and learn from other peoples mistakes.

  5. Jeff Nay says:

    Agreed, referrals are a subject fraught with risk for the referring party. But I wonder: if I institute a system of incentivizing my customers (with a prize of some kind: money, a free meal, etc.) for referring people to me, isn’t that, too, a slippery and dangerous slope?

    Consider this: Company X offers a referral. So I refer someone. The company gets my referral and fails to make the person a customer. Therefore, I don’t get my prize. Now I’m mad at Company X because they made me an implicit offer of a prize for a referral. I did my part, they failed in theirs. Why should I suffer for their failure to convert?

    Didn’t Company X just make their problem worse? At least before this incentivized program, no customers were being turned off by Co X’s failure to “pay out” for referrals!

    • Mike Stodola Mike Stodola says:

      Jeff…in your example yes it is worse. That’s why we say to recognize the referral behavior, not the outcome. So if you refer 10 people to company x they would send you 10 rewards, notes, whatever. If people do become a customer of company x maybe they let you know that and recognize that as well. Make sense?

  6. Bernadette Massiah says:

    Thanks for insight!

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