03May

Ep#37: BNI – Building your Business with Referrals

 Delve into the BNI business networking model and how you can use it to grow your business

Simon Derrick-RobertsThis week we have a great interview with Simon Derrick-Roberts, the regional director at BNI South Australia. BNI is a business networking organisation with 6,200 active chapters and 150,000 members in 50 countries, it is the most successful business referral organisation of its kind.

We cover;

  • What is BNI?
  • How does it work? What is the cost?
  • How is it different from other networking groups and events?
  • Is it best suited to particular types of businesses (e.g. B2B vs B2C) or particular industries (product, service) or everyone?
  • Are most members there for the long term or is there a constant turnover?
  • How does BNI get new members?
  • How can people get the most out of BNI?

Links;

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Interview with Simon Derrick-Roberts from BNI

Nick: Welcome back to the Web Marketing Adelaide broadcast. I am your host Nick Morris and this week, we are joined by Simon Derrick-Roberts from BNI and we are going to talk about BNI, which is a business networking, network international, business networking. Good day Simon welcome to the show.

Simon: Thanks for having me on Nick. Great to be here.

Nick: Let’s get started by having you tell us a little bit about yourself and a little bit about your role at BNI?

Simon: Yes, sure. So, I started my BNI journey as a rank and file member just over three years ago. I actually spoke with the local business enterprise center CEO, his name is Mike Hawkins. I asked him to tell me what are the networking opportunities that were available in my area. I spent that time working as a Business Development Manager for a cloud computing custom software Development Company based in Adelaide and also looking to connect with other business professionals, IT professionals, business consultants etc., who could refer me in to the clients that I was looking to tap in to. So yeah Mike put me on to BNI and it was interesting the very first time I went to a meeting.

We had actually, we were meeting at a pub, we were locked out of the venue, so it wasn’t a great first impression. We were stuck in the courtyard at the Britannia Hotel but I just felt that the people that were at the meeting were a much higher caliber than what I’ve bumped into at say, business SA, Chamber of Commerce, the local BEC. So, even though perception was it wasn’t a great first start, there was just something different about it, so that’s why I got involved at the ground level.

Nick: Cool, that’s a good little introduction. Moving on from that, what is BNI exactly? I mean obviously, it’s business networking but can you give us a little bit more information?

Simon: BNI is about doing your personal referral network so the challenge that you have with a normal networking group is that when you walk up, there might be three telecommunication guys in the room, five mortgage brokers, two real estate agents etc. So, you’re at one of these events, there’s normally more people there you know. There might be anywhere from 40 up to 100 but your competitors are in the room and probably the other challenge is and I actually was attending an event a couple weeks ago.

I was asked to speak for a few minutes at something we call the Networking Disconnect. I’ve never tried this exercise myself before but I asked the room, you know please raise your hand if you’re here to sell. So, every single hand, its about 35 to 40 people in the room, every single hand went up. So, they were all there to sell and then I asked the question, “Now c’mon guys, be honest, how many of you are here to buy?” Well two hands kind of half went up a little bit ashamed at least, so that’s the disconnect that everyone’s there to sell, no one’s genuinely there to buy so the idea with BNI is your competitors aren’t in the room. So, that’s one advantage and you’re actually there to sell through the people in the room, so they tap into their network of the 2 or 300 people sitting behind each other person in the room, rather than to sell to the 30 people in the room, if that makes sense.

Nick: Yeah, that makes sense. You mentioned other networking groups, what are the main, sort of differentiators between BNI and others of regular networking groups apart from obviously as you say compared to that in the room? There are other networking events I’ve sort of become aware of it, operates in a similar where they can only accept one of each industry and things like that. Are there any other major differences or for instance, do you think other networking events can still be effective for getting business?

Simon: Yeah, absolutely although you generally, look, it depends on what industry are you in. If you are a florist, you know it’s a fairly low risk transaction, so someone who’s only just met you might try you out and spend $50 or $100 bucks. What could possibly go wrong. If you are an accountant, really your goal should be to make two or three meetings for contacts on the night, have some good conversation and then follow-up for coffee afterwards. So, we actually encourage our members to be involved in other networking groups.

We think they should be active, depending on their target market Facebook and or LinkedIn in various conversation groups there. They should be involved in at least one sort of Chamber of Commerce, you know those place you go, events just to build their contacts sphere. Also you should be involved in a service group if you are a community minded, you know Rotary. We have a lot of Rotarians and Lions Clubs members, I’m in Lions myself.

So yeah, but what we don’t want for our members is that they are involved in one of those other groups that you talked about, which are similar to BNI, in that there are about referrals or leads and there is only one person per profession in the room because if the great opportunity comes across my desk for a real estate agent, then I’ve got divided loyalties, who do I give it to? So, it’s great for me, I’m tapping into two separate groups of people that again find me referrals but it’s not very fair to the other people in the room because of those divided loyalties.

Nick: Yeah that makes sense. Let’s hear a little bit more about how it actually works on the day when you go along to these events and how the referral system works and also what’s the cost behind this?

Simon: Sure, ok. So I’ll handle the cost side first if that’s alright then we’ll come back to how it works because how it works is a little bit like getting a haircut. It’s very hard to explain and get the result unless you’re actually there. So, cost wise, first thing, we’ll talk about the value. So, last year in Australia, the average return from member, obviously there is some that’s way over, some that didn’t do very well but the average return because we test and measure everything in BNI and that’s probably one of our points of differences over the similar organizations that have one person profession. The average return was $47,000 Australia wide. In Adelaide, it was around $43,000 last year for the average member. So, the cost involved, there’s an annual membership fee which is $730 next year’s fee and there is also once of joining fee of $340 next year’s fee. So, in your first year it’s $11,077 including tax and that’s less than a cup of coffee a day. I think it works out, being divided by 365 its $3.20 a day. So, if you weigh up the returns obviously you’ve got to put in some time and effort. You don’t just magically get 43 grand or 47 grand just because you’ve signed a piece of paper but cost benefit analysis is a fairly good return on investment.

Nick: Absolutely. I can see if you’re only putting in $1,000 or $750 for later years and then getting $43,000, that seems like a pretty good return.

Simon: Yeah and every year, sorry, what was the first part of that question again? So I jumped in…

Nick: That’s fine. I was just trying to get a bit of an idea how it works in the day. If it’s hard to explain maybe you can give us a brief overview.

Simon: I’ll give you a very brief overview. Somebody run a structured 40 point agenda that’s designed to facilitate building their profile and trust levels within the room, so basically proves that you are credible because if you are a real estate agent, not everyone in that room in a given 12 months period is going to be out to personally try your services. In fact, if one or two of them can, that’s great but again that’s what we’re about. We’re about selling through the people in the room. So the 40 point agenda is designed to let you show up, present your business in a very positive way, probably the key points of the meeting. We actually make a request for specific referral every week. So, depending on the size of your group you normally deliver a 60 second presentation, where you might talk about a recent job you’ve been working on and then you are ask for something quite specific.

If you’re business to business, you might name a particular person, their position in the company, the company, the industry etc. If you work business to community, business to consumer, sorry, you might describe a key life situation. So, if you are a travel agent, you might be talking about someone who’s just gotten engaged because they’re gonna start thinking about their honeymoon. So, we make a specific referral request. Each of the members during the meeting and then towards the end of the meeting, we actually pass the referrals that we did during the week, we actually record at a transaction level and it goes into the database, the referrals that we passed.

Any referrals we received previously that have translated into business, we actually tracked the value of the business received. That’s how we can tell you how that $43,000, who’s the average return for the Adelaide member last year, but I think the key point for building credibility in the room, as I said, not everyone is gonna try your service. But if one of the members has personally used you or they’ve referred you to one of their contacts and you’ve done a fantastic job, what they all generally do was read out a testimonial, either written by themselves or by that client and then they normally give you that in written forms, so you can put it in your websites or your Facebook pages etc. So, the point is, if that person then endorses you, the people in the room, they might be pretty close with 5 or 6 of the other members who therefore, because you know Bob’s endorsed you. They feel comfortable then referring you to their contacts, as well, if that makes sense. So, the testimonial is the key element.

Nick: Cool, yeah. That’s a pretty good little overview and I like the fact that you’ve all shared that testimonial angle as well, sort of goes beyond just kind of the networking itself but also things like testimonials you can put on your website. So, as you said, which can help people when they’re kind of related in this word of mouth but it’s an additional thing as well as just the networking itself. Just to make sure I got the process down, it sounds like you’re collecting referrals to give to the other people in the group when they come along each week you meet up?

Simon: Yes. We meet weekly generally. We don’t meet up on holidays, you know, if we have a break over Christmas, we generally meet 47, 48 times a year. So, there is a commitment involved but we’ve tried over the 28 year history, we’ve tried other models fortnightly, monthly but we found there was a clear relationship between the frequency of meeting and the amount of business past. One thing I should probably get clear on, if I have a BNI meeting and it’s a Thursday morning and an opportunity comes up to refer business to a Thursday afternoon, I don’t wait until the next Thursday morning to tell the member. Obviously referral’s like milk, they go off pretty quickly so you contact the member straight away but we do the paper work so we can put it into the database each meeting, that makes sense.

Nick: Yah, I was wondering about that a bit. So, you would have the business cards and the contact information of other people in the group that you sort of network with and then when you get that referral, you send it straight through to them and then you document that when you come each week for your meeting?

Simon: Absolutely that is right. Members carry a card holder, although that’s a bit old school these days, so often the referrals wait until the opportunity comes up over the phone or something, so we might send through an e-card or MMS the members date house to the prospect. The key is, so that would just be a lead. The difference between a qualified referral and a lead is we also seek permission from the prospect to have the member call them within the next day and that’s the case. There’s no sitting there waiting for that phone call that never comes in you know. If you just give a business card probably 95% of the time, you never receive that call, not that they’re not genuinely in the market but they just get busy and they get distracted, so we want to empower our members with the opportunity to follow up the prospect.

Nick: Absolutely yeah, that makes sense and I can definitely relate to getting busy and not getting on to things, I was meaning to call this person or whatever, so, that make sense.

Simon: Yeah.

Nick: Let’s move on. I’ve heard some really great things about BNI, I think the first time I heard about it I was at another networking event. Some of it said that they have joined up and then I had to leave within the first three months. They had so much business that they couldn’t take on anymore. It’s an amazing thing to say but I think I’ve heard bits and pieces from other people around the place. So, what do you think is it that has people so, sort of excited about the BNI model even, I mean obviously getting a lot of business is good. Is that just work that way well or is there other things that’s making them getting so excited?

Simon: I think obviously most people are there for the business opportunity. I should be careful about using that sort of language because it might make people think we’re pyramid scheme or multi -level marketing which, absolutely we’re not. There is no kick backs or commissions or anything like that for members introducing another member into the group but most people are there to make money. In fact, really, we want people who are there motivated to make money because we’re founded on the principle of giver’s gain, so what goes around comes around. So, yes, what happens, you end up in a room of 30 to 40 like minded business professionals in a generally go getter types, that are hungry to get work, therefore, they know they’ve got to be hungry to find opportunities. And it’s always quite rewarding when you make an introduction to a family member, a client, whatever and the jobs, you’ve solved their problems.

It’s outside of your personal, professional sphere but you’ve actually made an introduction that solved their problems. So, I think people get a good, warm and fuzzy feeling about that but also because we’re really a training organization. We provide a lot of training at no cost to our members as part of their membership fees so it gives them access to the system but also the training we provide by face to face, one on one, group workshop format and online. We have a 24/7 online training portal as well. So, some people joined for the professional development and you can see that you see members that have been in 3 months, 6 months, 5 years and they’ve really grown as an individual.

You know their public speaking, their confidence etc. So, there are other reasons why people get excited about BNI but it could at the end of the day, most of us that are there are there to increase the bottom line. And I guess people get excited because I figure it is a good return on their time. It’s far more effective than a lot of the other, what I call pay as you go networking events like Adelaide word of mouth etc. There’s some good stuff out there but it doesn’t always translate into good business opportunities, not to say that you shouldn’t do it. As I’ve mentioned before, we recommend members that are involved with other networking groups.

Nick: Awesome, yeah that makes sense. Just a thought on one point, you said there is no kickbacks or commissions [Inaudible 00:15:25] separated differently from any kind of scheme, anything, in that way. Are people expected, is there an expectation on number of referrals you need to bring along, I think you said before, you should try to bring one to each meeting. Is that like an exchange almost, like you should be matching the number of those you get, sort of thing?

Simon: Sure, sure. Look, what goes around comes around, so, if each member in the room is looking to make $50,000, $70,000 a year on average of their return. That means every member in the room needs to bring $50,000 to $70,000 worth of business opportunities to the table as well. So, but BNI’s definitely we’re [Inaudible 00:16:00] to contact sport. We want players, not spectators. So, passengers can actually or each chapter has its own vibe and culture, some chapters do better than others. We’ve got an established chapters that’s been going for about seven or eight years, that meets on Melbourne Street every Friday morning.

They have shared this calendar year and I think that $720,000 worth of business so far. So, that’s referrals that have actually translated into business and we’re not even 4 months to the year. So, the point is, they don’t tolerate passengers, they have high expectations and they hold their members accountable. So, they hold their members accountable and each member makes a commitment and members allow themselves to be held accountable by their fellow members because they’re a high performing chapter. Their results are entered. Did I answer your question? I got a bit side tracked there.

Nick: No, no, that’s alright. I think that’s good, it’s good for people to know that upfront as well that they’re gonna be expected to, the system won’t work if you don’t bring facts onto tables as well as take, you can’t just take, take, take.

Simon: Absolutely, each chapter must have its own goal. Most chapters set a target in terms of those target. Most of them wont set a goal higher that one referral per member per week cause then they’re in danger of lowering the quality of the referrals and you straying into leads territory and what we’d rather do is have a member, when they receive a referral notice, there’s a reasonable change of making a couple of thousand dollars out of that rather than you receiving a piece of confetti that that’s probably worthless.

Nick: Yeah, I think that’s a good point. You mentioned chapters in there, I think I’ll just ask on that point. So, obviously, there’s different chapters within the city I guess and I guess chapters come up when there is enough demand to open up a new chapter? Is that sort of how it works?

Simon: Yeah, that’s absolutely right because we only allow one person per profession. We have unmet demand in Adelaide right now, so we had, the start of last year we had two BNI chapters. By the end of the year, we’d launched the third, they both met in North Adelaide actually and I was a member of one of those chapters that launched about 3 years ago, as I mentioned. So, we launched a chapter in the Marian Aquatic Center, the new aquatic center down there, fantastic venue and that was because of the firstly unmet demand in the Southern and Western suburbs. We then launched two more chapters at the start of this year, one in the Deeps [Audio breaks 00:18:36] area of the for Christy’s Beach.

They made up this surf like serving club down there. There’s some serious wow factor going down to that, it makes going down there bright and early worth it when you see all the ocean views because you are right on the espionade on the second floor and also launched very rapidly, I had a great group of people, some of them had quite a corporate background. So, it got a different culture to some of the other chapters that seem to be built more around the real estate and trades more than the professional services, financial services but we launched a group that meets on Green Hill Road on Parkside and they’re a great group. In the first four weeks together, those 30 people shared over $96,000 worth of business, which for a new group is quite unusual, actually because you’ve got to build up that trust before you put your credibility on the line, making a new introduction to your best client for example. That’s a high risk referral, so they have done a really good job.

Nick: Wow, yeah. Well, if someone is looking to join BNI or join a chapter, is it best for them to go straight to the chapter themselves or do they come to BNI and you sort of tell them because it sounds a little bit like it may be beneficial for people to go to a chapter that sort of fits their culture a little bit better rather than perhaps, closest one?

Simon: You’re absolutely right. In fact, me, as Mr. BNI, I don’t determine who your team to be, some have got five chapters. They’re actually self governed ones, they are off the ground you know. I provide training support but they have a membership committee who is really the HR department and the recruitment department. So, they are the gate keepers of the chapters too. So someone, we had an example of a fantastic guy who is helping me launch a chapter in the CBD. At the moment, we are doing our first meeting next week but he came along to this chapter. I just mentioned that he shared in the $96,000 because they are actively, he’s in recruitment.

They’re actively seeking recruitment agent but when we sat down with their membership committee, they realized even though it was a successful group, just culturally, he wasn’t the right fit, but he’s a great fit for BNI, which is why he’s helping me out putting together with four other guys who are really in the same head space as him and so they’re gonna be a powerful chapter as well but Michael wouldn’t have fitted in as well at the Green Hill Road chapter. I guess by mutual decision, I realized yeah, this is not for you. Now, obviously CBD is pretty close but yeah, if they hadn’t have been available to him, we might have sent him down to Marian or Christy’s Beach if he was prepared to travel that extra distance to find the right groups for him.

Nick: And does BNI actively do some advertising things to get new members and new people involved or is it more just a word mouth thing?

Simon: Yeah, look, as we are a word of mouth organization, we wouldn’t be more credible if we used the Yellow Pages, tv, radio. Look it has been tried, Portugal’s one of the fastest growing BNI regions in the world and they did use tv advertising, a guy in Tasmania that looks after Hobart in the Southern, think it’s a Southern half of Tasmania. He’s tried some radio advertising. I’m not sure what the results have been, but really, the way, 90% of people get involved in BNI is that they get invited along to attend a meeting by someone in their network. Now, sometimes the meeting they go and see, they’re actually locked out of that meeting, so I’ve got a friend who works for Telsra and he’s just really passionate about BNI. He is getting some bright results. He’s meeting at a North Adelaide chapter but his network is in the Western suburbs, so he takes friends and colleagues along to his meeting in North Adelaide. Now, they can’t actually join that North Adelaide chapter because their profession, that seat’s already been filled. What he does is, he redirects them down to a new chapter we’re launching at West Lake, which is suitable culturally and location wise for them but yeah absolutely, he takes them to see his meetings because he’s proud. He figures his chapter is a showcase you know. They have done $720,000 of business in less than 4 months and these people like what they see. They locked out, so Yvonne will help them as a sort of an introduction to me, so I can get them having a look at the West Lake group, make sure they’re happy with the people in that room.

Nick: Awesome, and is the BNI model suited to different types of businesses, like for instance B to B versus B to C or particular industries, maybe like product based industries versus service based industries?

Simon: Look, we know that BNI can work for absolutely any business but it won’t work for every person. Again, we want people who are results oriented, they’re hungry, they’re willing to put in a little bit of time and effort because they understand that what goes around comes around you only get in, you only get out what you put in I should say. Look, we do know that there are particular, I guess professional fees that can do very well out of BNI. We find it is usually service based industries, we’re always seeing very strong industry representation in the real estate and the trade sector, that’s from the backbone and then you’ll see generally a third of the membership base of any chapter is in that real estate and trade area.

So, the real estate agent can feed the mortgage broker, who can feed the conveyance, who can feed the property manager, who feeds all the traders with the maintenance work etc. and also you get, usually you don’t see volume builders involved in BNI but you might get those high end builders who have a premium product because if you place an ad in the Yellow Pages or the messenger, you’re competing on price. Normally, when someone, if it’s pre-sold advertising they are genuinely in the market to buy when they ring, but they’re gonna ring some of your competitors, they generally shop on price. If you are someone who competes on value, not on price you need an unfair advantage of your competitions, so you need that foot in the door the person’s recommendation. So, the builders we tend to see involved, might only do ten homes a year because their homes are half a million dollars.

We will also see looks strong representation those business services and financial services so commercial lending, financial planning, personal risk insurance, general insurance brokers, business coaches, marketing consultants etc. Now, one area that we’re starting to see development in Adelaide is the health and wellbeing, so we’re getting chiropractor, physiotherapist, massage therapist, nutritional products, people like that involved in most chapters. Where we’re not strong in Adelaide currently, but I’ve seen it in the Eastern States, they called it the wedding mafia, so it’s the event planning type profession. So, you’ll see wedding celebrants, you’ll see gift baskets, bouquets, which cook can also go into corporate use. You can see people who can organize entertainment etc. So, that’s a weakness or an opportunity in Adelaide that’s, currently we really don’t have many people in the wedding and event planning type sector. Photographers would be the exception. We’ve got a photographer in virtually every group. In fact, every group I think.

Nick: So, photographers are on top of this obviously but there is a bit of opportunity for some other people in there, the wedding area and also in many other areas as you went through there I think. It seems like this quite broad and as you said, you have to be willing to give in, get back what you put in sort of thing and there is an opportunity for lots of different things there, which is good. With the BNI models, I mean, you mentioned a little bit at the beginning, do you encourage members to use LinkedIn and social media. Has the rise of digital and social media, has that changed much the way you do business? I guess because it’s essentially you are meeting in person and that’s still the major part of it. I guess the core hasn’t changed that much or…?

Simon: Yeah look, we’re still all about face to face contact, however, some of our members particularly our under 35s are starting to use social media to actually put it out there, so, using social media to generate interest in getting visitors to come along and see the meetings. They’re also responding to requests through LinkedIn groups. Someone might, I’ve seen it myself, say hey, do you know a good business coach in the Central areas and someone that’s connected with them or is involved in that group who’s also in BNI would then speak with the person online and maybe they can find a referral out of that.

We actually have a fantastic member Colts [Inaudible 00:27:28] Douglas, I don’t know if you know of his social media IOK. She’s now the Vice President of that top performing chapter in Melbourne Street and she’s working with me, we’re actually going to be rolling out a social media strategy from July of this year and providing additional training as well as. Leaders, initially, as I said each chapter self-governed and then hopefully in 2014, if we can prove the models valuable, then we’ll be rolling it out to a general membership. I think the key is, any training we provide in BNI, it’s not just BNI training. Much of it is transferable for people to use in their own business.

Nick: Cool, yeah. I have also come across someone. She’s very active in the Adelaide Business Central Facebook group which BNI came up again that’s what made me get in contact with you, so I’m reminded of BNI through her so, obviously, it’s working, the social media stuff from that perspective. One other question here….

Simon: I just gonna say, so we do test and measure everything. Simone is one of the top three members in Adelaide. She’s using social media as you have seen widely, so there is probably something in that. So, Simone and I obviously need to talk more.

Nick: Cool, yeah, absolutely. I just have one question on members, which I didn’t address before which is, most members tend to be there for the long time or is there a bit of a turn over there? What can you give me on that?

Simon: Absolutely. As I said, BNI doesn’t work for everyone. Now, our membership committees are the gate keepers so, we had a reasonably extensive interview and follow up process to make sure that people are the right fit because we don’t want to damage the brand by having people come in with the wrong expectations and it just doesn’t work for them. So, we do find that about 15% of their membership will either not renew when their 12 months come to an end or they may even leave midterm, but we have members we have a painter in Simone’s chapter who has been a [Inaudible 00:29:38] I think, 7 or 8 years and we’ve got several members in her group that have been in for five years.

We just awarded some 3 year ribbons. So, you know it’s a great testimony to the system when someone has been in for that long but we also see people like you mentioned, that if – I actually gave referral to an HR consultant that was in my chapter. He left in his second year and he rang me up and was so apologetic but what I’ve given him has turned into a three day a week contract and with his other work, he simply couldn’t take on anymore business. Therefore, what is the point of turning up every week if he didn’t want to take anything on and he was too busy to give back to the group. He didn’t want to be a passenger. So, we do find that for the life circumstance or for business reasons, people leave. So, sometimes leaving is not a negative thing, it’s a positive thing.

Nick: Cool, yeah, great answer. With this question here, was something that sort of gave me pause, when I first heard of BNI and I touched on it a little bit but I’m asking it anyway, want to get a clear answer. So, one thing I felt I wasn’t too sure about was, I didn’t want to be giving, having an expectation to give referrals and sort of being pushed towards giving referrals to people what I know friends, family, other clients and people within my business networks and referring them to other businesses that I didn’t really know that well because I have only met them through the group and I hadn’t really had a chance to try out their services. What would you say to people that have this sort concern?

Simon: That would be probably the number 1 concern that people, well probably number 1 is the commitment because really, the money expected returns is rarely a consideration, so is that weekly commitment is a challenge for a lot of people and the next highest concern, is they don’t feel confident that they can bring referrals out, particularly because 5 or 10% of members we get might have been introduced to BNI by someone interstate. So, they don’t actually someone in the group they already trust because we talked before about the testimonials. Most people are invited into BNI group by someone they know and trust and so, if that person is happy to endorse another half dozen in the chapter, then as a new member, you’ll often give them a go because you trust your friend’s judgment.

As we touched on before, the real estate agent didn’t etc. isn’t going, you’re probably not gonna use this person’s service yourself. So you know, one thing in business and in life and such as BNI, a lot of business coaches would say this. How you do one thing is how you do everything, perception is reality for the person who is perceiving it, so one thing you can do is always bring your A game when you come to a meeting. Arrive early, plan to stay late, dress sharp, even if you are a trade, come prepared and people will start to think well, if they front up to BNI meeting with that mindset and attitude, then they’re probably gonna front up to a meeting with a client, at least if not with a higher setting. Now, we also know that as a new member, you’re probably not give a lot of referrals in your first 2 or 3 months, so we have a system that sits behind BNI, which is designed to help people build their credibility within the group. We called it the BCTP process. So, firstly, you need to be visible but then you need opportunities to build your credibility because as you know if you give a referral and it doesn’t go well, it falls back on you. So, you need to trust the person you’re passing the referral to, so everything on that 40 point agenda and the other components of the system that for the rest of the week outside of the weekly meeting, I designed for the members to be able to build their trust and credibility levels within the group even if most of the members can’t personally use their service.

So, we say so probably the higher the average value of the transaction of your product or service, the more risk to the referrer. So, you would probably, if you join the group Nick, feel reasonably comfortable if you give the referral to that Florist that we talked about before cause you know $5,000 you know, okay maybe the flowers were slightly brown around the edges but it’s probably not gonna kill your credibility with your best client but you know if it was an introduction into the accountant and I stuffed it up, that would be really bad for you. So you’re absolutely not expected to start passing referrals on day 1, particularly those high value ones. So, it’s up to the other members, they actually put in the time and effort so that you feel comfortable referring business to them.

Nick: Cool yeah that’s a great answer and you did answer it a little bit before but it’s not that sort of in a package there. Just on the back of that then, do you have any tips for people on how they can get the most out of BNI just things that you can give to my listeners?

Simon: I would say I’ve touched on some of them. Don’t be late because we say that you know we’ve got a yes bucket and a no bucket sitting on your shoulder at all times with your BNI members, so if you woke up late to a meeting and people notice it, are they thinking, is he gonna walk up late when I introduce him to my client? If you come in if looking like you just rolled out of bed, what are they thinking? Most of our meetings are 7am by the way. So, again if you’re a tradee and you wrapped up your painter for example Jeff never walks up in his overalls with paint stains on them and dusty boots.

He’s always in a nice logoed shirt with slacks because he’s trying to set that right perception. He wants introduction into property managers and boutique builders and so forth, so he needs to position himself so everything’s aligned. So, that’s one thing, you know, dress for success and think about all those little 1% that are gonna affect people’s perception of you. Absolutely, look, please embrace all the training we have to offer. As I said, the training is free, I put to caveat on that. Members always pay towards venue high and catering cost but the actual content that we deliver, there’s no, we don’t get paid an extra fee for you actually accessing the training, so embrace the training opportunities. Speak with the experienced members in the group, you know they’ll provide some 1 on 1 mentoring and support the other thing is and this probably the number 1 thing don’t just be a 90 minute a week member because you will not succeed. So, we have a 90 minute structured meeting every week but you need to actually be doing some activity outside the meeting. We think you should be putting in 3 to 5 hours a week, probably no more that that because a lure of diminishing returns but we encourage you to go out 1 on 1 and meet the other members in their work place. And in return, they want to do the same for you.

If members asked for specific introductions, you should take note of that and maybe a day or two after the meeting you might not have triggered something in memory at the time but just review those notes and actually I don’t know this from xyz company but I know their biggest competitor. In fact, they’re a client of mine, ring up the member, hey, I know you asked for Bob Jane, would you like an introduction to Bridgestone instead, that sort of thing. So, put in some time and effort outside of the meeting as well as being bringing your A game to every meeting that you attend.

Nick: Great yeah. Thanks for those tips. How can people find out more if they’re interested in getting sort of signing up for a chapter or just checking out a little bit more about it?

Simon: Yeah look, if they don’t have a friend or someone in their contact, they are free to personally introduce them to BNI because as I said it is always – I feel the best way, just like you approached me, you made an enquiry through BNI.com.au, through the website that they’ll get in contact with me. I’ll follow them up, normally with a phone call if they leave up their number and we’ll have a bit of a chat. I need to understand where they’re located, what profession they’re in, to know where they’re vacancies, and chances are, when they front up at that meeting you know, with 30 odd people in the room, usually they actually know someone in the room.

They might have not realized that there was a BNI member but they normally, they have someone that can take them under their wing because they’ve had that prior relationship, but if you don’t have someone, just do what you did, enquire through the website. I’ll get on to you within one business day, unless I’m traveling. So, I also manage BNI in Darwin but look they’ll hear from me within 2 to 3 business days, the absolute worst.

Nick: Great. So, if you know someone already who’s in BNI then you can get in through them or BNI.com.au for the link and I’ll show next on our website, how to get you in contact.

I think that pretty much brings me to the end of all the questions I had. Thanks very much Simon for coming on the show. Its been a really interesting sort of delve into this BNI thing that I’d heard about but I didn’t know all of what it was about, so I think the information you’ve given has been really great.

Simon: Fantastic and if you are interested to connect with me you connect with Simone and we can -you’ve never been to a meeting yourself right?

Nick: No, I haven’t. Just heard about it from the people on the call and I think it could be interesting.

Simon: It is probably worth even if it’s not for you, it’s probably worth two hours of your time, just to check it out and maybe go along to Simone to her group. It might be the best for you, as you got – is that a virtual relationship, or do you guys know each other face to face?

Nick: No, we’ve not interacted that much. I mean I saw this Adelaide business Central group but I came across it, anyone who’s curious and I’ll put a link in the show as well. It’s quite a big group it’s like 800 people and they’re all talking about different things and I just see Simone in there fairly often posting. We haven’t interacted personally that much so I don’t know her that well but it’s a good group to go to and meet people there. So, yeah thanks again for coming to the show and we’ll speak perhaps in the future?

Simon: Alright fantastic, really appreciate the opportunity. Thanks Nick.

[/spoiler]
11Apr

Ep#35: Building & Marketing a Web Startup with Patrick Moody

Building and marketing a Web Startup: Themematcher.com, with founder Patrick Moody

Instead of the regular show this week we’re playing you an interview we did with Patrick Moody, founder of Themematcher.com as part of our Adelaide Entrepreneurs video interview series.

Get all the details about the startup at the original post over here: Patrick Moody Interview – Founder of Themematcher.com

If you’re interested in attending some Adelaide small business events such as networking, presentations or workshops then you can check all of those out at our Adelaide Small Business Events Calendar. Be sure to sign up to our mailing list as well so you don’t miss anything.

08Nov

Ep#16: Online Business Directories, Are they Worth it?

Have you been getting calls from online directories asking if you want to buy a premium listing?

In episode 16 I discuss online business directories and how you can get the most value from them.

Covered;

  • Online directory benefits
  • Potential negatives
  • Free vs paid
  • Where do they get their traffic from: why this is the most important thing
  • Tips for choosing a paid business directory

Mentioned in this episode;

[spoiler title=”Click Here for Transcription” open=”0″ style=”1″]

Nick: Welcome back to Episode 16 of the Web Marketing Adelaide Podcast. I’m your host Nick Morris. This week, no guest, it’s just me sharing a great topic with you today, something that I’ve done a lot of research on, and I think I can provide some good value on, so let’s get straight into it.

Our topic this week is online directories and whether they’re worth it for your business. Now, it used to be that the Yellow Pages was all the rage, that’s where you needed to get your business put in so that people could find you and if you didn’t get it in there you’d probably lose quite a lot of business over the year but these days, most people use search engines such as Google to find local businesses when they want to go to a restaurant or find someone to fix their pipes or whatever.

You may have been receiving some calls from some online directories that have set themselves up and they’ve got various options like core businesses and ask them if they want a premium listing on their directory and you’re probably wondering, are these directories worth it? Should I be paying to get in this premium directory? They sound like a good deal, they seem pretty convincing. This episode is really to give you all the information you need to know about these online directories. Are they going to be worth it for you? What do you need to keep in mind, which ones are the best ones to go for, etc?

So we’re going to be covering in this episode the benefits of getting yourself into online directories, possible negatives and free versus the paid. So, you have free listings and paid listings usually in each directory. An important question to ask or to get the answer to, which is where do they get their traffic from? We’ll go through that and also tips for choosing a paid directory or a paid directory listing if you want to go down that route. So let’s get started with the directory benefits. Now, we’ve got 3 different sorts of benefits and we’ll also go through the possible negatives or the one possible negative.

The first benefit is traffic and customers. So obviously this is the main one, you’re going to get more customers for your business. It could be people that actually see your directory listing and see your contact details, such as your phone number, such as your email address or possibly a contact form on the directory. Your address for walk-in traffic or your website and people could actually see your contact details there and contact you directly from the directory or they could click through to your website and buy from you if you have a store on there or contacts you through there. There’s sort of 2 different ways you can benefit from that obviously. That’s sort of the main or the core benefit that most people would think about when they’re thinking of getting themselves into a directory but there’s some other benefits as well.

Now, there’s, one of them is local SEO. Now, just to give you a little bit of rundown on what that is. Google has got its own version of a directory which is called Google Places and you’ve probably seen this, if you go to Google and do a search, which is somewhat local, it could be something like restaurants or plumbers or something like that, something where Google thinks you’re probably looking for a local business and they automatically serve you up with what’s known as places, Google Place listings. Now, this is typically accompanied by a map on the right hand side of the screen with little check marks on it and they relate to listings in the search results which look a bit different from the normal results and their place results usually have an address there and possibly some information about reviews.

So, this is sort of Google’s own version of a directory. It doesn’t really work like a normal directory but you can think of it as kind of a directory but it is a way of sort of boosting yourself in the search results if you have a local business, specifically for people searching from your local area. It’s not really known exactly how, just like normal SEO, it’s not really, Google doesn’t put out a road map telling you exactly how to rank better in their search results or the local search results but some research has been done by various experts in the industry using co-relation data and using various tests and whatnot. They’ve discovered that it’s a language code structured citations, which basically means the number of times your business information appears throughout the web.

The number of structured citations you have can help increase your local or your Google Places ranking and a great way or an obvious way to do this is by having lots of directory listings, which have your business information on there. This means as well that you should make sure that when you put your business details out there, you’re always giving away the same information. So, always use the exact name business name, don’t add a PTY LTD on there or do something different with key words because you think it may be beneficial. It’s best to keep it the same. Also put the same phone number, don’t add 0 8 to the start of some and not others or don’t put like tracking phone numbers. It’s best to give your basic information and that can help you with your local SEO.

The last benefit I’m going to talk about is a more general SEO benefit. So just to go back to the basics of SEO, links are sort of the main way that Google uses to determine which websites deserve to rank higher than the other websites. So, they look at the number and quality of incoming links, that’s links coming from other websites to your website and using those signals, those link signals to determine where your website should rank. Now, pretty well the accepted directory links won’t give you much value, because it’s pretty obvious to Google that they can be created by a person, so it’s not really a strong vote but it would probably give you some value and you probably want to take all the value you can get. So, that’s one benefit, one sort of broader SEO benefit. Another broader SEO benefit is you just have more pages in the search results which relate to your business, so you just have more opportunities for people to click on a page and come through to your business and because they’re not on your website, there’s perhaps of a little bit higher chance of ranking up there. If you’ve already got your own business in there, it’s unlikely that many, many pages from your business or from your website are going to rank in the search results, but if they’re on different websites they’ve got a better chance of ranking because Google likes to have a bit of variety in there. Of course it’s all for your website, it’s going to be beneficial.

Now, one possible negative which I should definitely mention for adding yourself to directories, something to keep in mind for sure, is that some people have abused the directory model by just creating thousands and thousands of really low quality directories, ones that you would never visit them and they don’t really have any value for people. The primary purpose is to, just sort of create links for some of these websites. It’s really just manipulating Google’s rankings and that’s all they’re for, and Google is not a big fan of these sorts of schemes and if they discover many of these directories linking to your website.

So, if you were to go out and sort of link your website with the thousands of these or even many of these directories, Google might mistake your website for being low quality or spammy and give you a penalty or deduct your rankings. So, that’s certainly something you should keep an eye on when you’re adding yourself to directories. Also, if you have a web designer, an SEO or marketing person doing some work for you, you should make sure they’re not doing anything like this a well, or always use good quality directories, ones that actually provide value to people, not just for search engines.

Alright, our next section is sort of looking at free versus paid listings. Now, most directories operate on a “free-mium” model, so they’ll basically give you a free listing with probably, usually some pretty good business information. Most of your business information, a description, a link to your website often, and some other things, possibly photos or videos or a map showing where your business location is. It depends on the directory but most free options give you that and then, they have some sort of premium option which will usually give you a more prominent ranking within their categories, within their directory and perhaps maybe less advertising on or around your listing and maybe some more additional features as well, and you pay extra for that. It depends on the amount you pay, it depends on the different directories.

I would say that for the free listings, I should say they’re not completely free because there’s obviously some time associated with adding your business in there and you should be writing unique descriptions for each directory and that could be up to say 400 words. That can take a bit of time to get that done and it might take sort of 5-15 minutes depending on the directory to add the business in there. So, it’s not completely painless but it’s not too difficult. So, if you have the time, I think it’s definitely worthwhile to add your business to these free directories, keeping in mind that you want to stick to high quality directories because you don’t want to get any of those negatives I just mentioned, and another thing is, you probably want to stick with local directories. There’s some directories out there that are sort of international in nature and when you think about these, probably unlikely to really provide that much value to people because they’re so broad and they don’t really relate, a specific location for a specific directory really provides much more value than these really broad international directories, so I would stick with local directories. We’ve got plenty in Australia for you to focus on.

In the show notes, I’m going to put, we’ve got a big list on Wicked Cow Marketing of up to about 50 or more free Australian directories that you can add your business to and some tips there for how to do that and what you can use to make the process much easier. So, I’ll put that link in the show notes.

Now, the other option of course is the paid option, which is the one you’re probably getting calls about from these directories, trying to get you to pay for their program, for their premium options. It’s very difficult to know if a directory is going to be worthwhile unless you actually get in there and test it. You should definitely tread very carefully because in my opinion, the money you could spend in a premium listing in a directory is probably often could be better spent on other marketing initiatives. So, what you’re going to make sure, if you’re going to be thinking of going with one of these directories, you want to do some research and really make sure it’s going to be worthwhile and it’s the best use of your money.

The other thing to think about with paid directories is that sometimes, they won’t ask you for money but they’ll ask for something else in return. And I lump these in under paid as well because it’s not completely free and often this will be a link back in return. So, what it will say is, we’ll give you a place in our directory but you have to give us a link in return from your website and I would pretty much in all cases, I would not do this.

The reason for that is it might sound like a kind of a good deal for you but the reason is that this sort of link exchange arrangement is a common way of trying to manipulate Google’s rankings and they’ve really sort of come down on the last couple of years and it’s a very sort of dubious way of getting links. I think just to be on the safe side, you should avoid that at all costs. It also means you have to put up a page on your website with a link on it, and it’s somewhat counterproductive. It probably isn’t worth it for you and it could have bad, sort of negative connotations to it, so I’d leave it alone.

So, this next section is about why it’s a great question to ask where these directories get their visitors from, if you’re going to be thinking about going for their premium or paid options. So, basically, there’s probably about 3 different main ways that these directories get their visitors and traffic. Now, those ways would be, number 1, organic search, so, that’s through the search engines, the free listings, you might call them, people just making a search and clicking through. Number 2, through advertisements, so that could be Google Adwords ads, so that could be ads within the search results, paid ads or it could be ads on other sites. There are various other ad websites out there where these directories could advertise, and the third option is by actually having built or building a community of people that come back to that site regularly to get great information, perhaps from a blog or something or interact with each other on a forum and these people are sort of coming back to the site anyway and they’re using the directory as a resource.

So, this is really the one you want to pay attention to because the other 2 traffic sources, the organic search and the advertising is something you can actually just do yourself and you can probably do it cheaper because there’s no middle man. The directory is the middle man if it’s going to them. If the search is going from the visitors, wherever they’re coming from to them and then to you, that’s sort of a middle man situation, whereas you can use these techniques yourself, use the money you might be spending on a directory to get organic search to your website, to get advertisements to your website.

So, those 2 options you can really do yourself, and probably cheaper and more efficiently, whereas the third option is much difficult to do yourself, which you can do, and you definitely should try and build a community if you can, but it could take quite some time and if the directory has already done that for you, this might be a good reason to actually go with the premium option and you could get some good benefits from it. So, let’s go into the last section for this podcast, which is how to choose a directory or for some tips to ask, things to ask, information you should consider, if you’re sort of towards the stage where you really want to figure out if a particular directory is for you or it’s going to be worth it.

The first thing or the main thing you want to be doing is getting data and the directories probably get this question all the time if we’re going to have this data ready to give you. There’ll be, the data they’ll likely to have on hand is the number of visitors their directory receives overall, the number of visitors you receive in your particular local area and also the number of visitors that get to particular categories that they think that you should be put in. That information is useful, but there’s probably some other data I think you should chase up as well, and they may not have this on hand but you should certainly try and get it.

The first one is which we’ve just talked about, which is where do they get their businesses from and this is very important for sort of knowing whether they’re really going to be worth it or not. The second thing is, how many visits are you likely to receive on your listing? They’re going to tell you perhaps how many visits their website receives, and how many visits each category receives, but it really depends on how many different businesses are in that category that you’re competing with and what’s the location, sort of distribution like. So, asking them how many visitors you’re likely to receive from your listing is kind of an important number.

The last thing of the data that I think you should try and collect is try to get an average conversion rate for visitors to your listing. So, that is the rate, or the number of people who convert by either contacting you through one of the methods on the directory or through actually clicking through your website and they should have some of this data there if they’re good and this is really important data because you want to know how effective their directory is going to be for actually driving customers your way. If it’s going to be really low, a really low conversion rate, then maybe you’d be better trying to send them to your website where you have bit more control.

Like I said, they’re going to have some data on hand, but those last 3 they probably won’t so here’s a few ways that you can try and get that information if they don’t have it for you. Number 1, look for signs of a community. So, if they don’t really have that information on hand, of how much of the traffic comes through the different methods, look around on their site to see if they look like they might have some sort of community going on there.

You can look for, if they have a forum, or they have a forum that has lots of activity going on, that’s a pretty good indication that there‘s some sort of community there. If they have a blog, look at their comments on their blog posts. If there are frequent comments and lots of back and forth, that’s another good indication. Look at their social profiles, their Facebook page, a little bit of Twitter profile, see if they have any activity and if they have many fans, if they haven’t got any, then that’s not a good indication.

Now, for trying to figure out how much, how many views your listing is likely to receive, you can usually ask them to give you the data for a comparable business in your area. You want to make sure that they are comparable obviously and that they are in your local area because obviously, with the population distribution, the number of people that are going to see your listing will be very different if you are in the middle of the city or you’re right down in the country, on the outskirts of town or whatever. So, this is certainly something you should be aware of and should be probing about and they’re probably not going to give you the business name, like a competitor and how much business they get but you don’t need to know the business name, you just need to know some basic details and the number.

The last thing you can do for finding is to find some comparable businesses yourself in the directory and actually just contact them directly. So, depending on your industry, your competitors, probably aren’t going to be that willing to help you but if you have something like a, a very similar business to yours in a different city, is one idea because they’re likely to, as long as you can sort of match up the populations pretty well, that’d be a pretty similar business or you can look at a non-direct competitor of yours in the same city, that’s in a similar business as well, so that’s just another way you can go.

I’ve just got a few more tips to finish off to help you out with this thing of getting a premium directory listing. So, try and negotiate a pay by the month arrangement or some sort of trial period before you get locked into like a year long contract, because you want to be able to test it out, get an idea if it’s actually going to work and if you find that it’s just not going to work for you, then you want to just get out of it without having to pay for a whole year, which would be a waste of money and also just to test these things.

You should get Google Analytics and put it on your site or you can use another analytics package if you have one, or if your web developer has already put it on but Google analytics is sort of the industry standard, your web developer or your SEO guy should easily be able to put that up on your website for you and that will give you also statistics about where your traffic is coming from, how long they stayed, etc. Another more advanced tip for using Google Analytics is to set up goal tracking. So this will allow you to actually track when people convert in some way on your website.

So, that could be buying a product, is the most simple way of thinking about it, but it could be also filling in a contact form or even just visiting your contact page, which is the strongest indication that they may contact you or it could be joining a mailing list or something. So, you can set that up in Google Analytics you can actually see, okay so these people have converted and where did they come from. These ones came from Google, these ones came from some other website and these ones came from the directory and then you can sort of work out whether it’s going to be worth it for you.

Another good idea is to keep in mind that you should probably ask people who were calling you or people who foot-traffic into your business, where they heard about you and this can also help you capture some of these people that may have seen your directory listing and have come, not to your website but called you directly or have come in directly. So, that will also help you to track within your trial period and decide whether this directory is actually working for you.

Alright. That pretty much brings me to the end of all the information I had for this episode. To get notes, some links, more information about the stuff that’s been mentioned here, you can check out the show notes for this episode, for episode number 16. We’ll have some links up there, links to my list of business directories in Wicked Cow Marketing, and also a link to an article which has a lot of this information up on our blog coming up this week.

I hope that was good information and I will see you all next week.

[/spoiler]
30Aug

Ep#6: Word of Mouth Marketing

Word of Mouth Marketing interview with Martin incl. what are people already saying about you, negative word of mouth, how to get started and more.

This week we have an exciting interview with Martin about word of mouth marketing. Martin is a marketer, consultant and co-author of the ebook; ‘Word of Mouth Magic.’

Included in this episode;

  • What is word of mouth marketing
  • Every business is getting some kind of word of mouth (WOM)
  • WOM in the wider marketing strategy
  • Who should do it?
  • Is WOM marketing suited to B2B or B2C or both?
  • Negative WOM
  • Turning negative WOM into a positive
  • How to get started using word of mouth marketing

 

The Wanding Videographer

This week’s featured photo is another great snap from The Wandering Videographer.

Download Episode #6

[spoiler title=”Click Here for Transcription” open=”0″ style=”1″]

Nick Morris:

Welcome back to Web Marketing Adelaide.

This week, we have a really exciting guest. We have Martin, a consultant, marketer and co-author of the book Word of Mouth Magic.

Martin, welcome to the show!

Martin:

Thank you very much, Nick.

Nick Morris:

How are you today?

Martin:

Good. It’s one of those times where there’s a lot of stuff going on in small business. Small business is having, I think, a tough time, almost no matter where in the world, they are. And it’s good to be able to offer them something solid for their marketing.

Nick Morris:

Great! Well, let’s just get started by you telling us a little bit about yourself and what you do.

Martin:

Well, my background is, as you mentioned, as a small business owner, so it didn’t come to me naturally to have marketing as part of it. I worked out, I was missing a big chunk of information about how to market myself.

Obviously, in the medical arena, the first thing you do is look at referrals, so I naturally developed an interest in it and started looking into all the information out there about referrals, word of mouth — all that sort of “getting known” – because that was the thing I had access to.

Then, I met up with a colleague who was also doing marketing. In fact, he did marketing for a number of things but one of the things he did was he bought a hair salon. And for the 24 weeks that he owned it, he built it up and sold it.

When he looked back on everything he’d done in his marketing, he worked out that word of mouth and referral marketing had created 253% of growth in his customer base and it’d done that in that short space of time – above and beyond what all his other marketing had done!

So, he decided to put down the information about how he got that word of mouth going, and when I came across it, I went, “Wow! That information is fantastic! You’ve gelled into one place all sorts of things I wish I had known from the get-go when I was starting and working this.”

And so, we collaborated together and that led to Word of Mouth Magic!

Nick Morris:

Great! When was that published?

Martin:

That was back n 2003 so I’ve been online ever since then, and, as most people would know, that have looked in the Internet for marketing, it has changed a heck of a lot in that time. The good thing about word of mouth, as a mechanism, as a way of marketing – is that the techniques and the methods have changed, but the underlying fundamentals remains the same.

Nick Morris:

Great! Well, let’s launch into the topic where you tell us a little bit about what word of mouth marketing is, and why is it something that small business owners should be interested in?

Martin:

Well, I think… I duck every time someone asks me for a definition of ‘Word of Mouth’ because people can make up their own definition.

I think the things people think about in terms of friends telling their friends, in terms of referrals, in terms of bad word of mouth (laughs)—bad reputation and things like that… they’re the sort of things small businesses know.

Every small business is getting some sort of word of mouth. The question really is – Is it damaging to them? Is it effective for their marketing? Or is it just, well, basically untapped in their particular business?

So, my goal is to make sure that people can actually do this as a deliberate process rather than, as often happens, something accidental — When they get a referral, they go,”Oh, that was great! Wish I could make that happen more often.”

Nick Morris:

Great! And how does Word of Mouth Marketing fit into a wider marketing strategy?

Martin:

Well, I think what you’ve got to do is look at what your business is doing anyway.

I mean, there are the rare businesses that don’t use the word of mouth, aren’t gonna get referrals. But by and large, if people drilled out into their own business — and if someone is listening to this now, I’d like them to just think about their own business and their own customers, because as they do, they’ll probably notice that their referred customers or the ones that came because of someone else telling them, are a different type of customer.

On average, referred customers will tend to have a higher level of respect, trust in the business, which means very practically, they’ll often spend more money.

They’ll often spend more money the first time. They negotiate on price less. They’ll often buy more often. And they will often be more loyal to the business if there are hard times.

These are exactly the sort of customers you want to keep particularly because also when they come by referrals themselves, they’re often more keen or aware of how to refer others to a business. So, one referral can get many more, when done appropriately.

Nick Morris:

Right, something you said there made me think. It’s so much more a warm lead versus a cold lead for instance.

Martin:

Absolutely! In some cases, it’s more like just taking the sale and taking the order rather than making a sale. It’s the sort of business we’d all love to be in. People walk in expecting to spend money; they’re really just working out exactly how to do it.

Often a referral is more like that than someone else you have to convince from cold market or whatever or from an ad or from the newspaper. So, in terms of where it fits in their marketing mix, I think most businesses starting up will do it anyway. They’ll tell their friends about their business at the start, but I think more businesses should focus on it because of the return on an investment.

I mean, if I ask a business straight out, “Okay, your marketing mix – you’re spending this much on this, this much on this… How much are you spending getting referrals from your current customers? What’s your dollar value and your budget on that? How many resources of your staff or yourself are you putting into that particular task?”

Now, you know, they’re getting referrals often. They’re doing quality work. People are talking about them. But, very few are actually concentrating on that as a strategic part of their plan that they would commit resources, time, and money towards. And yet, if they look at their business, it’s often a huge chunk.

Nick Morris:

Wow, ‘cause yeah, I can certainly see how it’s an area where people like to get referrals, but they may not think there’s actually something they can do to encourage it.

Martin:

Exactly. And I think the two things that I notice in my work with small businesses is that they either don’t believe it can be done deliberately – that’s one big problem – or if they believe it can be done deliberately, they think it requires begging.

“Do you have to beg? / Do I have to go and beg my customers for referrals?”

What? No! (Laughs) That’s not comfortable for your customer. It’s not comfortable for you. And it’s actually not a successful strategy.

Nick Morris:

Great! And so, by the sense, what you’re talking about… It sounds like something that you do perhaps across the business rather than like a specific sort of task that an employee would do. Is that accurate?

Martin:

Exactly! And I think this is one of the reasons why people have a difficult time setting a plan or budgeting for it because they can’t say “Oh, I will put this ad in this paper and spend this much” or “I’ll go to the website and get my rankings on this or pay this on pay-per-click.”

It’s very much harder to do word of mouth marketing in that type of strategic sense and yes, it covers all your marketing.

If you can get your ads to produce not just a customer but a referral from that… If you can get someone to have a story in part of your marketing pamphlet that also includes the fact that they came from referral – “Oh, when my friend referred me to this business, wow, did they do a good job!” – That’s a little piece of word of mouth marketing. It’s teaching people, “Hey! We get business from others. You can refer to us others you know, too!” And fit it in to the rest of the marketing message. But, that has to be done as a deliberate part of your strategy.

Nick Morris:

Right, and is it better or is it necessarily a need to be done by the business itself? Or could this be something an external marketing person, if the business has one, can do?

Martin:

Well, certainly there are different pieces of the strategy. In terms of web marketing, I would certainly suggest that businesses outsource a lot of that. Most times it’s not the expertise of a business to know how to run these specific things…

But if it’s something like content of it or about how it beds in to the rest of the process, because you want your website to match with your other messages in your marketing and often support it… For example, if your testimonials on your website talk about referrals and word of mouth messages – If your website or your tweets or your LinkedIn profile give people a story to tell, then those are powerful things in word or mouth and they are powerful things of connecting all of what you do together.

So, you can outsource the techniques but you really have to keep the spirit of the business and the core of what the word of mouth message is connected very strongly to the actual people in it – And often, that’s the owner.

What is the owner standing for in their business? Why did they get into the business? What is the value they are offering? And, you know, those messages have to come through all the way through the business, not just in pieces.

Nick Morris:

Great! It seems like if it’s something you can do well or get right, it could be quite a competitive advantage. Would it be right?

Martin:

Well, I mean, if you think about it, referrals are in fact one of the few ways the people can have an entire marketing strategy done in one format. There are businesses that can run only by referrals.

Now, it’s not most businesses but certainly it’s a way you can have a solid strategy and I know that one of the gurus that I looked at when I was first studying this said he wouldn’t have a business running unless he had a solid referral strategy in it.

I mean, it is just so much a part of every single business structure that I think if someone neglects to put it in, they’re leaving dollars on the table – The easiest dollars they’ll often (ever) find.

Nick Morris:

And do you find it’s more suited to say Business-to-business (B2B) and business-to-consumer (B2C) marketing? Or is it for everyone?

Martin:

Well, it’s for anyone whose customers will talk to other customers.

So, you know, I sometimes say anyone from drug dealers to the president. It’s sort of like networking done on a business scale. You might network one to one with some individual people and that would be your word of mouth if you’re B2B and you just need to network with 3 or 4 other people and you’ve covered your entire field you want to link up with.

But if you want to go more broader than that, then it’s called word of mouth rather than one on one networking, and you need a strategy that will allow you to get networking effect and out to a broader audience.

So if someone is listening to this with their business, they can ask themselves—“Could more people refer themselves to the services I offer? Would the customers I currently have or the vendors or the people who already know about my business refer someone else to me?”

Almost inevitably, they’ll say, “Yes, I wish they would!”

Then the question is — “Okay, so what’s your strategy to make that an easy and comfortable process for all involved so it happens more regularly?”

Nick Morris:

Great! So another question I have was what about negative word of mouth?

Is there something or some things people can do to reduce the effect of that or to stop them from leaving a negative word of mouth?

Martin:

Well, that’s a whole topic in itself, so let me not go too broad. The obvious answer is yes, there’s a lot of things that can be done but the key ingredients, I think, are to make sure that you actually get to know that it’s happening.

So, for example, one of the biggest issues with people in terms of their word of mouth is once they’ve dealt with a customer, they never follow up.

They don’t know what that customer has been saying to others or that client is saying to others down the track. So, if they don’t keep in touch, they don’t know what the messages are going on from there and they don’t have the chance to catch things they don’t want and do anything about it.

In terms of online, that’s another thing. If you get bad messages online, sometimes in forums or something gets put up there, are you even monitoring to know it’s there? Do you know how to monitor it?

I mean, I’m sure you, Nick, have taught businesses how to find out such things but it’s a simple business. If they’re wondering now, go to Google, type in to Google your business name, and maybe some variations on it — if you’ve got a lot of results come up. Type in to Google your “BUSINESS NAME review”, “BUSINESS NAME complaint”, “BUSINESS NAME scam”, whatever.

Then, type in the names of your key personnel. See what comes up under those.

What is your current online reputation?

You can get sophisticated and set up ways of monitoring Google or monitoring twitter and those sort of things, if you want. But, at least keeping in touch with what’s there. And then, yes, if something pops up, then I have things I do to help people remove and repair their online reputation. Not necessarily remove, but make it so that when people search, they find the information you want and can look after.

But, obviously, the best form of this is prevention. Particularly with the internet, it’s such a free world you can’t prevent everything.

I think people would need to understand this: A complaint is not so much the issue. What you do with that can often be the solution. And with the right response, you can often turn a problem into exactly the thing people say, “Oh, wow!” And then they talk about not just the problem, but they talk about the fact that you solved it. So, if handled right, there are ways to turn these back into big advantages.

Nick Morris:

Great! That’s some really great information there. Now, you’ve given a few little tips and steps in a bit about word of mouth.

Are there any other things or tips you can give for how small businesses can start to get into the word of mouth marketing game?

Martin:

Well, once they’ve realized they’re already in it, the first thing to do is just to monitor what’s going on.

Have you ever asked your customers, “What do you tell others about me?”

That’s just a simple question to ask but since we’re talking about online and web marketing, let me be a little bit more precise. I think in exploring how people use the web, often small businesses feel like they don’t have enough expertise or they don’t want to do that and may outsource it.

But, one way to think about this is you have to respond to what your customer wants. So these days, you can just ask your customers. Like perhaps previously, if you were trying to run an ad, you’d ask, “Which magazines do you read so I know which place to put the ads?” for your best customers.

So, for your best customers, what are they already linked up with? If a business wants to build a word of mouth strategy around Twitter but none of their customers bothered to read any of the tweets, then there’s no point.

The biggest thing I’d say with word of mouth is, this is one of those marketing strategies where the communication back and forth that you have with the people you want to be your referrers – and by the way, not all your customers are one you would want to build word of mouth with. That’s a totally different strategy but it’s something where you do need to be a little bit selective — but in doing that, they will tell you, “Yes, we’re on Facebook all the time.” or “We look at email but really don’t get involved with the rest of the web.” or “We don’t have computers at all. Don’t bother with it.”

These days I would still recommend businesses have some sort of website or some sort of blog, or something to catch their attention when their customer’s daughter or whomever goes on and checks it out for them, but still.

So, responding to what your customers are telling you is the true power to word of mouth, and the back and forth in the real communication is at the heart of every business that uses it well.

Nick Morris:

Great, really great tips in there.

And when people are trying to find out about their customers, should they be just asking them directly when they come in to the store, or bringing them up, or a combination of things?

Martin:

Oh, I wouldn’t stop anyone from doing any of those things. The main thing about it is not when you do it. It’s more like whether you do it!

And also about the attitude you take with you. I think if you understand that this is something to help the customer to help someone they know, that you have the understanding that this is a benefit to the customer… that the money or the time you spend on advertising could be saved and passed on to the customers as either better products because you got more time to concentrate on them or less charges because you don’t have to have the fees of advertising if you can get referrals in.

Referrals are actually a win-win, and the reason that I really have my focus on this compared to a lot of other forms of marketing is, it truly is the best win-win for all concerned.

You’re not paying an outsider like Yellow Pages or advertising companies. You’re not behooven to Google’s vagaries as to how they change things.

You’re relying on the people who rely on you. And that network is a strong one that can withstand, when you’ve got a worthwhile business that is valuable to others as well.

Nick Morris:

Well, great! That’s a really great bunch of tips there. There’s some stuff in there that I’m just thinking in my head that we’re going to apply to my business when we get off this call. Thanks very much for coming on the show.

Martin:

My pleasure! It’s one of those things where the more I can get this information out there, the more I think it’s valuable for all businesses because the only businesses that don’t want word of mouth are the ones you don’t want to have out there (laughs).

I like supporting businesses that come to me saying, “Hey, how can I do my word of mouth better?”, because that means they’re happy to be judged by their customers on the value they provide in the marketplace. It’s a pleasure to work with those sort of businesses.

So yes, if people are wanting to learn more about this, or take some of these into specific strategies beyond what we’ve talked about today, they can find me at the WordofMouthMagic.com website.

When you put in your details there, don’t just leave it there – get in touch! Make this personal.

Give me a phone call. Link up by email or online. Whatever works best for you… And we’ll see how we can build this together because I look forward to meeting those businesses that are happy to be judged by their reputation, and helping them get the referrals, raving fans, and repeat business the deserve!

Nick Morris:

Great! Hopefully we might be able to talk to you again in the future and get some more tips from great sort of knowledgebase you’ve got there. Have a great day!

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