referral marketing

Why Does Referral Marketing Work?

referral marketingAccording to Ivan Misner, the founder of BNI, in his article on referral marketing is like fishing with a net. How you cast the net increases your chances of catching fish. You choose a likely spot, throw your net and when you pull it in, you find a number of fish. You have a pretty good idea of how many fish you’re going to catch if you do this a few times, but you don’t know which individual fish are going to end up in your net. The fisherman concentrates on casting the net, not on the individual path of one of the fish.

When you have a properly functioning referral marketing system in the works, you can predict almost exactly how many referrals you will receive and the type of quality referrals they’ll  be. Although you won’t know exactly who you’ll be selling to or how large the order will be, this is the case with any type of marketing. He stresses the importance of not looking solely at the sale itself. When you do this, he says, you’ll miss exactly how that sales opportunity came to you.

Referral marketing may seem a bit chaotic and random to those who’ve been trained to call a list of names in hopes of selling to one in 100. But it’s a system that works well because it weeds out all those unpredictable connections that exist between people in everyday life and in business.

Most large companies are still in the dark ages when it comes to networking as procedures and results of referral marketing are not as easy to measure as cold-calling. Therefore, big companies stick to the old ways when training their sales staff. Someday, savvy people in corporate settings will catch on to this system but in the meanwhile, small businesses are now leading the way in this networking technique.