Wednesday, December 27, 2006

The 3 Types Of Referrals

The big misconception people tend to have about referrals is that if you do a good job for people and you stay in touch with them that you’ll get referrals and that’s true to a degree.

In fact, that’s what most people who have what they call referral businesses do.

See they do a good job, they buy a nice gift for their clients at closing, then they put them on their newsletter list and they send them a card at Christmas. They may invite them to their summer barbecue, maybe send them an anniversary card, all kinds of things like that, and it works because when they look at their business they look at all the business they did and at the end of the year a good portion of that is what you would call repeat and referral business.

Now I’m going to show you something this week that I’ve been working on for a long time and if you try it for 30 days you’re going to see an amazingincrease in the number of referrals that you get. So here’s how it works.

This summer I was invited to speak at a real estate company’s annual sales retreat, and it was a beautiful resort, they had all the agents, loan officers, the managers, the owners of the company and some of their investors and their bank representatives were there as well. I wanted to talk about something that they could immediately put into action without really spending any money and something that everyone could be a part of that had measurable results.

So I started by asking them to help me out with an experiment, and I’m going to ask you to do the same experiment with me today.

What I’d like for YOU to do is get a piece of paper and in the left margin of that piece of paper put the numbers 1 through 10.
Now I put the numbers 1 through 10 on an easel pad when I was doing this with the group.
Beside each of those numbers I want you to put the name of a client that was referred to you.
So this might take a little time, but think about this because it’s going to be a very valuable exercise for you.
I want you to think back, think about the last ten people that you’ve helped who were referred to you and write it down.
Now if you can’t think of 10, make sure and write down as many as you can because this is going to be very illustrative for you.

Now when we did this in the meeting, I just went around the room and I had people call out names until we had 10 names up on the easel, so a lot of different people were participating here.

It would be great if you’re in your office right now, or your home right now, or somewhere where you can stop to stop reading for a second and do this before you read the rest of this.
If you can’t do that, that’s okay, just stop, make a note that when you’re working on your business, when you’re spending your time this week working on your business, make a note to do this exercise because it’s going to be very valuable for you.

Okay so you’ve got 10 names of referred clients down the left side of the page.

Now beside that column of names, I want you to draw three vertical columns, and at the top of the columns we’re going to name the first one P, we’re going to name the second column R, and the third column O.

So we’re got three columns, P, R and O.

Now here’s where it gets interesting because those three columns represent the three types of referrals that you can get.

The first type of referral is what I call a passive referral and those are your favorite kind of referrals.

Someone calls you up and they say hi Jeff, it’s John Parker and my friend Richard Peters told me that you could help us sell our house, or they might say get a apartment, or buy a house, whatever it is.
But they call you up out of the blue to tell you that so and so told them that they should call you because you can help them.
Beautiful call to get and these are fantastic because you never know when you’re going to get them, it’s always a pleasant surprise and they always make you feel good.

Or one of your clients might say, might call and say hey Jeff we decided we’re ready to buy a bigger place, when can you come and see us? Both of those phone calls are what I classify as passive referrals – so referral and repeat business, but they’re both passive sort of referrals. They’re the equity that you build up by nurturing relationships with people who know you, like you and trust you.

So take a look at your list of the last 10 referrals and put a check mark in that first column for each of those names that were passive referrals or repeat business so that’s the first type of referral.

Now the second column is labeled R and that stands for reactive referrals. A reactive referral is when someone calls you up and says “Hey Jeff, I was talking to my friend John Parker and he’s been thinking about selling his house, you should give him a call, I told him all about you.” So I call this type of referral a reactive referral because you have to react to the phone call by doing something.

Now most of the time those phone calls are pretty easy to make but they still require you to take the initiative and if you’re skilled at talking to people, you’ll have better results than someone who has less skill or a reluctance to call strangers.

Either way, these reactive referrals are wonderful to get and often they work out successfully so go through your top 10 list again and put a check mark in the second column beside each name that was a reactive referral.

Now when I did this live the very first time up at that conference, it worked out that the 10 names that we wrote up on the easel, 8 were passive referrals where they just got the call out of the blue and 2 were reactive referrals where they got the call but they had to call someone else to actually follow up on the referral.

So we didn’t even get to the third column.

I’ve done this exercise now with different groups and individuals, and not once out of at least 500 names have I had anybody make it to the third column, it’s always 8 out of 10 passive and 2 out of 10 reactive.
I’ve never seen more than 3 out of 10 in the reactive column even.
So I’m going to be anxious to hear about how this works out when you do it, but I bet you’re dying to know what the third column is about.

Well before I tell you what it is, I want to tell you some very valuable information about column 3.
Because column 3 is where all the leverage in your business lies. You are in complete control of column 3, and if you can master some simple dialogue skills you can get incredible results. In fact the more skilled you are, the better results that you’ll get.

Okay, that’s enough teasing.

The O in column three stands for orchestrated referrals, and in all the times I’ve done this exercise I have yet to see even one check mark in that column, and the reason I’m such an advocate for direct response marketing is because it’s so predictable and duplicatible.

If you know what you’re doing you can skillfully apply direct response principles and multiply your money again and again and again.
That’s what orchestrated referrals can do for you. It can bring predictability and repeatability to your referral marketing.

So what is an orchestrated referral?

It’s about asking your clients, friends, associates, sphere of influence for a very specific type of referral and getting it.

You create the referral and you control exactly how you get them.

For example, you asked for a move up buyer and you get a referral for a move up buyer.
You ask for a first time buyer, and you get a referral for a first time buyer.

So here’s how it works.

When I was doing this live at the real estate retreat I took them through the exact process step by step, and I’m going to do the same thing for you.

First you have to decide what type of referral you’d like.

With the sales agents, I asked them if anything new and exciting was happening in the market.
They told me one of their investors had come out with a zero down program that had a 40 year amortization.

I said so what does that mean?

They said it means that someone could get 25% more house for the same payment and who would be interested in that I asked?
Well they said, first time buyers who are looking at townhouses or condos because the detached homes are just a little bit out of their reach.

Okay so now we’ve got something to work with.

We’ve taken a basic program, we’ve turned it into a benefit oriented mentality here, now let’s see if we can’t turn this into an orchestrated referral system.

So think for a second about how many people you talk to in the course of a day – probably a lot.
Your clients, your friends, the barista at Starbucks, your server at lunch, the dry cleaner, you know some of your clients that you might have not talked to in a while, people you run into at the grocery store.
All these people and interactions you have on a daily basis are going to be the fuel for your orchestrated referral machine.

Now I’m going to outline a three step process for you to test just for 30 days.
It’s going to cost you about $50 and you tell me at the end of the 30 days what it was worth to you.

First is the opening dialogue, so the first opportunity you get, try to segue in your opening dialogue.

It goes something like this; “Hey that reminds me, who do you know that’s looking to buy their first home right now?”
and then pause.

Now the pause is to observe the reaction you get and what you’ll notice is that their eyes will probably start looking up, which means they’re searching their mental rolodex to see if anyone comes to mind.

As they’re doing this, you continue on.

"...The reason I ask is that we just found a new zero down home loan program and some great houses where you can get about 25% more house for the same monthly payment as a regular mortgage, it’s perfect for someone who’s looking for a first home or a bigger home – who comes to mind first?"

Then stop.

You just don’t say anything, and they’ll think for a minute and one of two things will happen.
They’ll either come up with a name or they’ll say I can’t think of anyone right now.

Those are the two, the only two things that could happen.

They’ll either come up with a name or they’ll say I can’t think of anyone right now, and if they have someone that’s great.

If they don’t, which they probably won’t, you just smile and say "That’s okay, would you do me a favor?"

Sure they’ll say.

"Would you keep that thought at the front of your mind and when you think about or run into someone like that would you give them one of these cards and hand them three cards, and you say there’s a free recorded message they can call right here with all the information on that program and homes I was just telling you about.You hand them the three little cards, and they’ll have a short description of the benefits of the program and a phone number they can call to get the information 24 hours a day. "

Now you’ll use your 24 hour voice mail service, your hotline service for that.

If you did that with even 3 people a day, that’s about 100 experiences you’d have with this dialogue. Now if you give each these people you talk to three of those cards you’ll have three times the reach of just the people you talk to personally. Now what would happen if you had that conversation with 5 people a day, or 10 people a day?

You know how many times could you have that conversation if you made a concentrated effort for 30 days to really focus on this?
You know the key to getting orchestrated referrals is to think about it consciously for 30 days so that you can unconsciously bring up that dialogue at just the right time.
See a lot of times even with the best intentions often we don’t think about asking for referrals until it’s too late.
So we want to decide in advance what type of referrals you’d like to get, then think about a new reason to bring it up in conversation.
See in that home loan example which will work equally as well for realtors as it does for lenders, the fact that it was a brand new program made it newsworthy.

Most people like to have insider information so they look smarter than their friends and that’s what you’re giving the people you talk to, you’re giving them some inside information.

Then script out and practice your dialogue until it rolls off your tongue.
You need a smooth transition to get into it, so you say you know
"hey that reminds me..." , or
"hey let me ask you something" , or
"oh I almost forgot..."

Then you go into part 1 –

"who do you know that’s looking to buy their first home right now?" , or "who do you know that’s looking to build a new home?"

Whatever you decide, just ask the question and pause just long enough for them to engage the search engine in their mind then follow up with "the reason I ask is I just found out about this new zero down home loan program and some great homes where you can get about 25% more house for the same monthly payment as a regular mortgage...It’s perfect for someone who’s looking for their first home or a bigger home. Who comes to mind first?"

Then stop, and if they say I can’t think of anyone right now, just move on to step 3, "that’s okay would you do me a favor and keep that thought at the front of your mind and when you think about or run into someone like that would you give them one of these cards?"

Practice that dialogue and commit to trying this for 30 days.
Now you probably want to know what to put on that business card don’t you?

I’ll tell you what, I’ll trade you.

Do the experiment, do the exercise we talked about, think of the last 10 referrals you got and recall whether they were passive, reactive or orchestrated, then send me an email to with your name and the number you had in each column.

So you say Jeffrey Stanton, (Realtor), (8) passive, (2) reactive, (0)orchestrated.

By the end of next week I’ll send you a sample card and a script by email. Also tell me whether you are a realtor or a lender.

Okay? Fair enough?

I think you’re going to really enjoy this.
I think if you just commit to this for 30 days and I’ll work along with you here for these 30 days, this is a great time, you’re going to be talking to a lot of people, you’re going to be running into people, you’re going to have an opportunity to bring up this dialogue.

Thanks for spending 3 minutes with me.....
The best is yet to be!


You read Jeffreys Journal every week because you, like me want the best for yourself. And you, like me want to build a strong referral based business.

Who else like you, like me, loves referrals that you can share this blog with right now?
Pass it on to one agent that you like and respect.

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