Making word of mouth count Making word of mouth count

The power of referrals for generating new sales, cannot be denied. However, not enough SMEs are utilising it to maximise profits.

If you ask pretty much any seasoned sales person or business owner where the majority of their highest quality new business come from 92% will say from referrals, networking and word of mouth (between 50% and 100% of landed new business). These figures are backed up by a recent study by Dr. Ivan Misner, founder of global networking organisation BNI. According to the data, over 12,000 business people from all over the world and maybe surprisingly this statistic seems to hold true for every cultural and country surveyed.

If so, many business people know it is such a great resource then why is so little done to or maximise its potential? Ultimately, there are only four categories of landing new business and most people have a plan and system for most:

  1. Marketing and advertising
  2. PR
  3. Cold calling
  4. Referral marketing (including networking and word of mouth)

For anyone wishing to grow their business they will tend to know what to do about the first three approaches mentioned above.

For marketing and advertising, one invests in an “all singing all dancing” website that utilises  search engine optimisation. You can advertise in a newspaper, on TV or radio and hopefully track which medium is most effective above and below the line. While these are effective methods of business generation, they are often too costly for an SME to take seriously especially if they want to stay in business. Larger businesses can afford to do so but is it the most effective and efficient?

With PR, setting ones self up as an expert in the market through a third party medium is extremely powerful. Being interviewed on TV, Radio or in magazines as the expert certainly improves your brand encourages people to come to you with more of  “buy” mentality. Of course for most people you need to pay to get PR because many people do not know how to leverage the system.

Cold calling is strangely popular with many managers because they get to watch their staff work and record their efforts. Historically, 20 calls made will result in one appointment. The disadvantages of course with cold calling are many. At the least, you need a resilient sale person, then you need to pay them 10- 15k a month. Other less intangible are the perceptions in the market of your brand particularly if excessive cold calling is the norm.  Finally and more importantly cold calling was recently made illegal in Dubai.

So what’s left? Referrals (or leads), WOM and networking. But what’s the difference and do we really know how to make the best of these methods and techniques that we hear tossed around the market place with little true understanding.

Because we as humans have a natural ability to communicate we often think this makes us immediate experts in networking. Networking is not about charging into a room full of people and ramming our business card into as many hands as possible, collecting other cards like a harvester and then following up with a sales e-mail once back in the office. This is actually “cold calling face-to –face” and again does our brand little good because we are often seen as annoying.


This is all about being remembered favourably by the people you meet so that they will want to meet you again and get to know you further. I advise people when networking to find individuals with whom you can develop relationships.  Some one with whom you share a common client and could actually refer each other multiple business.  It might take a bit more time then hunting down the one deal in the room but ultimately it is more efficient and doesn’t annoy every one you meet which is often the case with the “networking pounce.”

Word of mouth

These are the clients that “land” because people “heard about you” but are not sure where from. This is the buzz in the market that can  be developed by utilising social media, radio, TV, magazines, or by just doing a good job. One way to leverage media outlets  to get exposure without paying for PR, by simply getting referred in. Remember, there is also bad word of mouth and this can be generated in many ways including poor service, poor business ethics, not returning calls, emails turning up late, networking badly, and so on.


We need to set referrals apart from “leads”. Leads are little better than cold calls. The “lead” generated client does not necessarily know you exist nor have they given you permission to call. This is still technically a cold call. Unfortunately many people are making themselves feel better thinking this is a referral. While it can be called such, it will by no means be as efficient as a” prepared” referral. Where someone you have developed a relationship with has prepared the client by explaining what you do in depth, assuring there is a need, possibility even helping to develop one through questioning and then providing you with a high level introduction.

I imagine while I may have clarified some points above some of this will be known, so you may be asking why is this most wasted secret. Well let me ask you what is your system to generate more business by referral marketing? Who are the key individuals you need to work with to refer each other, and what is your strategy to motivate and educate them?

If you needed to double this business tomorrow what would you do differently or more of? Most people would not even know where to start because Referrals historically come by chance.

People know referrals are the best business, but they really do not know how to get more out of them. Yes you could ask your clients to give you more

Phil Bedford

referrals but in the end, they are clients and you might not be able to get this from them everytime. Harvard Business Review recently revealed that 68% of clients will promise to refer you but only 11% ever do and this is not usually reliable its “as and when” they feel like it.

Here it is in a nutshell: there are eight sources of referral and one of these includes six types of networking groups. The ability to leverage all of this and apply the system is not something we are born with, it’s something we need to learn.

You can buy books, download MP3s and use YouTube to get tips. Just be careful when learning that’s its not old style “how to hunt a room” networking. Rather then the more productive “farming method” that is becoming increasingly popular.

Many of the local networking groups are looking to help their members get more business, so encourage your group to provide networking and referral training. I am sure they will happily oblige many of the groups are always looking to increase value for their members.



Phil Bedford is the Middle East Master Franchise owner of The Referral Institute, an international referral training and consulting company with branches across the world. He holds a master’s degree and brings over a decade of experience in sales training, business development and consulting to his role as Master Trainer at the Institute. Phil helps professionals live more and earn more through relationship-based referral marketing. With his business acumen and extensive experience in the market since 1998, Phil is currently expanding the franchise across the Middle East region.

Rushika Bhatia Editor

Rushika Bhatia is one of the region’s leading commentators on business and current affairs issues. She is the Editor of SME Advisor magazine - the flagship title of CPI Business. She is passionate about infographics – with special emphasis on data, research and statistics. Rushika has a Bachelor’s Degree from Indiana University, USA and is also CIMA qualified.

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