"Our Take" - Asking for a Reference

(Past Editions by: Date, Title, Topic)

 
About "Our Take" 
"Our Take" is a collection of daily vignettes covering a wide range of CRM topics. It's an attempt to add our own spin to the world of CRM. We will use the column to share our perspectives, opinions, epiphanies, web nuggets, or quite frankly anything that moves us. Get ready to expect the unexpected. And, don't be shy about sharing your thoughts.
 
 
10/30/07 - Unexpected Consequences
I received a story from VocalLabs about the use of the Net Promoter Score (NPS) that I just had to share. Especially since we just talked about NPS last week. Here's a summary:
 
BigBank (not the company's real name) did an ongoing customer service survey which took the form of a follow-up interview with customers a day or two after they call BigBank's toll-free phone number. One of the questions on the survey was "Would you recommend BigBank to your friends or colleagues," the famous NPS question. A couple years ago, someone in Sales got a brilliant idea: if a customer answered "yes" to the recommendation question, then the interviewer would ask for the name and phone number of someone the customer would recommend BigBank to. BigBank, of course, would use those names as sales leads. As soon as this question was added to the survey, BigBank's "net promoter" score plummeted. After some months of investigation, BigBank discovered that the interviewers found the follow-up question unbelievably awkward. So awkward, in fact, that they absolutely did not want to ask the question. But if a customer answered "yes" to the recommendation question, the interviewers would get in trouble if they didn't put something down for a new sales lead. So when a customer said "yes" to the recommendation question, the interviewer would simply enter "no" in the form for the survey -- intentionally miscoding the answer to avoid having to ask the awkward follow-up. BigBank removed the follow-up question and the net promoter score promptly rebounded.
 
Isn't it interesting how something totally unrelated to loyalty can dramatically impact loyalty measurements? What other customer-centric metrics do you use that might be influenced by something totally unexpected? You might never know without really investigating.
 
Gary Lemke, Publisher
(Share your thoughts)
 
11/6/07 - How Much Is a Referral Worth?
Last week, I shared the story about a company that used the NPS question - "How likely are you to recommend us to a colleague?" - beyond the metric for lead generation. If the respondent answered "very likely," the company would ask for a name. This created a bit of awkwardness that affected the results (read the story) because the interviewer would record a different answer as to avoid a follow-up question they didn't feel comfortable asking - "Can you give us a referral?"
 
One reader suggesting using the follow-up question "Would you be willing to so in exchange for a month's free checking or some other inducement?" There is great value in lead generation and the reader has an excellent suggestion to avoid the awkward moment - offer an incentive. The incentive could be to the person making the referral or it could be an offer the customer passes on to their friends and colleagues.
 
Someone that might feel satisfied with the service enough to make a recommendation might not feel comfortable enough giving a colleague's contact information to someone else. At least, not on the spot. A less direct method could be direct marketing totally independent of the survey thus totally disconnecting the customer experience measurement from lead generation.
 
Gary Lemke, Publisher
(Share your thoughts)
 
11/7/07 - Selling Out or Ratting On a Friend
Yesterday's discussion about offering an incentive for a referral was met with stern comment from many of our readers. Many of you feel that offering an incentive for a referral is nothing short of befriending your friend. Consider these two comments:
 
"Because there’s been so much marketing abuse of customers, in some cases this scenario would be interpreted as taking a bribe to rat on a friend. I’d love to see some side-by-side testing, but tracking is very arduous." Or this perspective: "As soon as you offer an incentive, you have biased your NPS data. You have either bought yourself a higher score, or sabotaged your self if the offer is not attractive (or awkward)."
 
Our world of less-than-genuine offers makes us suspect incentives like this. However, if I feel the product or service is outstanding, why wouldn't I want my friends to share in that value proposition (assuming they see the value too)? Which leads me to the big point. The question is "would you tell a colleague" not "would you make a referral?" See, it is about the person sharing the information with their friend, not their vendor. So no question, no incentive.
 
Gary Lemke, Publisher
(Share your thoughts)
 
11/8/07 - A Genuine Reference
What is a genuine reference and how does that differ from other references? I received a number of responses to yesterday's column about creating programs or business practices to encourage references. The question of the day is this: Is it a real referral if it was obtained through incentives?
 
One person responded, "I read your column and I would somewhat agree with the comments you have received. If the products offered are genuinely good and you yourself are sold on those, then I ask, would you need an incentive to tell your friends about the products? I don't think so. It is human nature to talk about good things that one does. And if someone thinks that they have done a wonderful job buying a product and they are quite satisfied by the services... well, there is no need for an incentive to get him/her to spread the word. It will happen naturally. I think the focus of the organization should not be to get more names ... it should be to satisfy the existing customers to the extent that they genuinely refer their friends without any strings attached. And anyways, genuine referrals are more likely by far to try out the product than incentive based referrals."
 
All good points about the genuine nature of a reference. You could replace the word "genuine nature" in the last sentence with "value." But regardless of the quality of the product and service, there is always a certain amount of marketing and sales that has to occur. We can't just assume the product sells itself. Free market forces and competition don't let that happen on a sustained basis. Do they?
 
Gary Lemke, Publisher
(Share your thoughts)
 
11/9/07 - Asking for a Referral
If you have been following the discussion this week about asking for a referral, you know there are many times it is not good to ask. One specific example is when you are surveying the customer (recent columns). Beyond timing, we have learned there are inappropriate ways to ask.
 
Specifically, is an incentive a good thing to offer for a referral? Most of you believe it is not a good thing simply because it often has the appearance of "selling out" a friend or a colleague. From the vendor side, it can appear to be a bribe. And bribes don't breed loyalty.
 
However, there is a difference between a bribe and an expression of thanks for a referral. One reader wrote, "I have had a lunch delivered or sent a dinner certificate to thank a customer for taking their valuable time to talk to a prospect about us." Isn’t that just good business basics?
 
Gary Lemke, Publisher
(Share your thoughts)
 
11/15/07 - Narrowing the Referral Request
We've been talking about the right and wrong ways to ask for a referral. One reader added a suggestion regarding a non-direct and more effective approach to asking. Consider the following:
 
"To increase your referrals, you must ask. To increase them even more, you must ask properly. 'Who do you know who could use my services' is much better than not asking, but it is still weak. Instead, ask 'Who do you know with a sales staff of more than 20 people' or 'Who has been complaining about sales staff turnover in his company?' Narrow questions allow your customer to easily focus on the right people. It also lets you ask him for referrals in different ways at different times."
 
Creating the vision of your qualified prospect can greatly improve the quality of the referral you get. It also helps the customer feel their referral may be more appropriate for the colleague or friend too. Do you agree?
 
Gary Lemke, Publisher
(Share your thoughts)