Let's focus on leveraging others to promote your products and services.

The core four are essential, but what truly scales your business is having others do the heavy lifting for you.

Let's explore how to build a lead machine that drives exponential growth through leverage.

Understanding Leverage

Leverage is the difference between what you put in and what you get out.

High leverage means you get significantly more output for a small input.

This concept is crucial for building a business that scales efficiently.

It's not about making more calls yourself, but about finding ways to make one call that generates thousands of leads.

The Power of Lead Getters

There are two primary ways to let people know about your products: you can do it yourself, or you can have others do it for you.

And when you think about it, there are far more other people than just you alone!

Leveraging others is where true scalability lies.

Let's go through four scenarios to illustrate this concept:

1. Scenario 1: You as the Lead Getter
- You do the core four activities every day to generate leads.
- This is the self-starter, solopreneur model where you handle everything yourself.

2. Scenario 2: Hiring a Lead Getter
- You do the core four for one day and then hire someone to take over.
- You now have someone generating leads every day, significantly increasing your leverage.

3. Scenario 3: Multiple Lead Getters
- You hire a lot of lead getters.
- With each new hire, your lead generation capacity grows exponentially.

4. Scenario 4: Hiring a Recruiter
- You hire a recruiter to find lead getters for you.
- This recruiter builds a team that continuously brings in new lead getters, creating an endless stream of leads.

The Core Four and Beyond

The core four are the foundational activities you do to generate leads. But to truly scale, you need to move beyond this and leverage others:

- Customers: Encourage them to refer new customers.
- Employees: Train them to promote your products.
- Agencies: Outsource lead generation to specialized firms.
- Affiliates: Partner with others who can promote your products in exchange for a commission.

Customer Referrals

Referrals are one of the most powerful forms of lead generation.

Here’s why:

1. Cost-Effective: Referred customers often cost nothing to acquire and tend to spend more.
2. Quadratic Growth: Referrals can grow exponentially. One person tells two, those two tell four, and so on.
3. High Trust: People trust recommendations from friends and family, making them more likely to convert.

2 Reasons Most Businesses Don't Get Referrals

  1. Their product or service isn't as good as they think it is. It doesn't provide enough value to customers.
  2. They don't ask for them.

6 Ways to Increase the Value for Customers

Increasing the value for customers is crucial for enhancing their experience and boosting referrals.

Here are six effective strategies to achieve this:

  1. Sell to Better Customers:
    • Identify the top 20% of your customers who get the best results or have the highest satisfaction.
    • Focus on attracting and selling to similar customers to improve overall results and satisfaction.
  2. Set Better Expectations:
    • Clearly communicate realistic and data-backed expectations to your customers.
    • Under-promise and over-deliver to create positive experiences and goodwill.
  3. Increase Perceived Likelihood of Achievement - Get More People Better Results:
    • Survey your customers to identify those who achieved the best results.
    • Interview them to find out what they did differently.
    • Analyze their actions and replicate those steps for new customers.
    • Ensure new customers follow proven steps to improve their outcomes.
    • Measure the improvement in average customer results (speed & outcome).
    • Important - Match the conditions of your guarantee to the actions that get the best results to get more people to do them.
  4. Decrease Time Delay (Give them faster results):
    • Speed up the time it takes for customers to achieve their desired outcomes.
    • Break down large tasks into smaller, manageable milestones and communicate progress frequently to your customers.
    • Choreograph the first 28 days of any new customer coming in to set a positive initial impression (that's when the risk is highest).
    • Customers make up their mind on how good is a business within the first 48 hours––make sure you delight the hell out of them. Tell them exactly what's going to happen and overdeliver on it.
    • Never leave them in 'no man's land' - book a meeting from a meeting, meaning customers should always know what happens next––you always set the next meeting at the end of a customer meeting.
  5. Decrease Effort and Sacrifice (keep making yourself better):
    • Use surveys and customer feedback ('ask them, what sucks about this?') to figure out ways to improve your product or service.
    • Then give the improved product to a small group of your struggling/unhappy customers.
    • Get your next round of feedback. If a problem was solved, roll it out to all customers.
    • Repeat this process until the end of time.
  6. Tell Them What to Do or Buy Next:
    • Guide customers on the next steps or products they should consider.
    • Offer upsells, cross-sells, or additional services that complement their initial purchase. Tell them, 'once you go through ABC, you'd be qualified for XYZ, which will allow you to unlock this & that benefits. I don't think you're qualified yet, but you will be after finishing ABC'.
    • Ensure ongoing engagement and value delivery to keep customers interested and satisfied.

By implementing these six strategies, you can significantly enhance the value your customers receive, leading to higher satisfaction and more referrals.

Thought Experiment: Let's Consolidate the 6 Strategies Above into One Experiment

Scenario:

  • Imagine you have lost all your customers except one.
  • The rules dictate that all future customers must come from referrals by this single remaining customer.
  • You cannot use traditional advertising methods.

Questions to Consider:

  1. Treatment and Experience:
    • How would you treat this customer to ensure they have an exceptional experience?
    • What extraordinary measures would you take to delight this customer?
  2. Results and Outcomes:
    • What kind of results would this customer need to achieve to feel compelled to refer others?
    • How would you ensure these results are not only met but exceeded?
  3. Onboarding Process:
    • What would the onboarding process look like to make a strong first impression?
    • How would you communicate and engage with the customer during this critical initial period?
  4. Ideal Customer Profile:
    • Who would you choose as this last customer if you could pick anyone?
    • What characteristics or qualities would make them the ideal candidate for referring others?

Application:

  • Implement these considerations into your actual customer service and product improvement strategies.
  • Aim to treat every customer with the same level of care and attention as you would this hypothetical last customer.
  • Focus on creating such an outstanding experience that customers naturally want to refer others.

By applying the insights gained from this thought experiment, you can enhance your product, improve customer satisfaction, and increase the likelihood of generating valuable referrals.

7 Ways to Ask for Referrals

  1. One-Sided Referral Benefit: Offer a reward to the referrer.
  2. Two-Sided Referral Benefit: Reward both the referrer and the new customer (this is powerful).
  3. Ask at Purchase: Request referrals at the point of sale (combining 2+3 is EXTREMELY powerful).
    1. Pro tip: Show them how they will get better results when they do it with a friend. ' You want to see what's the best way to double your results? Do it with a friend. Who do you want to do this with?'.
  4. Negotiation Chip: Use referrals as a bargaining tool to offer discounts. 'I'll give you the discount you want if you refer 3 friends'.
  5. Referral Events: Create events where customers are encouraged to bring friends.
  6. Ongoing Programs: Keep referral incentives active and visible.
  7. Bonuses for Referrals and Testimonials: Offer additional rewards for referrals AND public testimonials.

Real-World Example: Dropbox and PayPal

- Dropbox: Offered free storage to customers and their referrals, growing their user base by 39x in 15 months.
- PayPal: Gave $10 to both the referrer and the new user, reaching a million users in two years and 100 million in six years.

Maximizing the Referral Process

To maximize referrals, focus on creating exceptional value and leveraging social proof.

Here’s a strategy to enhance your referral program:

  1. ‍Gift Cards: Provide gift cards for your business that your existing customers can give to their friends (gift card should be up to 1/3 of your cost of the delivery).
  2. Heavily Discounted Gift Cards: On holiday season, you can say 'I'm selling gift cards at 90% discount. 2 per person.
  3. ‍Personalization: Personalize the referral experience to make it more engaging. Write the person's name on the gift card and have the customer send it to their friend.
  4. ‍Urgency: Add expiration date on the referral incentives to create a sense of urgency.
  5. ‍Combination of Methods: Combine multiple referral strategies to increase effectiveness.

The Referral Growth Equation

The referral growth equation is a powerful tool for understanding and driving business growth through customer referrals.

Here's a breakdown of the key components and steps:

  1. Referral Rate vs. Churn Rate:
    • Referral Rate: The percentage of your existing customers who refer new customers each month.
    • Churn Rate: The percentage of your customers who leave or stop buying each month.
  2. Positive Growth Indicator:
    • When your referral rate is higher than your churn rate, your business will grow without any additional advertising. This means more customers are being referred each month than those who are leaving.
  3. Calculating Monthly Compounding Growth:
    • Subtract the churn rate from the referral rate to get your monthly compounding growth rate.
    • For example, if 10% of your customers refer new customers each month and 5% churn, your business will compound grow at a rate of 5% per month.
  4. Three Key Scenarios:
    • Referrals Greater Than Churn: Your business grows organically and profitably without needing additional advertising.
    • Referrals Equal to Churn: Your business remains stable but requires other forms of advertising to grow.
    • Referrals Less Than Churn: You must continuously advertise just to maintain your customer base, leading to a "hamster wheel of death" effect of constantly needing more leads to replace lost customers.

Conclusion

Referrals are a powerful way to grow your business exponentially.

Referring is always a risk for the customer.

They risk their goodwill with their friend in the hopes of getting more by showing them something cool (your stuff).

So customers only refer when they think it’s very likely their friend will have a good experience.

By creating exceptional value, asking for referrals, and incentivizing your customers, you can build a referral machine that drives sustainable growth.

Remember, the key is to leverage others to amplify your efforts, reduce your CAC, and scale your business efficiently.

Action Steps

1. Calculate Your Referral and Churn Rates: Understand your baseline metrics.
2. Implement Value-Adding Steps: Use the six strategies to increase the value of your product.
3. Capitalize on Goodwill: Use one or more of the seven referral strategies to start generating more referrals today.

Building a successful business is about mastering leverage and creating systems that allow you to scale efficiently.

By focusing on lead getters and maximizing referrals, you can create a sustainable growth engine for your business.