7 Takeaways from My Referral Genogram
If you’ve ever seen a therapist or family counselor, you may have filled out a genogram. I filled one out in graduate school for a class, and it was an eye opener.
A genogram looks a bit like a family tree diagram but with circles and squares and dotted and squiggly lines. The intent is to clarify historical family relationships and spot (mostly) dysfunctional behavior. A genogram creates snapshot of all the messy stuff of families – divorces, remarriages, estrangements, physical and sexual abuse, and whacky sibling relationships.
Today, a variety of disciplines other than psychology and social work use the genogram as a tool, including medicine, genealogy, genetic research, and education.
Several years ago, I decided to conduct an analysis of the business I’ve generated since starting CZ in 2000. I had a lot of referrals to analyze, so I used the genogram, a tool perfectly designed to track the history of a referral. Marketing services, like most other professional services, grow largely by referral. If you have no system to generate quality referrals, other marketing activities like social media, digital ads, marketing automation, and blogging, are largely impotent. A solid 85% or more of new business for professional services comes through some form of referral.
Even technology products with strong referrals affect the bottom line with lower CPL (cost per lead) metrics. The referral is still the golden goose.
Perhaps the goose is becoming even more valuable, given our world of unlimited marketing automation tools and ubiquitous data. In diagramming all my referrals, tracking new business to real human beings, I came up with several key insights:
The Power of One
With almost two decades of referrals, a single referral at the Big Bang of my business had an unbelievably cascading effect – literally, millions in revenue – over time.
One person, whom I call “The Godfather,” referred me to another who referred me to another and another and another. As I calculated the revenue through ten or more generations of referrals, I was surprised by how a single person can affect a small services organization like CZ.
Follow the Trajectory
There are many types of referral sources, of course, the most obvious being the person with whom you worked at one firm who moves to another and invites you to the new party. This is one of the fruits of longevity. You can follow the trajectory of your clients. There’s no phone call like the call from an old client at his or her new firm.
Natural Referral Athletes
I’m a fly fisher, and I resent (not really) watching someone effortlessly pick up fly casting as a newbie. How can she make casting look so easy so quickly?
With referral sources, there are also natural athletes. For whatever reason, he or she simply gets what you do and feels compelled to connect you to others. There’s not a lot of Natural Referral Athletes, so when you find one, you have struck gold!
Impotence of Family and Close Friends
This is not fully true, but it is true enough to mention. We worked with a tech start-up years ago whose CEO believed that his friends in the industry would champion his start-up and purchase the software. Not so.
Few friends ended up as first or early adopters. Fortunately, the company had great success early on without them, but it’s always a disappointment.
Friends are friends, family is family. And not many make great referral sources. Perhaps it’s because family and friends struggle to see you as a professional.
The Long Tail of Trust
As I analyzed the referral data, I was struck by how a single referral can generate new business a decade or more after the initial referral. So much of business today revolves around speed. For many in sales and new business development, the end of the quarter is always just a few days away. The emphasis is always on numbers, not on how much trust you generated.
There should also be more conversation about how trust really forms between two humans (most often not instantaneously) and the lifetime value of trust (LVT).
Give and Ye Shall Receive
Most of us tend to talk more about receiving referrals than giving referrals. Many are the conversations about how to curry favor with COIs (centers of influence) and drive new business.
That’s all well and good.
The real trick is to be generous and quick with your referrals – and to think often of others. It’s harder than it looks, especially if you’re not a Natural Referral Athlete. The ideal is not to give in order to receive. But in the giving, there is receiving. Crazy how that works.
Instead of tracking only referrals received, professional services firms should consider tracking referrals given. It really is game changer, shifting the mindset.
Several years ago, I was asked to be a guest lecturer at a college class on entrepreneurship. At the end of the class, I said something like, “And if you want to talk to me about any ideas you have, I’d be glad to buy you lunch.”
One student took me up on the offer. He had designed a board game for universities around the Monopoly concept and wanted some marketing ideas. We met another time or two. I then referred him to a client, landing him an internship, which turned into his first full-time job out of college.
Later he moved to a tech firm as a developer. A couple years later I referred him again, this time to a different client. By the time he was in his early thirties, he started a tech company of his own. I don’t know if his board game ever took off, but his initiative (he was very ambitious) and my referrals are to thank for the jump-start to his career.
It’s not, in the final analysis, about a single referral only. It’s about the lifetime value of the referral, and the generations of referrals that each can spawn. Not all referrals live on for generations.
But if you are lucky enough to stick around for a few years, you experience collateral blessings when trust between two humans forms and a referral is created.