“A referral happens when the evangelist’s friend has a need that the evangelist believes that your product or service will service their friend’s need.”
This article might not be for you!
If your business model leans more towards the transactional side, clients and evangelists are not in your model and all your resources should be focused on the prospect to customer action. If your business model is transactional, this article does not fit your business. Transactional businesses normally have a product or service that is only sold once. Things like debt relief or diet pills lean toward this model.
A good marketing ecosystem moves people or businesses through various stages of relationship with the business. People flow in both directions based on the on-going experience they have with the business. The job of a marketer is to move the most people in a positive direction in the flow. While often represented as a pyramid, the shape of the data is actually more like the form above. It has a steep angle as it moves up the statuses with a bubble at the end in the most mature companies. Time is like gravity in this process as the status tends to drop if the relationship is not constantly refreshed.
Many business executives will tell you that most of their business comes from referrals. The challenge is that the executive is only looking at one point along the path and typically that is when the order is registered and the prospect becomes a customer. If you follow this farther back, you will find that all business ultimately came from prospects or suspects.
Please note that nowhere in that statement is there anything about the vendor (that’s you) in the process. That’s because while you have to earn the referral, you do not cause the event. It is the need of the friend that starts the process. There are things you can do to influence that but it is very difficult to create need.
It’s about moving people through the communication system
Each stage in the process can be thought of as a segment classification with a barrier to the next class. That barrier is the customer experience and that is within your control. So let’s take this problem apart and discuss the barrier between each classification.
Suspects – People that might do business with you
The first class, and by far the largest, are the suspects. These are people that we suspect could do business with us but so far that’s it. Many times, the problem with this class is the size and the related expense of communicating with that class. The first thing a business has to consider is do they have the budget they need to talk to this class. If they do, the primary barrier to being a prospect is awareness of the product or service. This is especially difficult when you are dealing with a new innovation where people are not aware of the problem or the product. With a well-defined product or service, creating awareness is largely an educational process to a very large group of people. As awareness becomes interest, the person morphs from a suspect to a prospect. So this barrier is the combination of awareness and interest.
Prospects – People who have some indication they might do business with you
Prospects are created by data that indicates that the person is more likely to be a good fit for your product or service. Creating prospects using data is quick and easy but moving them from prospects to customers is not. This is because as a marketer, you need to transform the qualification of interest into desire and ultimately action. This is where most businesses spend the majority of their marketing resources and their measurement of choice is the ever popular first sale.
Leads aka Sales Pipeline – People that have proactively indicated an interest in your product or service
A prospect or suspect that has proactively reached out to the business is a lead for the time period that it is being followed up on by the sales team. The proactive outreach normally takes the form of a sales lead form completion, phone call inquiry, or other valued event. If the lead goes cold, then the person returns to be a prospect with special history.
The subsystem of leads is often called the “Sales Pipeline” but our position is that the pipeline runs from suspect to evangelist. Thinking only of this one section of the system results in a myopic view of the process. Since this status starts with expression of interest and ends with a sale, it is an area of focus for many plans but it is no more or less important than the management of the other stages.
Customers – People that have done business with you within one business cycle
Customers happen when a suspect or prospect purchases a product or service. Sounds simple enough but trust me when I tell you it only looks simple. A customer is not a lifetime status and the customer can easily drop back to being a prospect if they fail to reorder when expected. This is also the time when many organizations stop marketing and that is a huge mistake. The other big mistake made with this classification is thinking of customer as a permanent status. While you can establish any rule you want for the classification, the typical customer status should only hold until the next expected purchase and this is driven by the normal sales cycle of the product or service. If you are not aging the customers out of this status, then you will not see what is truly happening in the business.
Clients – Customers who will continue to do business with you even if you do something wrong
Clients are someone who will continue to do business with you even when you are not the low cost provider. They will also forgive you when you do something stupid because they trust you. Moving a customer to a client requires that you build trust and loyalty. Normally this transformation happens over time and can be difficult to observe. Most businesses that measure this do so a few times a year.
Evangelists aka Brand Advocates – Customers, Clients, or trusted advisers that recommend your business when their friend has a need
Evangelists are the very lofty goal of the ecosystem but they are exceptionally difficult to create because it requires a client with a specific set of social skills and experiences. I subscribe to the concept of the social connector as described in the book, Tipping Point by Malcolm Gladwell. In every social network, there are people that value the process of connecting others and it is this trait that turns a client into an evangelist. To some degree, there are clues in social media as to who these people might be but there are also lots of posers. The data you want to look at is their connection level and the activity of those connections. Evangelists are a temporary status and can change from product to product. This means that an Evangelist for product A may be a silent client for product B. Mavens (trusted expert) can also become Evangelists if the need of the person is a very specific product. These evangelists are driven by their desire to pass technical information.
It is important to note that not all evangelists are customers or clients. It is entirely possible to create an evangelist that is a trusted adviser to the prospect. Common examples of this are CPA’s or Attorneys that often recommend items to their clients when they see a need. In some cases, campaigns with the goal of communicating to potential evangelist segments make good business sense.
Referrals can be positive or negative based on the experience they are communicating. Negative flow can happen when you create an evangelist with a negative experience and they distribute that. Many studies show that the typical negative experience will get distributed to 12 people, while a positive experience will reach one. This is not what you want to hear but referrals do work both ways. If the person involved is an evangelist, great care should be taken.
Time is Like Gravity
Time pulls the person to lower levels within the classification. An example of this is a customer that does not repurchase and drops back to prospect status. The reason this is important to understand is that while we might want to earn a level and stay there, that is not how it works.
Paying for Referrals
One common idea about referrals is to pay for more of them. This idea almost never works but it often looks like it does. The reason it can look like it works is that when the referral happens and an incentive is available, it is often claimed. It is likely that an incentive to some customers will result in an action but you have to ask yourself how powerful the referral will be if it was motivated by money. Are you in fact paying for what will happen naturally? I would contend that in many cases, paying for referrals does not create a referral but they do create a marketplace for them.
Moving People through the System
|Suspect||Prospect||Active: Create awareness that serves a want or need|
Passive: Find data that indicates a product want or need fit
|Prospect||Customer||Create desire to service a want or need|
|Customer||Client||Create a trust relationship|
|Client||Evangelist||Have a trust relationship with social connector and get lucky enough that they become aware of a friend’s want or need that is served by your product or service|
|Customer Client Evangelist||Prospect||More than one business cycle without a business interaction.|
In the marketing plan for the business, each of these areas needs a campaign to serve these movements.
The Market: Everyone
Suspects: Someone who could do business with you
Prospects: Someone who has demonstrated some interest in your product/service
Customers: Someone who has purchased your product or service
Clients: A customer that will continue to do business even if you do something wrong
Evangelist: A person that tells others about you. Can be a customer, client, or other trusted adviser. This is also known as a Brand Advocate in some circles.
Mavens: a trusted expert in a particular field, who seeks to pass knowledge on to others
Social Connectors: people in a community who know large numbers of people and who are in the habit of making introductions