referral system

My favorite concept in business is positive feedback, or “flywheels.”

Flywheels happen when the output of a system feeds back into the input, leading to exponential growth.

A classic example is Amazon’s flywheel where a better customer experience attracts more sellers, which leads to better selection and an even better experience.

An easy flywheel you can create in your business right now is a referral system.

More referrals = more customers to refer even more people to your business.

Referrals lead to exponential growth.

Let me share with you my patented 3-step referral system for collecting more referrals in your business or businesses you help:

Step 1: Don’t Suck

Referring a friend to a business is a social risk.

If the business does a bad job, you lose social points with the friend you referred. You made a bad recommendation.

This is why people only refer businesses they are 100% confident in. They need to know, without a doubt, that their friend will have an incredible experience. Their reputation depends on it.

Conversely, people will make negative recommendations when a business does a really bad job. This is partly an outlet for frustration and partly a way to help their friends avoid a similar negative experience.

However, most businesses are in the "quiet zone” where they’re not terrible but also not amazing. It’s not enough to speak about positively or negatively.

I won’t get into the specifics of not sucking because it’s a huge topic. I would recommend you check out Alex Hormozi’s Referral Playbook for strategies to overdeliver and get yourself into the Referral Zone.

Step 2: Offer A Strong Referral Incentive

This is how companies like PayPal & Dropbox achieved their exponential growth. They “bribed” people to sign up by giving them free money or storage space.

Bribes work. In my marketing business, we give people $1000 cash when they refer a new client to us.

We work with medical spas and I teach them to bribe their customers as well.

I recommend they offer a $200 treatment credit to new clients and a $100 credit to the client who referred them.

If you have a brick-and-mortar business, you can set up signs that look like the one below:

Step 3: Make It Super Easy To Refer

For my business, I send my clients to go.foreverbooked.com/refer. They can click a link to automatically pre-fill an email to send to other medical spas they want to refer.

Super easy.

I then teach them how to make it easy for their clients to refer. Although the system works a bit differently.

Below is my selfie-referral system that can be applied to all sorts of brick-and-mortar businesses:

1. Have happy customers fill out a referral sheet

It’s best to get people to fill out physical sheets, like this one HERE.

People then enter the names and phone numbers of five friends who they’d like to refer.

You can also use this as a negotiating tactic if people want a discount. “We normally don’t lower the price below $1,000, but if you give us five friends’ numbers, we can give you a bit more of a discount.”

2. Take a selfie with the customer

This is a super unique strategy that I don’t see a lot of businesses using.

Including a familiar face in a text message will help you break through the clutter and stand out.

You take a selfie with the customer. The next step is to text that selfie to the five phone numbers you collected earlier.

3. Text the five friends with the selfie

The next step is to text the five friends with a message containing the selfie and the offer, like below:

This can either be done manually or by using texting software.

It’s amazing the response rate you get from these texts.

I have a client who’s getting 3 new customers per day using this strategy.

4. Follow up and track the referrals

You then follow up aggressively with the people who respond to the text. Call them right away and follow up to get them scheduled.

This strategy works for all types of businesses, from med spas to jewelry stores to auto-detailing shops to interior designers.

Now go get some referrals. 🫡 

See you next week,

Graydon

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