The Ultimate No Fluff MSP Referral Guide. A whitepaper following 12 months of research interviews with MSPs!

Referral marketing is a strategy to encourage passionate customers and advocates to refer their network to your business directly.

Referral marketing plays a vital role in the exposure and growth of managed service providers in getting new and loyal customers cost-effectively.

People of all ages prefer to make decisions according to the real-life experience of the people they trust. The importance of referrals for MSPs is huge. In other words, referral marketing is the most effective strategy for customer acquisition.

In this ultimate no fluff referral guide, you'll learn everything you need to know to run a successful referral program.

The MSPs' close rate with referrals is 80%, where the MSPs' close rate without referrals is only 3.3%.

Source: https://www.collabrance.com/about-us/blog/2019/08/how-msps-can-generate-more-leads-referrals

How to get customers to sell for you!

At Local Loves Local, we focus on building relationships with your local business community and providing a platform that allows easy interaction with your local business community.

We help you engage your local business community by building you a branded referral system that enables you to both build and leverage business relationships in a fun and easy way consistently leaving your prospect with the impression of increase.

For MSPs, there is no better sales lead than a referral from a satisfied customer. Unfortunately, most businesses take referrals for granted. They are grateful for the ones they get, but very few have a proactive plan for generating them. Like any other sales or marketing, you are doing, having a systematic way of asking for and working referrals is essential. If you are getting them now, think of how quickly you will ramp up sales while helping your community!

Spiceworks’ How to Win Friends and Influence IT Pros found that 97% of IT professionals rely on peer recommendations and reviews for hiring managed service providers.

Source: https://www.spiceworks.com/marketing/resources/reports/how-to-win-friends/

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How to know who you can refer you to prospects

The following are major categories of people you should immediately consider sources of referrals.

When reviewing the suggestions below, don’t just focus on those folks who currently fall into each category; also think of those who used to be but no longer fall into those categories (e.g., former vendors, ex-neighbors, etc.), but with whom you may not be directly in contact at this point.

Any of them would appreciate that you cared enough to re-establish the relationship.

And don’t forget to consider combinations of the following categories, for example, the former employees of current competitors. Your resources are nearly endless if you’ll just stop to think about it for a while.

?1.??Vendors

Whether current or former, your vendors are an excellent source of referrals. They already know something about you and your business, about the way you work, about the kind of person you are, and the kind of people you’d likely work best with. Vendors are ideal for linking up two of their customers in a mutually beneficial business relationship.

2.??Customers

You are a vendor, too — to your customers. Think of all your customers, people who currently use your product or service or with whom you have worked in the past. These people are a gold mine of referrals waiting to be discovered. These are people who already know the kind of service or savings you provide, who know all you can do for a customer, and who know others who could benefit too. And don’t forget to ask them about other contacts or prospects in their own office or organization. Why limit yourself to working with just one person in any given business? Are there other people there, perhaps in the next office or just down the hall, who could use your services too?

3.??Staff

People who work for you and with you are an ever-growing network of people who might need your business. Whom do they know? Professionally? Personally? Your tech’s wife’s cousin’s husband could very well turn out to be the most significant new account you land this year!

4.??Competitors

This can be very lucrative. But it would be best if you learned to view your competitors in a somewhat less aggressive way than maybe you do now. If your competitors cannot fill a prospect’s needs, they might recommend you to do the job. For a finder’s fee, why wouldn’t they? The caveat, you must be able to reciprocate. You must get to a place in which you feel comfortable sending prospects (those who don’t quite fit your product or service) to your competitors. If you get a handsome finder’s fee and generate goodwill all around? What deals can you make? It’s a win-win-win situation for you, your competition, and the client.

5.??Friends, Neighbors and Relatives

Most of them have jobs. Most of them have friends. Friends, neighbors, and relatives can be excellent sources of referrals. Pick their brains. They know the kind of person you are, and they want you to succeed.

6.??Existing Clients/Prospects

If you’re still selling to them, if you’re still trying to onboard them, if they’re still unsure whether they’ll give you their business, your current prospects can direct you to other companies or people who also might be in need of your business. Don’t make it a hard sell. Asking for referrals should just be routine. Bring up the subject. Show the prospect you care about doing your best for him or her and others. While they are still prospects, it is an excellent time to begin educating customers that referrals are crucial to you. You’re going to ask for referrals when they’re customers, so why not ask for them now? Who are the other businesses or professionals they trust? Either inside or outside your geographic area? Who are they doing business with? Just ask! A prospect reluctant to make a buying decision may be very happy to give you a few leads if they help you get other customers; you could consider giving them a discounted quote for closed business

7.??Unconverted Former Prospects

Just because someone decided to go elsewhere with their business doesn’t mean you remove them from your CRM. It doesn’t mean that they can’t help you get business from someone else. Unconverted prospects are in a unique, useful position. They have been in your sales process, so they have a clear understanding of what it is you have to offer. But they also know which of their needs they did not believe or feel you could meet. They are well-placed to give you some excellent referrals, people, and companies who could benefit from what you do best with all that knowledge. And let them know that they, too, will benefit by giving you referrals. Gifts, prizes, and finder’s fees are useful incentives to help them think of appropriate people. Never give up on an unconverted prospect!

8.??Members of Churches, Associations, and Special Interest Groups

Here you will find like-minded men and women, who in many ways already share your views. Associations and special-interest groups (e.g., golf clubs, wine clubs, running clubs) are great places to form social relationships that can turn into a business. Church members are excellent resources too because they know about a very important aspect of your personality already and are much more willing because of that to vouch for you to friends and associates.

9.??Radio/Podcast

Get to know the hosts with a listenership likely to benefit from your services, and then ask them to recommend you. You can be used as a subject matter expert and interviewed. You will build social proof, and you can use that interview in your other marketing efforts!

10.?Industry Leaders

Who are the respected figures in your industry? Do they know about you and your business? Why not? Get their attention. Get to know them. Let them know you admire them, that you respect their opinion. Ask them for advice. And make sure they get to know what kind of person you are. These influencers are an invaluable source to which others will turn when looking for services and businesses they can trust.

?MSP Alliance MSP Survey shows that 89.3% of managed service providers get answers from their prospects when it's from a referral.

Source: https://www.channelfutures.com/from-the-industry/marketing-managed-services-via-referrals

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How to ask for referrals ??We’ve got 22 ways!

1. Make sure you are excellent at what you do. Why are you better than your competitor - Are you confident? If you are, proceed. If you are not, improve before you do anything else about getting referrals.

2. Love what you do. Your job is an integral part of your life. Give it the attention and the respect it deserves.

3. Position yourself as different from your competitors. Do you offer guarantees? Do you have a no-contract policy? Do you support a local charity when you sign up new clients? Do your clients love you - showcase this.

4. Be interesting and be interested! Show interest in the people from whom you will ask for referrals. And don't just pretend — ask questions, truly listen -- this itself is a goldmine.

5. Educate them. Tell them why your product or service is of better value. Be able to tell them clearly and concisely, using terms and facts they will readily understand.

6. Assure them that even if referrals do not buy from you, they will gain a valuable service from you anyway by you informing and educating them on what they should look for, what they should avoid, what they should expect, and what they might overlook.

7. Promise that you will be a professional and that the referrals will ultimately thank the person who referred them to you.

8. Give them reasons why they should give you referrals. Let them know that you get much or most of your business through referrals and that because you do get referrals, you can invest your money and time in providing a better product or service.

9. Offer to give them an incentive to make it easy for you to follow up again and again. For example, they do things to help grow their business or donate money to their local favorite charity.

10. Offer to give the referrals a product or service for free, or at least at a discount, and tell them that this product or service is something that the person who referred them to you has bought them.

11. Offer incentives. This is what we do over at localloveslocal.com. These special incentives might be bonuses, money-back guarantees, additional services, a discount, or anything else that has perceived value to the referrals.

12. This one is often overlooked! Tell the people you are asking the referral that you are looking to do business with great people like them.

13. Ask them to call or directly contact the referral.

14. Do something for the people from whom you want to get referrals — but do it in advance of asking for the referral, think givers gain. Send them a card. Send them a gift card for a local restaurant. Give them a referral. Give them something of value.

15. Keep in frequent contact with the people who have provided you with referrals in the past.

16. Acknowledge the people who have provided referrals that turn into customers. Again, it needn't be elaborate—a thank-you note or flowers. But if you want to do something major, make it original; it's not the gift, it's the thoughtful gift!

17. Follow up and let people know how you are getting on with the referral they have provided you - nurture that relationship; if they gave you a referral, they would give you more!

18. People are most receptive when they've just bought your services. When you've done something great for them. Maybe you've gotten them out of that nightmare contract? Maybe they got married, had a baby, got a promotion? This will set you up to ask for a referral

19. It's all about them - never about you -- forget sending them cyber tips; try this instead. Send them articles, books, and information about their special interests. This could be about yoga, football, whisky, or other special interests.

20. Be Brave. Put yourself out there - if you don't ask, you don't get. Ask for referrals.

21. Ask for advice as an introduction to requesting referrals. People love to help - show vulnerability Ask, "How can I grow my business?"

22. Your Mom taught you well, so I know you won't forget this one! Thank them for referrals. You'd be amazed how many forget a simple thanks! Forget to say thanks, and it will damage your relationship, and you can forget to ask again!

Small and local businesses dominate 82.8% of the IT sector in the US, and 39% of them use managed services in some capacity.

Source: https://www.sherweb.com/blog/partner/msp-it-industry-statistics-2018/

4 ways to generate referrals without asking

1. Gamify your monthly newsletter:

Is your newsletter falling flat? Failing to get more people subscribed - Try this the more businesses your subscribers invite, the more perks they unlock. Reward them with access to exclusive content, online events, community shoutouts, or merchandise. You can then ask your newsletter subscribers for referrals with added incentives for closed business (in fact our system can help you do this (shameless plug!)

2. Everyone loves coffee!:

Remember, it’s not about you; it’s about them. We have one client that sends two Starbucks thank you cards along with invoices encouraging their clients to refer them on, ‘We love clients, like you, coffee is on us, we love working with you and would love to work with folks like you. Do you know someone that would like to talk IT over coffee - send this onto them, we promise to provide value and entertainment!’

He says it’s the easiest way to follow up - clients love the simple and unique gesture.

**Local Loves Local?tip - Don't send them a Starbucks card send them a card from THEIR local coffee place!

3. Hold referral contests:

Include your staff in this one. The person with the most referrals wins the prize. You can get quite elaborate here.?(you are not going to believe this but our system can help you do this too)

4. Send a thank you card:

Nothing else - send these to prospects and clients. If you didn’t win business, send that lost prospect a card. It seems silly, but it shows you value relationships, and you can follow up with them easily and even ask for referrals. Do you have clients that send you referrals? Always show gratitude - gifts not necessary, call them - thank them - send them a handwritten thank you.

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MarketsandMarkets estimates the global managed services market is expected to grow from USD 223.0 billion in 2020 to USD 329.1 billion by 2025, at a Compound Annual Growth Rate (CAGR) of 8.1% during the forecast period.

Source: https://www.marketsandmarkets.com/Market-Reports/managed-services-market-1141.html

6 referral systems used by MSPs!

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1. The Competitor Referral Strategy

"I went to my competitors who do not offer cyber. I gave them a covenant letter not to solicit or interfere with their customer base, but to have access to their customer's base for cyber. And then, whoever sold my service to the customer got a direct percentage on whatever the gross sale of my service. Probably 20% of the work I've done this year is a result of my competitors introducing my service to their customer base."

?2. The Seminar Referral Strategy

"I conducted several seminars. I am in a narrow niche - I set about talking with a trade publication, and I asked some of my best clients to allow these journalists to interview them. These interview recordings really gave us incredible insight into our work from the customer's point of view. We then converted these recordings into an industry-specific report, which we then sent to our clients - it's given us complete understanding and another position to the customer. Because they now ask us, "Well, does that mean that you have to decide whether you want me as a customer?"

3. The Edutaining Referral Strategy

"We get about 35% of our leads from referrals and about 35% from direct mail. Our market size is niche. What we do is a direct mail piece to all of our prospects every other month. In the interim months, we send a personalized letter to our clients, our key prospects — people in the queue, someplace between demonstration and proposal enclosed — and industry consultants. And we try to do a value-add with that, whether it be an educational piece or a premium. One of the best things we did was send a book written by an influencer in that niche. We mailed them out on our direct marketing list, and we ended up doing about $200,000 worth of business off of that base list of referrals. So the way we get referrals — we gift their education - but the education they want. They don't like to learn about cyber - they leave that to us - to them, that's not fun. So I guess you could say we 'edutain.' We also teach our salespeople to ask for referrals. I mean, I'm just amazed so many people don't ask."

?4. The Birthday Referral Strategy

'I would have meetings with my clients for their birthdays. And I'd either take them out to breakfast or lunch. And in those meetings, I'd sit down with them and ask them to tell me how they started their business. What makes it different? What are some of the things that are different about you? What makes it great? I'd say, "Tell me one or two things I could do to really improve my business. Who would you call on if you were in my position? Do you know two, five, 10, a hundred people?" And they start listing people. "Tell me about them. Tell me about them." What happens is you end up with a referral system. And of course, you just keep going with that.'

**Local Loves Local tip – LinkedIn will have their birthdays listed – take note and add the birthday date to your crm!

?5. The 20 Client Referral Strategy

'I focus on my client base and nurture 20 of my best clients. I work with those best clients and become so valuable to them; they automatically give me referrals. I think it is valuable: I spend a lot of time with my core clients. And then I'll sit down with them and say, "Let's go over individually who are the people you can recommend to me." Then I have them personally call the people they put on that referral list. I get back to the people who gave those referrals, so they know what happened in the process. If we get a sale or a new client from their referral, we send them a nice gift - I like to send a gift that is not food or drinks related but kitchen related. I also don't include our branding. I ensure the gift is all about them and is high-end, something they enjoy showing off!'

**Local Loves Local tip – Check out Giftology by John Ruhlin and learn the true art of gifting!

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During a typical year, 75% of small and mid-size local businesses occasionally outsource their IT to a solution provider, VAR, or MSP.

Source: https://www.sherweb.com/blog/partner/msp-it-industry-statistics-2018/

I had a lot of fun doing research interviews with MSPs and and am delighted to share my findings in this newsletter, take these strategies and apply them to your own business.

I am looking forward to sharing further findings in upcoming newsletters.

Until then, can you help me out with the following?

1. If you liked this article, push on the subscribe button.?I will be publishing more.
2. Like, comment and share. If you found this useful, I bet a lot of MSPs you know will benefit from this, too.
3. You can join me over on my Facebook group for MSPs where I run regular masterclasses focused on business growth.
4. If you would like to know how we can help you become the trusted advisor in your area and have a branded brand referral system, built for you, book a call ?