I’ve just got off the phone to a friend of mine who was partially inspired by my start up in seven days series to give his idea a shot.  I’ll save the details of his idea once it’s up and running, but regardless, he is in “day two” of the business – the legalities and registrations.

His idea is quite unique – in that it is meant to provoke – and therefore his business requires a deeper focus on the legal structure than what might otherwise be required.  It was the structure that was the subject of our conversation and as I’m not a legal expert, I had no hesitation in referring him to my excellent solicitor who is very adapt in setting up start ups and has helped me greatly in the past.

After our lengthy conversation about the benefits of a trust/company structure he went on his way, brimming with enthusiasm and ideas and armed with a lead worth it’s weight in gold – a referral.

But what makes a good referral?

This experience showed me clearly that you don’t need to be a subject matter expert in a field to provide a good referral.  I have very little idea in corporate trust structures, but that didn’t seem to matter.  My good friend Ms Polka is a mastermind of finding things on the internet.  I know without doubt, that if I ask her for the best way to do this, or the best person to seek for that, she will be pretty darn close to spot on.  I value her referrals more than most because I know she has put the effort in to research it for her self.  So is it trust?

We generally trust our friends to give us good referrals, and I think I know why.  When you’re referring something to a friend, you’re putting your own reputation behind the product or service you’re recommending.  If your friend has a bad experience, you absolve some of the responsibility.  So you’re less likely going to want to refer something to a friend without knowing absolutely that it will work for them.

I once recommended a service to a friend which at the time I was having good experience with.  However the business changed ownership and customer focus became a low priority.  I’m now too embarrassed to even mention it to them, as I know they’re having just as much problems as me.

So we know that a referral is worth it’s weight in gold and that if your mate tells you to use this product, you’ll be much more likely to give it a go.  So how can we influence this when promoting our own product or service?

Without question, you need to have an awesome product or service to start with.  Once you’ve got that squared away, you can look at ways to influence the referral.

There are a number of independent third party websites that are in the business of referrals.  They provide a means for people to recommend, or warn against, the use of a product or service.  There are industry specific sites which allow reviews to be written, as well as generic service orientated websites.

Of course, you could join the leagues of Affiliates that allow you to earn cash by putting up a link on your own site.  However, I don’t value these the same as referrals, no, a true referral needs to be personal.

The referral is a big part of the AutoCarLog growth strategy.  It’s a way for the business to grow quickly and cheaply, and I’ve called it “Mooching off your mates”.

I still need my customers to love using the service so they don’t get embarrassed.  The “mooch” system simply provides an incentive to speak out about it.  I’m gathering the hordes of otherwise contently quiet customers and turning them into trumpeting voices of reference.  How? By giving the product away.  If you sign up a few of your mates, you can use it for free.

I’m rewarding people for helping me out.  It still needs to be a good service, but I’m providing an easy means to share the love and giving a little bit back as thanks in return.