The Game with Alex Hormozi - Part 8: Customer Referrals | $100M Leads Book

Episode Date: August 19, 2023

“You’re only limited by your creativity.” In this episode, Alex (@AlexHormozi) discusses the importance of customer referrals and how to leverage them to grow your business. He breaks down the different types of lead-getters and explains how to build a referral-based lead-generation machine.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Get your own copy of the book at acquisition.com/booksWanna scale your business? ⁠Click here.⁠Timestamps:(0:57) - Get Lead Getters(5:42) - Customer Referrals(18:33) - Get More People Better Results(24:58) - Asking For More ReferralsFollow Alex Hormozi’s Socials:LinkedIn  | Instagram | Facebook | YouTube  | Twitter | Acquisition

Today I've got a special episode for you guys on our 100 million dollar leads podcast collab between myself and myself. This is the high leverage portion of the book. The first four of the core four of the book are about how one person can advertise to let other people know about their stuff. Today is how we get other people to advertise on our behalf. Many of you heard about the book from someone else. And this is going to be key because today we're talking about referrals.

All right. And so the only way that other people find out about stuff and a way that is viral is other people letting them know about it for you. And so if this stuff, has proven valuable for you. And you've already gone through two, three, four, five episodes of this and you've not chosen to share it. Shame on you. All right, because if you've gotten this far, it means you've gotten some value from this, which means that someone else would get value too. All right. So at the very least, if you can leave a review so that someone else can see it,

because if you have no friends who are entrepreneurs, then leave a review for someone you don't know. And if you do know someone, send it to them. And if you're awesome, do both. Enjoy the rest of the content. Section 4. Get lead geters. Get people who get you more leads. Give me a lever long enough and a fulcrum on which to place it, and I shall move the world. Archimedes. Building a $100 million lead machine is all about leverage. An old lady can lift a semi-truck with a long enough lever.

The strongest man in the world without one can't. The length of the lever determines how much someone can lift. This is leverage. We can use the principle of leverage in advertising. Let me explain. Someone with internet can send a message to millions of people at once. Someone writing postcards by hand can't. The internet allows us to reach more people for the same time spent.

So it's higher leverage. That means leverage boils down to how much we get for the time we spend getting it. So we want to use higher leverage activities to get what we want. More stuff we want, less time getting it, good. And we want leads. Lots of leads. Pro tip. Don't mistake leverage for speed.

One person can only move so fast. A person a thousand times ahead of you isn't moving a thousand times faster. They can't. They're doing different stuff. So the future that feels so far away with leverage is closer than you think. Lead getters give you leverage. Only two people can let strangers know about the stuff you sell. You and other people.

And there are more of them than you. People can find out about the stuff we sell from two sources. We can let them know using the core four, or other people can let them know using the core four. I call these other people lead getters. When other people do it for us, we save time. That means we get more engaged leads for less work. Leverage, baby.

Imagine four scenarios. Scenario 1. You are the lead getter. You do the core 4 all day, every day by yourself. You get enough leads to pay bills. Work, high, leads, low, leverage, low. Scenario 2. You get a lead getter. You get a lead geter to do the core 4 on your behalf. Now, the lead getter brings enough leads to pay the bills without you advertising. You work less than scenario 1 and get the same number of leads. Work low, leads low, leverage high. Scenario 3. You get lots of lead getters. You spend all your time getting other lead getters. Your leads go up every time you get another one. You work all day every day, but you get way more leads than you did when it was just you. You work more than scenario 2, but get way more leads. Work high, leads high, leverage higher. Scenario 4. You get a lead getter who gets lead getters. You recruit somebody who recruits other people to advertise on your behalf. They get more lead getters every month. You only had to work to get the

first lead getter once, but his leads continue climbing without you working. You work less than scenario three, and you get more leads each and every month. Work low, leads high, leverage, highest. Now you've got the makings of a $100 million leads machine. Outline of the lead getters section. The lead getters aren't part of the core four because they're not things you do. You don't do affiliates or do customer referrals or do agencies or do employees, but you have to do the core four to get them. They come from warm reachouts, cold reachouts, posting content, and running paid ads, and once you get them, they do it for you. So the core four stacks.

One time to get them and a second time for when lead getters get engaged leads on your behalf. But it doesn't have to end there. In fact, it shouldn't. The process repeats. Lead getters can go getters. So we do something once, then lead getters can do it forever. But wait, I thought this book was about getting leads. So am I trying to get leads, or do I want lead getters?

Answer? Yes. Lead getters start out as leads, then get interest. it in the stuff you sell and become engaged leads like anyone else. The difference is they get other people interested in the stuff you sell too, and ideally, every lead becomes a lead getter. The following chapters explain in detail how to get other people to advertise for you, and if you want to scale to 100 million plus, you have to understand them. Number one, customers. They buy your stuff, then tell other people about it to get you leads. Number two, employees, people in your business that get you leads. Three, agencies, businesses with services that get you leads. Four, affiliates.

businesses who tell their audiences about your stuff to get you leads. All four lead getters let other people know about your stuff. In other words, all four are higher leverage than doing it on your own. Once you understand the four lead getters, you can build a lead getting machine for every company you start for the rest of your life. I'll break down how I use all four lead geters, how each is different, how to work with them, when to use them, best practices, and how to measure your progress along the way. At the end of this section, you'll understand how to get other people to bring you more leads than you can possibly imagine. And since we already use the core four to get customers, let's start with some. something we can do right now. Get those customers to refer more customers. Free gift, advanced bonus. Get people to do it for you. That may have been one of my favorite chapters in the book.

It took me so long to figure out how to recombine everything into a simple model. If you want even more training on getting other people to get you leads and how it applies to scaling, go to acquisition.com, for slash training, for slash leads. As always, you can scan the QR code below if you hate typing. Customer referrals. Word of mouth. Best source of new work is the work on your desk, Charlie Munger. Layla and I sat together on her parents' living room couch, the one she watched movies on as a kid. The faded edges of the coffee table begged us to kick our feet up. We bounced laptops on our thighs.

Extension cords snaked around the couch to the outlets down the hall. Her stepmother clanged in the kitchen. This was not a work environment, but we made do. Two years earlier, I lost everything and met her parents on the same weekend. Hey, Dad, I met this guy on the internet. He lost everything and has no money. But don't worry, I quit my job and moved in with him to help him on his next big business idea. By the way, can we crash here for a while?

Great first impression, Alex. But a lot had changed since then. We were multi-millionaires now. We made enough to buy her childhood home in cash every week. Layla reviewed reports from our department heads. Oh yeah, we had executives now, too. Hey, sales numbers looked a little soft this week, she said. Really? How many did we close?

15. And sales started dipping last week, too. Is there anything different on your end? I don't know. Let me check. I logged into Facebook's advertising portal. Red rejection notifications filled the screen. Well, that'll do it, I said.

What? What happened? All the ads got shut off. Well, that's a problem. When do you think you can get them back up? It'll take a day or two to get a new campaign started. I squinted at the screen. Something even more alarming jumped at me. Facebook rejected the ads two weeks ago. I acted like nothing was wrong. So we closed 15 this week and how many the week before? I asked. 21. Well, I've got good news and I've got bad news. Uh, okay, she said. The bad news is the ads got shut off two weeks ago. So that explains the dip. The good

our product is so good, we're still doing 500,000 a week from word of mouth alone. You ignored the ads for two weeks? She had, oh, no, you didn't, written all over her face. I shrugged with a sheepish grin. Still love me, right? We busted out laughing at the absurdity of it all. Those two years were insane. The amount of money we were making didn't make sense.

We didn't comprehend how much it was until years later. We were just grateful to be doing it together, flaws, and all. And this accidental stretch without running paid ads made something very clear. Our customers were telling their friends. A few months later. I stood on stage and looked over the 700-plus gym owner audience. Everyone paid $42,000 to be there. All wore black gym lord t-shirts and stick-on moustaches.

It was nuts. I was mid-presentation explaining how excellent service generates leads through road of mouth. All the while, I obsessed over whether the money we made during the two weeks without running paid ads was a fluke. Feeling confident, I paused the presentation. Time to find out. All right. Just to show you how I'm bored this is, who here learned about gym launch from another gym owner.

raise your hand. As soon as the words left my lips, I felt instant regret. What if no one raised their hand? What if our growth was all forced? I'm such an idiot. I looked around the room with my arm raised like a monkey. The room stood still. Oh no. Then a few gym owners raised their hands. That doesn't look great, but it could be worse. Then more, thank God. Then more. Then a wave of hands. Holy cow. People looked at their sides and behind them. It was almost the entire room. I let the moment sink in for all of us. I'll never forget it. I knew we had good word of mouth, but not this. good. That, I said, is the power of word of mouth. I know you weren't there when Leila and I realized we're making 500,000 plus per week from word of mouth. I know you weren't there to see

$30 million in customers say someone referred them. The first time I realized the power of referrals, it was by accident. Seeing how much it made me, I studied what had gone right. I wanted to make sure I could recreate it on purpose. For me to transfer that ability to you, I have to transfer the beliefs that created it, and these experiences form those beliefs. This is why I share them. People copied our offers, ads, and lead magnets. They copied our landing pages, emails, and sales scripts. They copied everything they could, but they did it with little success. They think it's about advertising, and it is, but the best advertising is a happy customer. An amazing product turns every customer into a lead getter. The world loses trust by the second.

Every day, more customers do their research. They arm themselves with information to make purchasing decisions, as well they should. So to play at higher levels, we need our product to not only deliver, but delight. Customers must get so much value it compels them to tell other people about us. The good news is, once you know how, it's easier than you think. In this chapter, I explain how to get the lowest cost, highest profit, and best quality leads out there, referrals. How referrals work? A referral happens in somebody, a referer, sends an engaged lead to your business. Anyone can refer, but the best referrals come from your customers. So this chapter focuses on getting more referrals from your customers. How referrals grow your business? Referrals are important because they grow your

business in two ways. Number one, they're worth more, higher LTGP. Referrals buy more expensive stuff and buy it more times. They also tend to pay more in cash up front. Lovely. Two, they cost less, aka lower KAC. If one customer sends you another customer because they like your stuff, that new customer costs you nothing, and free customers are cheaper than customers that cost money. So free customers equals good. But what does this stuff really mean? Check this out. Imagine you had an LTGP to KAC ratio 4 to 1. That means it costs you 25% of your lifetime gross profit of one customer to get another. Not bad. But now imagine if every customer brought you two more customers. You'd now have an LTGP to KAC ratio of 12 to 1. You'd use just over 8.3% of your lifetime gross

profit to get a new customer. So you'd get three customers for the price of 1. Now we're talking. Hooray, what a deal. On top of that, referrals are exponential. Let me explain. The number of engaged leads you get from the core four depends on how much you do them. The inputs to outputs have pretty linear relationships. If you do 100 reachouts, you get engaged leads. If you double it, your leads roughly double. If you spend $100 in ads, you get engaged leads. If you double it, your leads roughly double. So no matter how well you advertise, how much you get depends on how much you do. And that's great. But with word of mouth, we can do even better. With word of mouth, one customer brings two. Two bring four, four, four, bring eight, and so forth. It's not linear. It's

exponential. Nothing scales like word of mouth. Want to know why so few people scale by word of mouth? They lose customers faster than they get them. Look at the referral growth equation to see it in action. Referrals in minus churned customers out. So the visual is percentage of clients referred monthly minus percentage of clients churned monthly equals percentage monthly compounding growth. If referrals are greater than churn, you grow without any other advertising. Yay. If referrals are equal to churn, you need other advertising to grow your business. M. If referrals are less than churn, you've got to advertise to break even. Boo. That's most folks. This gets nutty when you look at percentages. If the percentage of referrals every month is bigger than the percentage of customers

who leave, your business compounds every month. You'd have to spend that much more money on ads, do that many more reachouts, or post that much more content just to maintain that growth. You eventually hit a wall. But with referrals, you can maintain growth no matter how big you get. This is how companies like PayPal and Dropbox exploded into multi-billion-dollar businesses. I'll break down their exact strategies later in the chapter. On the other hand, small businesses barely scrape by because they have about the same customers exiting as they do entering, a hamster wheel of death. Here's why. Two reasons most businesses don't get referrals. Most businesses don't get referrals for two reasons. First, their product isn't as good as they think it is. Second, they don't

ask for them. You're not making as much money as you want because you're not as good as you think you are. Problem number one. The product isn't good enough. Everyone loves our stuff. We just need to get the word out, says every small business owner with a product that's not as good as they think it is. I'm going to take off my nice guy have for a second. If your product were exceptional, people would already know about it and you'd have more business than you could handle. So if you sell direct to consumers and they are not bringing more customers, your product has room to improve. I like to ask myself, why are my customers too embarrassed to tell everyone they know about my product? It may be

okay, but it's unremarkable, as in not worthy of remark. In fact, most of the stuff I pay for kind of sucks. My pool guy forgets stuff half the time. My landscapers make a ton of noise at the worst hours. My cleaners routinely put my clothes in my wife's closet. I guess that's what I get for extra medium t-shirts. The list goes on. Business owners wonder why they don't get referrals. The answer is right in front of them. They're just not good enough. Let me show you how I think about it. Price is what you charge. Value is what you get. The difference between price and value is goodwill. This means that the price not only communicates value, but is also how we judge value. Economics dorks call it customer surplus, but I'm just going to call it goodwill. You want

lots of goodwill. Lots of goodwill creates word of mouth. Word of mouth means referrals. There are two ways to build goodwill with your customers. You can lower your price or you can give more value. After all, if you lower the price of your product enough, people would line up to get it, but you'd probably lose money. So lowering the price is at best a temporary solution. You can only lower the price so much for so long. And as marketing legend, Roy Sutherland says, any fool can sell something for less. So, to build goodwill to get referrals, the question isn't how do we lower our price, but how do we give more value? Six ways to get more referrals by giving more value.

There are six ways I get referrals by giving more value, and it just so happens to map to the parts of an ad. NETO. One, callouts, sell better customers. Two, dream outcome. Set better expectations. Three, increase perceived likelihood of achievement. Get more people better results.

Four, decrease time delay. Get faster results. Five, decrease effort and sacrifice, keep making your stuff better. Six, call to action, tell them what to buy next. So let's start with the first. Callouts, sell better customers. We want to sell better customers because they get the most value from our products. Customers get the most value, have the most goodwill.

And the customers that have the most goodwill are most likely to refer. Yes, it's that simple. Let me give you a real-life example. We have a portfolio company that did public relations for small businesses. They had a lot of sales, but they had a lot of churn, so they plateaued. They didn't grow for years. To see what we could do, we looked at their lowest-turning customers to see if they had anything in common. They did. They were all in a specific niche and looking to raise funding from investors.

So the solution looked obvious. Get more of them. But the founder had a big worry. These customers were only 15% of his business. If he changed his targeting and it failed, he would lose 85% of his business. But the business wasn't growing anyway. A tough situation for any entrepreneur. But after reviewing the data many times, he agreed to change the advertising callouts to match his narrow, perfect fit customer. The results. The company broke through its plateau. grew for the first time in years, and now we're on track to adding millions per month.

Plus, their cost of advertising, a huge expense for their stagnating business, went down. They got even cheaper leads since they could be more specific with their messaging. But not only that, the cheaper leads got even more value from the product because it was meant for them. And those customers, because they had more goodwill towards the business, started referring with clockwork. Action step. Increase the quality of the prospect, and you'll increase the quality of the product. Figure out what your most successful customers have in common.

Use those similarities to target a new audience that has the greatest chance of getting the most value who are just like them. Then sell only people who meet those new criteria. Set yourself up to build more goodwill. More goodwill means more referrals. Two, dream outcome. Set better expectations. The fastest, easiest, and cheapest way to make your product remarkable is make it better than they expect. And that's easier than you might think because you set the expectation. Pro tip, dating advice. On first dates, I like to set the bar as as possible by admitting all my flaws. After telling my now wife, all my flaws, I joked, I can only go it from here. Have you ever had a stranger tell you a new movie was awesome? Then you

go see it and think, that wasn't as good as I expected. On the flip side, have you ever had someone tell you a movie was terrible and then you ended up seeing it anyways and thought, that wasn't as bad as I expected? Our expectations of an experience can dramatically affect the experience itself. We can increase goodwill by lowering expectations. It gives us room to over-deliver. In the beginning, I promised everything in the kitchen sink to get people to buy. The feeling on that turned into a nightmare. So I began inching down my promises while maintaining quality. It gave me more room to over-deliver and I netted a major benefit. Referrals. Customer expectations are fickle. That's why we set expectations for them. And if we set those

expectations, we can exceed them. Action step. Slowly lower the promises you make when making offers. Keep lowering them until your close rates lower. At that point, stop. This maximizes how many customers you get and the goodwill you build with them. Maximize customers and more goodwill means more referrals. 3. Increase perceived likelihood of achievement. Get more people, better results. The customers with the best results get the most value from our product. Figure out what they do to get the most value and you can help other customers do the same. Two steps ago, to sell better customers, we figured out who the best ones were. So now, to get everyone the best results, we figure out what the best ones did. Let me show you what it looked like at gym launch. We started by tracking

customer activities, speed to running their first fed, speed to their first sale, their attendance on calls, etc. Then we compared the activities of our average customers to the activities of our best customers. We found out something huge. If a gym owner ran paid ads and made a sale in the first seven days, their LTGP tripled. Once we realized this, we focused on getting everyone to launch ads and make sales in the first seven days. The results of our average customers skyrocketed. More customers, more testimonials, and more referrals followed. Here's the process I used to get more people better results. Step one, survey customers to find the ones who get the best results. Step two, interview them to find out what they did differently. Step three, look at the actions

they had in common. Step four, force new customers to repeat the actions that got the best customers, the best results. Step five, measure the improvement in average customer results, speed and outcome. Step six, match the conditions of your guarantee to the actions that get the best results to get more people to do them. Pro tip, make the success activities the conditions of your guarantee. Do not do this if you hate money and helping people. As soon as you start getting customers results, note what they did. Then start guaranteeing new customers those results, but do it on the condition that they do what the best customers did. The guarantee sells more people, the conditions get them better results. You win, they win. Action steps. Figure out what the best

people did, then get everyone to do it. Make your guarantees around the actions that create the most success, more success, more goodwill, more referrals. Hey, I hope you're enjoying the book chapter that you're listening to right now of $100 million leads. I took a long time putting together for you. And so my only ask is that you just take a quick second and leave a review for the book on Amazon. It's the number one way that people find books. And this is a way of getting more people into our world. And so our mission to acquisition.com is to make real business education accessible to everyone.

And I need your help. And so if you could do that, just that one small action, and it has a trade for the two years that I took, this book together for you, it would mean the world to me. So thank you. Number four, decrease time delay. Make faster wins. I define a win as any positive experience a customer has. Faster wins increase the perception of speed, increase the likelihood they'll stick, and increase how much they trust you. Triple win. To make wins feel faster, we give them wins more often. Let's imagine you have a product that takes a week to deliver. The customer can get one win at the end of the week or win every day with daily progress updates. Same amount of progress, seven.

times the wins. On top of that, if someone said seven things would happen and all seven do, I trust them even more. Referring a friend is now with lower risks since seven promises were made and all seven were kept. Here's five ways I make wins happen faster in the real world. 1. If I have seven small things to deliver, I deliver them at shorter intervals rather than all at once. Two, updates are wins. If it's a bigger project, I share updates as frequently as possible. You can never give someone too much good news, and regular updates, progress or not, is better than leaving your customers hanging. Three, customers form their lasting impression of a business within 48 hours after they buy.

Force a good impression. Force as many wins as you can in that window. Set many expectations, meet many expectations, repeat. Four, they should always know the next time they'll hear from you. I got a slick saying from a public CEO friend of mine. Bam, fam. Book a meeting from a meeting. Again, never leave a customer in no mansland.

They should always know what happens next. 5. Never expect customers to forgive you. Ever. So act like it. For example, you can deliver early, but never late. I add 50% to my timeline so I always deliver early. That makes on time for me, early for them. Action step. Breakdown outcomes into the smallest possible increment. Communicate it as often as reasonable, even if there is no progress. Update them. Set timelines with breathing room, deliver early. More customer wins means more goodwill, and more goodwill means more referrals. 5. Decrease effort and sacrifice. Keep making your stuff better. If the customer does less stuff they hate to benefit from your product, you've made it better. If the customer gives up fewer things they love to benefit from your product, you've made it better. And there's no such thing as a perfect product. You can always make it better. And the easier you make it for them to benefit, the more goodwill you get, and the more likely they'll refer. Here's my process to keep making my stuff better. Step one, use customer service data, surveys, and reviews to find the most common

problem with your product. Step two, figure out your fix. To get a head start, get feedback from the who made your product work despite the problem it has. Step three, use that feedback to improve your product. Step four, give the new version to a small group of your struggling customers. Step five, get your next round of feedback. If you solve the original problem, then roll it out to all customers. If it didn't, go back to step two. Step six, move on to the next most common problem and repeat the process.

Do this until the end of time. Action step. Keep making your stuff better. Survey, make changes, implement, measure, repeat. I run this process every month. Set this as a recurring monthly process in your business. A product that takes less effort and has fewer sacrifices means more goodwill. And more goodwill, you guessed it, means more referrals.

6. Call to Action. Tell them what to buy next. If you have an amazing product, they'll want more. You have to satisfy their desire to buy. If you don't, they'll still buy, but from someone else. Don't let that happen. Sell them again. You can either sell them a new thing or more of the thing they just bought.

In either case, you'll get even more goodwill and extend the lifetime of the customer. And besides, the more stuff they buy, the more stuff they can refer their friends to. For example, in a weight loss company we know, lots of customers referred friends to their first year product, but some didn't. A lot of those customers who didn't refer to the first product when they bought their more expensive thing refer their friends to that. So you just got to keep selling. In my experience, people obsess over their front-end offers, and that makes sense. But then they neglect the back end and customers fall off. And customers that fall off your product are unlikely to refer. So keep selling them

so they don't. Action step. Treat every customer like it's the first time you've sold them. Make sure your next offer is more compelling than your first. Remind them to buy more after each big win. More things to buy means more opportunities to add even more value. More value means more goodwill, and more goodwill, you guessed it, means more referrals. One question to rule them all. Let's consolidate these six steps into one thought experiment. I encourage you to try it out with your team.

Here it is. You've lost all your customers but one. The gods of advertising ban you from doing the core for and decree. All customers must come from this one customer. violate our terms and we will destroy your business and every other business you start for eternity. Tough break. But the question remains, how would you treat this customer? What would you do to make their experience so valuable they would send all their friends? What kind of results would they need to get? What would their onboarding be? What type of customer would you pick? Think about it, write it out.

Your business depends on it. Then do it. Start acting like the advertising gods will revoke your core four privileges at any moment. Soon, you'll see you have no choice but to start adding more value to get more customer referrals. Now that we cover that, do you want to know how you can get even more referrals? Ask for them. Referrals. Ask for them. Do you know why businesses have so few referrals compared to what they could have? They never ask for them. Your customers, like any audience, can only know what to do if you tell them. Now, I've tried a lot of referral strategies. Most failed and I struggled until I had this epiphany. Asking for referrals only works when you treat it like an offer. The referrals come when you show the value the customer gets when they refer their friends. Let me give you two quick case

studies to show you the power of asking for referrals. Case study number one. Dropbox gave free storage to customers and free storage to their friends they referred. The referral program went viral and they 39 X'd their business in 15 months. Case study two, PayPal gave $10 in credit to customers and $10 to the friends they referred. Within two years, the program helped them reach a million users and six years later they hit 100 million users. They still use it today. So how do we harness the same viral growth in our own small business. We do what they did. We ask for it. Seven ways to ask for referrals. There are three components to referral program. How you give the incentive, what you incentivize with, and how you ask. Rather than give you 100 variations that may or may not work,

here are the seven combos that worked best for me. Number one, one-sided referral benefit. I'd rather pay customers than a platform any day of the week. Pay your average cost to acquire a customer, aka KAC, to the referral or the friend. Make them a one. aware of the incentive. Example, imagine it costs $200 to get a customer. Ask the current customer to make an actual three-way introduction to a friend via call, SMS, or email. Not just to name a number.

Also, ask them to do it right when they buy. Don't wait. Then write them a check for $200 when their friend signs up or give their friend $200 off. Example 2. This works great for spouses because they both basically get the benefit. Always ask for the spouse and give a household discount. Two-sided referral benefits.

This is what dropbacks of PayPal used. We pay our cack to both parties. Half goes to the referer in credit or cash, and half goes to the friend in credit. This way, they both benefit. Example, we sell $500 programs. Our cost to get a customer's $200. For every friend someone refers,

we give them $100 in cash and give the friend $100 off signing up. Good for up to three friends. This worked really well for my local businesses. Pro tip. Run your paid ads for free. In our service businesses, we routinely get an additional 25 to 30% of signups as referrals. If we ask for referral right when they signed up.

So if we signed up 100 clients for a promotion, we'd usually get another 25 to 30 clients from referrals. And since we always operate above 3 to 1, LTB to KAC ratio, the cash from referrals often cover the cost of ads and some. Bingo Bingo. Number three, ask for a referral right when they buy. On the sales contracts or checkout page, ask for some names and phone numbers. of people they'd like to do this with. Show them how they will get better results when they do it with a friend.

Example, I had a new salesman come into one of my portfolio companies and shatter all the sales records for an upcoming event. We didn't know what was going on. So I hopped on the phone with him. How are you selling more tickets than everyone else? He shrugged and said, I'm doing the same thing as everyone else. I just make sure I asked them who else they'd want to have come with them.

Then ask them to introduce me. Half his sales were from referrals. So simple, and yet no one does it. Scripting example. People who do our program with someone else tend to get three times the results. Who else could do this program with you? Very simple. Pro tip.

Not if, but who. Once someone as a customer, be more direct with your ask. Don't ask if they know someone. Ask who they know. 4. Add referrals as a negotiation chip. On top of that, you can ask for referrals as a way to negotiate a lower price. In other words, if someone wants to pay $400 and your price is $500, you can give them a discount

in exchange for an introduction to three friends. You can ethically charge a different price for the same thing because you change the terms of the sale. Example, I can't do anything less than 500 down, but if you make a three-way text introduction to a few friends right now, I'd be happy to cut that initiation fee. And to address the question you didn't ask, if a full-price customer finds out you gave someone else a discount, which I've had happened, here's all you say. Yeah, Stacey got $100 off because you referred three friends. I'm happy to give you $100 if you defer me three friends. Who do you have in mind? They either back off or they give you three friends.

Win-win. Number five, referral events. people get points, credits, dollars, or even just bragging rights for bringing friends within an explicit time period. Referral events typically last from one to four weeks. Whenever you run one of these events, sell everyone on the benefits of working with others. Use some stats, internal or external to show high success rates and the selfish benefit of bringing friends. I use names like Bring a Friend Promotion, Spouse Challenge, Accountability Buddy, Coach Challenge, Promotion, where you create teams with your employees and customers. This works well in coaching style

businesses. Six, ongoing referral programs. Instead of running a limited duration referral promotion, you talk about the benefits of doing things with others all the time. Think in your free content, outreach, paid ads, etc. After a buddy did this, he saw a 33% boost in total signups. For context, he had a million customers buy tickets to his virtual event, and 250,000 of them were referred. This stuff works. Seven, unlockable referral bonuses. Create bonuses for people who won, refer, and two, leave a testimonial. A few examples. Unlock VIP bonuses, courses, tokens, status,

training, merchandise, service levels, premium support, additional hours of service, et cetera. Unlockable referral bonuses work well if you don't like paying out cash. The bonuses can also be for both parties if you like, since they cost you less than cash. Visit the lead magnet section for some extra inspiration. As always, the more insane you make the offer,

the more people will refer. If you want them to refer, make it so good they'd be stupid not to. You're only limited by your creativity. Here's what it looks like to combine a few of the strategies above into a killer referral promotion. Give everyone a gift card for one-third the cost of their program. Tell them they can give it to a friend of theirs if they sign up with them.

Give the gift card an expiration date within 7 to 14 days from the date you give it to them. It'll force them to use it. This gives the referer status when they give it to their friend. Rather than saying, hey, join this program for $2,000 off, they say, hey, I got this gift card for $2,000. Do you want to use it? I don't want to waste it. It's seen as a much bigger deal for them and you.

You can still use the three-way introduction with this tactic. Then text a picture of the gift card. Bonus points if you write the friend's name on it before texting the picture. It makes it feel personalized and gives you a legitimate reason for asking for the friend's name, wink. P.S. You can also sell the gift cards at 90% off as purchasable gifts, only for friends of customers. The referral looks like they spend a lot of money and you get paid to get new customers. I can hardly think of a better way to make money.

Again, the only limit is your creativity. Pro tip, match the thing you give with the thing you sell. If you don't want to give away money, try to match the referral incentive with the core product you sell. For example, if you have a t-shirt manufacturing company, give away free t-shirts makes a lot of sense, because your incentive will attract people who actually want t-shirts. And they're more likely to become paying customers. Hint, that's why the gift card works so well. On the other hand, if you give away an amazing limited edition t-shirt for your IT services business,

it may or may not attract people who want IT services. So try to match the thing you give with the thing you sell. Conclusion. Referrals aren't an advertising method you can do. It's not one trick or hack, although we learn some of those. It's a way of doing business, and it starts with you. After all, referring is always a risk for the customer. They risk their goodwill with their friend in the hopes of getting more by showing them something cool, your stuff. So customers only refer when they think it's very likely their friend will have a good experience. In other words, when the benefits to them personally outweigh the risk of hurting a relationship with that friend. So we add benefits for them

and their friends with incentives and we lower the risk by building goodwill showing we deliver on our promises. And we do that by using the six ways to give your customers more valuable. Now, don't get me wrong, building goodwill does a fantastic job of getting referrals on its own. But if we're smart, which we are, we capitalize on that goodwill. So we get even more referrals by using the seven ways to ask for them. So give more than you get and you'll never go hungry again. This is how we treat our customers. Do this and you can monetize goodwill forever. To keep this in perspective, I always remind myself. I am compensated tomorrow for the value I provide today. Action items.

Figure out your referral percentages and turn percentages to set a baseline. Implement the six giving value steps to build goodwill, then capitalize on that goodwill, using one or more of the seven ways to ask for referrals. Next up. So now we have to figure out how to scale a team. It looks like we'll have to call out potential teammates, show them the value of joining the team,

then ask them to join. Wait, that sounds familiar. But seriously, if you really want $100 million leads machine, buckle up. The most valuable chapter in the book is coming up next. Employees. For real, this isn't a boring chapter, and you're going to need them if you want to make the big money. Free gift. Bonus. Customer referral frenzy.

If you want to know more ways to use the highest leverage, most profitable ways to getting customers, I just made a training for you. You can get it here free. Acquisition.com forward slash training, for slash leads. I hope you enjoyed the customer referral section. I feel like it wouldn't be complete without me asking you to refer a friend to this podcast or the book. And if you want to read while you listen, which is actually how I prefer to consume content, It'll store the book in more places. I just want you to win so that ultimately one day I can invest in your business. And that is myself as attention.

That being said, next we have employees and agencies. And this one is one that's going to be a sleeper. This is a dark horse. And this is the one where the big business owners are nodding their heads and they're like, can't wait to get to this one. And the small business owners don't get it yet. And so I've broken down two huge parts. One is that I learned every new platform that you have seen me on first by using an agency

in an entirely unique method that I don't. see anyone else talking about and it's how I engage with every single agency and I'll give you the script and how to negotiate it everything down the tea in the next episode. On top of that, I'll show you how I've leveraged employees in order to get more people to find out of my stuff without spending more minutes on it. This has been $100 million leads written by Alex Hermosey, read by Alex Hermose, copyright, 23, acquisition.com, audio production, copyright, 2023, acquisition.com media.