Episode #019: The Psychology of Referrals with Michael Maher
In This Episode of The Buyer’s Mind with Jeff Shore:
Michael Maher, the author of 7L: The Seven Levels of Communication, joins Jeff to consider why referrals are the gift you earn. While many sales professionals might use monetary compensation to get referrals, Michael and Jeff discuss why that’s not such a great sales technique.
Topics we’re going to cover on today’s podcast:
[2:45] Quote of the Day
[6:05] Sales Tip of the Day
[9:40] The path to referrals
[12:50] Referral programs
[14:48] Should you pay for referrals
[16:58] Consumer passion and referrals
[20:42] Asking for the referral
[22:08] Proactive generosity
[27:50] Motivational Summary
More about our guest Michael Maher:
His “go-from-poverty-to-prosperity” story is one for the movies. Born into a family living in a shack in a small town in Kansas and knowing only poverty, food stamps, and hand-me-down clothes, Michael J. Maher conquered incredible challenges and a near-death experience to be known by many different titles:
* Millionaire Real Estate Agent
* Star Power Star
* Referral Guru
* Hall of Famer
* #1 International Bestselling Author
* Moving America Forward Entrepreneurial Award
* Michael is known as “North America’s Most Referred Real Estate Professional” selling over 1700 homes from referrals over the last 17 years and receiving over 500 referrals per year for 8 straight years making millions selling real estate.
* His book, (7L) The Seven Levels of Communication: Go from Relationships to Referrals has been Amazon.com’s #1 bestseller in the Real Estate Sales category for an incredible 6 straight years.
Links from today’s podcast:
Jeff: How would you like to have an entire sales force working for you for free? It’s not that hard. We’ll dive into that topic on today’s episode of “The Buyer’s Mind.”
Announcer: Welcome to “The Buyer’s Mind,” where we take a closer look deep inside your customer’s decision-making mechanism to reverse engineer the perfect sales presentation. Now, please welcome your host, Jeff Shore.
Jeff: Well, welcome, everyone, once again to “The Buyer’s Mind,” where we investigate exactly what’s going on in the brains of prospects who are considering a purchase decision. This podcast is all about taking a stroll through the buyer’s brain. It’s about knowing the customer so well that that sale begins to roll out right in front of you. I’m your host, Jeff Shore, a 30-year veteran of the sales business and a self-proclaimed sales geek. I love sales, but what I really love is to study the way that buyers buy. I’m fascinated by the psychology of a purchase decision, and today, the psychology of a referral. At Shore Consulting, we focus on one thing, we focus on how we make it easy for buyers to buy. That is our mission, and I’ve had the privilege of speaking to tens of thousands of sales professionals over the years. If you’re looking for a keynote speaker for your sales conference, we would love to talk, just send us an email. You can send it right to me, email@example.com, and I’ll make sure that we can have a conversation about that. We welcome our show producer, Paul Murphy. Murph, how’s it going today?
Paul: Things are going really well. How are you, Jeff?
Jeff: Fantastic, feeling good today. We’re gonna talk about referrals today. But let me ask you, Murph, as a consumer, how important is that referral from a friend or a colleague when you’re out shopping for something?
Paul: It’s really huge for me because knowing that I can trust who I’m gonna be working with that I’ve never met before, getting that referral from a friend means that I’ve got some level of confidence in who I’m working with.
Jeff: So, it may not be all the level of confidence but it sounds that what you’re saying is the trust of the friend is then transferable to the person who you’d be talking to?
Paul: Exactly. When I’m talking with my friend and they refer someone to me, I at least have some level of knowing that they had a good experience and so I expect to have a good experience as well.
Jeff: Yeah, that’s what Robert Cialdini in his book on the influence theory, “Influence: The Psychology of Persuasion,” he calls this the principle of social proof. When we are making a referral, that falls under the category of social proof. People are inclined to do what people like them are inclined to do. So, we follow our friends, we follow our colleagues, and that trust gets transferred. I love it, I love it. Here’s our quote of the day, and this one is from Jeff Shore, here it is. I just…I love this thought. It’s something I teach at Shore Consulting all the time. “Great experiences are future stories. Bad experiences are also future stories.” So, here’s the idea, great experiences are future stories. When we have a great experience, we want to talk about it. We tell stories about it and we love telling the stories about it. That really is the basis for a referral. It’s a story that we love to tell others. Great experiences are future stories, why? Because those great experiences, we’re passionate about those experiences, and there’s an old proverb that says, “Out of the abundance of the heart the mouth speaks.”
And I’m thinking, for example, to a business dinner I had many years ago at a restaurant called III Forks in Dallas, Texas, it was a great meal, a fantastic meal. We got to the point of the meal where, you know, the food server comes along and asks, “Is everything okay?” You know that part? Everybody’s got their food and the food server says, “Is everything okay?” Now, I have to tell you, I don’t know how many times I’ve thought to myself, “Is everything okay?” Yeah, it’s about right, it is in fact okay, but that’s not the question that was asked by this food server. The expectations were so high that the food server comes along and he says, “Ladies and gentlemen, let me just ask you now, is everything perfect?” Is everything perfect? And I was enjoying the meal so much that when he asked that question, “Is everything perfect?” it just resonated with me so much because he was putting himself out there, he was putting the restaurant out there by asking the question, “Is everything perfect?” But you know what? If it’s not perfect, they still have the chance to do something about it.
Okay, so I started telling this story to sales professionals about this great experience that I had at III Forks because great experiences are future stories. Well, about six months ago, I get in the mail a card from III Forks in Dallas, Texas. When I opened it up, it’s from the general manager. He said, “A salesperson was having dinner here and told us that they were here because you have been telling great stories about your experience at III Forks. We thank you for that and here’s a gift card. The next time you’re in Dallas, dinner is on us.” I mean, it was just… Now, what happens, the story gets better. That’s that generosity that makes it even better and it’s a great way to be able to address your own sales approach by asking yourself the question, “What stories do you want your customers to tell?” Give them the experience that will make for that great future story.
We’re going to let you know that this podcast is brought to you in part by our good friends at HomeStreet Bank, not just our show sponsor, they are my lender of choice. I used HomeStreet in my last home purchase and I have to say, it was the smoothest transaction I have ever had. And I’ve purchased quite a few homes, but they’re professional, they’re dependable, great rates, great service. And if you’re a real estate professional, you’re not just gonna find better people to work with in taking care of your clients. And they can do it all, banking, home loans, credit lines, you name it. Go to homestreetbank.com to learn more, that’s homestreetbank.com. Well, coming up in just a few minutes, an interview with Michael Maher, the king of referrals.
Before we get to that, let me bring you our sales tip of the day. And the tip of the day is to earn the referral. Now, you might be looking at saying, “Well, no, duh. I mean, who’s not gonna say that? I’ve heard that before. Earn the referral.” But here’s the tip. The tip is to think about what the extra is that will get you the referral. You see, people are not passionate because you just did what you said you were gonna do. You have to ask yourself, “What is the planned extra that would get me the referral?” This is what I’m supposed to do, just to take care of the customer. This is my process, this is my system, this is what I do, and that’s what the customer expects. Now, what’s the extra? If you want people thinking about their great experiences that lead to future stories that we call referrals, you have to think of it in terms of what is the extra. So, I want to just challenge you right now to think about your sales presentation, look at the process, and then ask, for the individual customer you’re working with right now, “What is the extra?” The extra is where the passion comes. The extra is where that customer says, “That is above and beyond.” That’s where that passion boils up and then causes them to refer because out of the abundance of the heart the mouth speaks.
Well, before we get to our interview, let me tell you about an opportunity. I want to invite you to join us for the 2017 Jeff Shore Sales Leadership Summit and Expo in order for you to become a better leader for your team, to grow in ways that you never thought possible, and to take your career to an entirely new level. This is a premier industry gathering that centers around real estate leaders. Now, we’ve had people who are in other industries attend the summit and they’ve never been disappointed, but just be aware that we’re gonna speak in the language of real estate leaders. You’re gonna learn from the best of the best about what it takes to make you a better leader, a better manager, a better coach with more insights, more actual strategies, more aha moments than ever before, entirely new material. You’re gonna come away from the summit confident that you possess the tools and the knowledge not only to succeed but to truly change your world. And I wanna tell you right now, we are getting very, very close to a sellout. We sell out those summit every single year. We’re going to sell it out again, and we’re actually getting very, very close. So you’re gonna wanna act on this right away. Go to jeffshore.com/events. Just a couple of quick details about the summit. It’s at a beautiful Loews Coronado Resort just outside of San Diego, it is an amazing resort. It starts on Thursday afternoon, goes all the way through Friday, you’re gonna wanna spend the weekend, trust me. In August, in San Diego, it doesn’t get any better than that. It is an amazing experience and I want you there. Go to jeffshore.com/events to learn more about the Jeff Shore Sales Leadership Summit and Expo.
All right, hey, I’m really excited about our interview with Michael Maher. He’s the author of “The Seven Levels of Communication: Go from Relationships to Referrals.” That book is regularly at the top of the list of real estate sales books on amazon.com. And Michael has a booming referral business, originally out of Kansas City, now in Atlanta, but he is a sought-after keynote speaker and an absolute expert in the area of referrals. Please welcome, Michael Maher. Michael, glad to have you with us.
Michael: Jeff, thank you so much. It’s always an honor and a privilege to be on, and appreciate it.
Jeff: Let’s have some fun, let’s have some fun. Let me ask you this. When and how did you first catch that referral bug? Because it’s one of those things that I find interesting about salespeople. Some salespeople get it, some just seem not to. When and how did you catch the referral bug?
Michael: Well, I think that the biggest thing is that you catch a bug, I think, when you truly focus on something. And early on, I was like all the traditional salespeople. I was told to do the cold-calling and I called quite a few numbers. And I did not take to that because every time I called it was a click or a cuss word. So, I said, “Yeah, I don’t wanna do the phone calls anymore,” and they said, “Well, you know what? You need to go door-to-door. You need to go door knocking.” So, I went door knocking and the 1st four, thank God, didn’t answer the door. And the 5th one was actually one of the top real estate agents in the city and I was doing this for real estate. So, she basically opened the door and a barrage of cuss words and anger was in front of me, and she said to get out of my neighborhood, never come back, and don’t ever knock in on the doors in this neighborhood. So, I was like… And the first four doors also had an interesting sign on it that said, “No soliciting.” So, you know, the Do Not Call list was very, very popular at the time, so I was like, “Okay, you know, I could call the wrong person. They could turn me in. It’d be a $10,000 fine if I called the wrong person. And over here, I could be a solicitor.”
So, I was like, “Okay, I don’t wanna be a criminal who’s fined and I don’t wanna be a solicitor or called a solicitor.” So, also email was starting to get big at the time, so they said, “Email everybody, let them know that you’re here and that you’re gonna help them with real estate and that you’re in real estate sales.” And I got a lot of responses. They weren’t great responses, a lot of responses that said, “Hey, you’re a spammer, quit spamming me. Don’t ever spam me again. Don’t ever email again.” So, I was like, “Wow,” you know, my first six months in the business and my options basically were a criminal to be fined, a solicitor, or I could be a spammer. And it was just like, you know, I’m not gonna do it that way. So, I found a better way, I found another way, and that is referrals. So, I decided that I would go, you know, 100% down the referral path, and that’s what I did.
Jeff: You know, it’s such a great story because I think so many of our audience’s members can relate to that. We heard or we were told by the experts, “Well, this is what you do, you know. You’re gonna knock on doors, you’re gonna make cold-calls, you’re gonna do all of these things,” only to find out that we were getting our heads handed to us on a regular basis. It wasn’t fun, it wasn’t enjoyable, and we didn’t really feel like we were adding much of a service to our customers at that time. But when it comes to referrals, it’s completely different because having a referral basis is almost like having your own sales team working for you and they’re doing it for free. It’s an amazing thing. So let’s talk about how we structure that. Let’s talk about why a customer is gonna choose to refer or not to refer in the first place. Because some companies have referral programs, “You refer and you get this. We’ll give you a bonus or we’ll give you some cash or whatever it is.” You and I have not talked about that, Michael. My gut says you’re probably not a big fan of a program like that.
Michael: I’m not. I don’t believe in the referral reward programs. I believe that people refer you because of your character, your competence, and your communication. So, I don’t believe that people refer you for money, especially in the bigger financial realms. You know, you sell cars or you sell real estate or you sell financial service or even sell insurance. They’re not gonna refer you for some monetary item, you know. They’re going to refer you because you’re good and because they trust you and because they know that you’re gonna take care of your friend. Most people, when they refer you, they’re saying, “Hey, listen, take care of my friend, answer their questions, and show up at the closing,” and that’s all they want you to do. So, what happens when you do a referral reward program is you go from a relationship to a monetary or dollarized relationship, and it instantly transforms the relationship. You don’t want to make your relationships… That’s why you don’t loan money to a family member, right? It goes from a family member relationship to a monetary relationship, and money has a tendency to ruin relationships. So, it’s just one of those where they don’t refer you for the reward, trust me. They refer you for the appreciation. They know you’re appreciative and they refer you because they know that you’re gonna take care of their friend.
Jeff: You know, it’s interesting. I think back to my own experiences, I’m remembering two different things, when we had… I worked for a company that had a monetary reward system and there were two areas where I just hated it. One is when somebody would say, “Look, I’m gonna refer this person to you. Would you please give them the $500 or whatever their reward was?” Which told me right from the very beginning, they didn’t want the money, they almost felt a little dirty for taking the money. The other times, and I remember it really coming back to haunt me, was, if somebody had a really bad experience that we’d offer him, “Hey, if you wanna refer somebody, you know, we’re gonna give you $500.” And I could remember people looking at me and saying, “So, let me see if I got this straight. You want me to sell out my friends, family, whoever it is and say, ‘I just had a horrible experience but it’s worth it to me to be able to put that relationship on the line for $500.'” It was crazy when you look back at it.
Michael: Well, here’s the other thing, right, it devalues the relationship, it devalues the referral, right? So, if you had a referral reward program that you are paying me $500 to refer you, and then the person that I referred found out that I was paid $500 to refer you, then, all of a sudden the motivation for referring you is questioned. They’d go into the mindset of, “Well, did they refer me because Jeff is good or did they refer me because of the $500?” And you don’t… So, you just wanna keep the monetary reward out of it and focus on the thing they really want, what referral sources want above all, above anything, even more than you taking care of their friend is they want appreciation, right? They want you to express your appreciation and they want updates which show professionalism and appreciation. So the number one thing that we can get referral sources is a true, genuine, and sincere expression of appreciation.
Jeff: You know, Michael, one of the things that I see is that there’s this question of passion that sits behind every referral. So if I’m gonna refer somebody to a movie or a restaurant or a vacation spot or whatever it is, I’m only going to do it because I’m enthusiastic about that. I’m not gonna refer somebody to a really good pencil just because I’m not that passionate. What role does passion play for a consumer in deciding to refer their friends to a product or to a salesperson?
Michael: Well, I truly believe that that’s part of building the relationship with the consumer, and it doesn’t have to be a client, right? A lot of people think that the past client or the clientele is going to be your best referral source. You know, we’ve had people that we’ve met through networking, and we built a relationship or I built a relationship to the point where they were referring my services without having ever experienced my services. But you know what they did, is they had a passion for me, they had a passion for the relationship. Because it comes down to value. And Jeff, I know how much, you know, delivering value and giving massive value to others means to you. And the thing is that’s what we bottle in the 7L system, is how do we get these raving fans, how do we create an army of ambassadors who are passionate about speaking highly of us and referring us willingly. And that’s… So, the way we do that from a salesperson perspective or a service provider perspective is we want to help them achieve their goals, help them conquer their challenges, and help them enjoy whatever interest they have even more, right?
And what happens is this practicing what I call proactive generosity, which is the surprising act of adding value to the other person’s life, is then they are…they become your ambassadors. They become these raving fans of you because you’ve helped them achieve this massive goal or you’ve helped them conquer this significant challenge, or you’ve helped them…if they love golf and they wanna learn how to get to scratch, then you’ve sent them a book on golf or you’ve sent them to a tour pro or a country club pro who has helped them on their swing, right? And it’s amazing when you ask questions and you get to know what’s important to them and then you help them live that life with things that are important to them, it’s amazing how they will become your…you know, they become your megaphones, right?
Jeff: So, it really speaks to the idea that we have to get past just the…how do we put people through a process. I mean, there’s an extra here. There’s an extra level of passion, there’s an extra level of service. You’re speaking to the idea that referrals are ultimately earned, and if we didn’t do things that were out of the ordinary, then there’s really no reason to expect a referral in the first place.
Michael: Here’s the thing, right, is whatever I do is not necessarily going to create passion in that, right? They already have a passion about certain topics and subjects and interests, right? And it has nothing with real estate, has nothing to do with the speaker, author training that I do, and I’ve had people call me the greatest real estate agent in the world to their friends. And, A, they’d never used me for any real estate services, and, B, all I had done is help them in some other facet of their life.
Jeff: When we look at providing that service and looking ways to serve, the whole idea of proactive generosity, maybe preemptive empathy along the line, now we look at the tactical. Where does the ask come into play, as far as asking a customer for a referral? First of all, do you believe that salespeople should be asking? If so, how early and how often should they be asking?
Michael: No, I do not believe that. Now I realize, I’m a real estate agent in a world where the average agent gets between 5 and 6 referrals a year, and we generate over 500 to 600 every single year without verbally asking for referrals. And I can be even more adamant about that, the newer UR in real estate. The fastest way in the world to repel your friends and professionals that you know is by asking them for referrals because you haven’t earned them, right? You’re asking for something that honestly you have not shown that you deserve yet, right? They haven’t established a trust or respect there. The time to talk about referrals is when they ask you either about business or how they can help you. And when they say, “How can I help you?” or, “What can I do for you?” which people tend to do when you’re helping them, then guess what, the answer is referrals. The thing is, we have to train our community that the way to repay us, the way to provide value to us is not a dinner, it’s not a gift card, it’s not a gift, it’s not any of these things, it is referrals.
Jeff: There is… We had the great Jeb Blount on the show here a couple months back, and one of the things that he talked about that I just really clung to was this idea that, you know, our customers want us to succeed. And, you know, Michael, I know you and I both share a passion for the stage. We love to do the keynote speaking and, you know, I remember Mark Sanborn, one of the great public speakers out there in the country today, he said something to me. He said, “Jeff, your audience wants you to succeed, right?” There’s nobody sitting there before you go on stage saying, “Boy, I hope this guy totally sucks and waste 40 minutes of my time.” That’s not what they’re saying. They want you to succeed. And I think our customers are the same way. They want us to win. They want us to succeed and they’re actually rooting for us along those same lines. So, what you’re talking about is consistent with that idea. Yes, we want something from each other, but more than that, we want to help each other be successful in our lives, on our business, in whatever it is that’s gonna make for a better future. So, there’s a real sense of mutual purpose that comes into play here.
Michael: I’ll tell you, that’s exactly it. That’s it in a nutshell, is there’s two things that we need to master. We need to master finding out how to help others, and by the way, that’s the mastering of practicing proactive generosity. We need to master proactive generosity. The other side of it is we need to master appreciative receiving, right? There’s a lot of great givers in the world, but the ones who truly succeed, you know, “Give and Take” from Adam Grant is a great book that goes into the data behind what I’m about to say. The greatest givers on the world also have learned how to receive help, and that’s the other side of this, is master appreciative receiving. And part of being appreciative is, you know, what you just said, is people want us to succeed. They want to help us succeed, but the problem is, they just don’t know how, and we need to really reinforce to our community that the way to help us is referrals. But as soon as we define in our specific with how to help us, all of a sudden, it is like a flood of receiving that we need to be ready for.
Jeff: Correct. Wonderful advice, great stuff. The book is called “The Seven Levels of Communication: Go from Relationships to Referrals.” Michael, how can people get a hold of you?
Michael: You know what? Go to referco.com, R-E-F-E-R-C-O.com We founded the foremost authority, the world’s foremost authority in referral generation and business referrals, and that’s what we do, referco.com. They can book me to speak there, they can find out about our events there, they can find out about our coaching there, and could possibly answer a lot of the questions that they have. They can also get a lot of free gifts because we do believe in generosity, right? We are the generosity generation, and that’s our community of 100,000-plus peeps. So, that’s us.
Jeff: Love it, great stuff, great stuff. Michael, that way, we’ll put that in the show notes for sure. Michael, thank you so much for being on “The Buyer’s Mind.” Really, really great interview, thank you.
Michael: Jeff, I appreciate the time and appreciate the show. This is awesome, thank you.
Jeff: Well, Murph, I love that concept that Michael talked about, proactive generosity and then how we master proactive generosity. I don’t know that I’d ever heard those two words put together. Had you?
Paul: No, I haven’t heard that before ever.
Jeff: It’s a cool concept though, isn’t it?
Paul: It is a good concept. We got so many good concepts that come on “The Buyer’s Mind,” right? You know, the idea of mutual benefit that came from Jeb Blount, what we’re getting from Michael today on proactive generosity, they’re just all good things that we can put into practice.
Jeff: Did Michael’s comments about mastering appreciative receiving strike you at all? I’m just kind of curious, I know how it hit me. Did it hit you at all, the idea of appreciative receiving?
Paul: It did. I don’t think we’re grateful enough for the things that we get, are we? And so, when we get that referral, when we get that kind of response from somebody, it’s important to be thankful.
Jeff: Mm-hmm, yeah, yeah. Well, we may be thankful without showing it the way that we should. It might be a lost skill set. I love, too, Michael’s comments about character, competence, and communication as the reasons why somebody is gonna refer in the first place. This is a really great checklist, kind of a report card for you, the listener, to be thinking through and asking, “What does a customer see in my character? Did I do what I said I was going to do? Did I practice the principles of good, strong character, kindness, empathy, service, those things that are consistent with the character? Was I competent? Did I provide that level of value because of my expertise? And if the customer needed assistance, was I able to jump in front of that and give them what they needed and maybe even a little more?” And then, maybe the most important, communication, because when a customer is going through the purchase process, especially for a complicated item, in Michael’s case a home, boy, that constant communication is critical. As a salesperson, we may think, “Yeah, everything is all buttoned up, everything is good to go,” but if the customer does not know that, then they’re on pins and needles, they’re very anxious, and it raises their stress levels. So, I would just encourage you to look at it and say, “Character, competence, communication, how am I doing in those three things and how can I improve in each of those areas?”
So listen, as we head into the wrap-up, I want to just suggest you, a referral is a strange…it’s kind of a strange paradox. It is a gift that is earned. That’s really what a referral is, it is a gift, that’s kind, but it’s earned because nobody’s gonna give you a gift, in this case it wasn’t earned. It should be the goal of every interaction, every sale, every customer. This should be your goal, that you would get a referral in every interaction, every sale, every customer. A referral is the assurance of excellence. It is the exclamation point on the great service that you provided and the way that you went out of your way, that you practice that proactive generosity, and you really, really took care of someone. Make it your goal from the beginning, every interaction, every sale, every customer leads to a referral, not because they owe it to you but because the service was just that good.
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