One of the best ways to start generating referrals is to construct a referral database comprised of all the people likely to help you and their friends by referring your services.

If you’re like most agents, your first list of business and social contacts will look embarrassingly short. That’s because few people dig deep enough to think of all the people with whom they have business and social ties.

To win referrals, you have to follow three important rules. In this arena, close isn’t good enough. Follow just two of the three rules and growth of your referral-based business will be stunted. Follow all three, and you’ll open the floodgates to success.

Be Referable

It is impossible to generate large numbers of quality referrals unless you are referable. Being a pleasant person isn’t enough. To attract referrals, follow these tips:

Do what you say you’ll do and do it with excellence. People known for mediocre results never win the kind of accolades that lead to recommendations.

Know your client’s expectations. The only way you can know what your clients expect from you is to ask. The typical agent thinks a client simply wants to get a home sold or find a home to buy, when in fact that end result tells you nothing about the client’s service expectations. Ask your clients these questions:

1. What do you expect from the agent you choose to work with?

2. What are the top three services I could provide that would add value when working with you?

3. If you’ve worked with other agents in the past, what did you like best and least about the experience?

Deliver exemplary service that exceeds expectations. Meet and exceed the service expectations of your clients, and they’ll become ATM machines for referrals. Follow these steps:

1. Survey your clients on a regular basis to learn whether their needs are being met and how you can serve them better.

2. Become a recognized real estate expert and share your expertise by calling clients regularly with reports on market trends, equity growth, and investment opportunities.

3. Continue to serve your clients after the sale closes.

4. Get to know your clients beyond their real estate needs.

5. Say thank you. This step is so simple, yet in our “what’s-in-it-for-me” world, most service providers overlook the power it possesses. When was the last time you were thanked by your attorney, accountant, or banker for your business? When was the last time the person who pumps your gas, or handles your dry cleaning, or bags your groceries thanked you for continuously directing your service dollars into their paychecks.

Extend your thanks verbally. Put your thanks into hand-written notes. Find simple and creative ways to express your appreciation to the people who put food on your table, gas in your car, dollars in your retirement account, and tuition dollars into the college education accounts for your children. Your thanks will be rewarded with referrals.

Admit and correct mistakes. Should your service fall short admit it, apologize, and make amends…fast!

Sometimes, the most loyal past clients – and the strongest referral alliances ­– result from perfectly corrected mistakes. When things go awry too many people put more effort into covering their tracks than righting the wrong and helping the client. Follow these steps instead:

1. Find out what the problem is and solve it quickly.

2. Once the problem has been identified, admit it was your fault. Diffuse frustration or anger by saying, “You’re right; I blew it, and I’m sorry.”

3. Tell them how you will make amends. Once they know that you’re committed to their satisfaction, the healing of the relationship can begin.

4. Follow up to see if the problem was resolved to the client’s satisfaction and to learn if there is anything else you can do.

Mine Your Contacts

The first step toward mining – or extracting value from – your referral contacts is to segment your database into manageable subgroups.

To use your resources effectively, you have to put most of your effort toward contacts with the highest referral potential. Contrary to the popular opinion, you can’t afford to treat all referral sources with equal attention. Unless you establish priorities, you won’t have the time or energy to devote to those who will benefit your business most.

Start by creating a top-level or platinum group of contacts. This category will include clients who were a delight to work with, people who are in key strategic positions, and friends and associates who are strongly likely to refer business your way. Go through your complete database looking for those with the following traits:

1. People who understand your need for business referrals.

2. People who really like you and would like to help you.

3. People who did business with you in the past and were highly satisfied by your service.

4. People who previously have sent referrals to you, even if the referrals never resulted in a commission check.

This is your best group of referring partners or referral alliances, and you must treat them accordingly. They deserve personal attention and personal interaction from you on a regular schedule.

You might even create a top-20 or top-50 list within this group. This super-elite list merits your highest level of attention. Send them special and personal correspondence a couple of times a year, and see them personally on a face-to-face basis a few times a year as well. Invite them to special client-appreciation events – or invite them in very small groups to attend functions or special activities with you ­– to further crank up the referral machine.

Create a second-tier gold level of contacts that you want to cultivate into platinum affiliates.

This group will include influential people who are likely to refer but only if you meet a few conditions. You might have to ask them consistently over a period of time before their referrals come through. Or you might have to achieve greater familiarity or top-of-mind consciousness before they’re comfortable with the idea of sending business your way.

To develop this group, take time to establish your credentials and competitive position. By proving how you save clients money, sell quicker, and handle smoother and better transactions, in time you’ll develop advocates that will serve you up with referrals for years to come.

Create a silver level of contacts for future cultivation.

This group will include contacts that may refer someday, but the jury is still out regarding when and if. Still, because you know them and they know you, they deserve your attention and follow up.

The people in this group are in a position to refer business, but they may not be overly excited about you or, in some cases, any service provider. Include in this group people whom you’ve only recently met, introverts, people with limited social circles, and people who are tremendously analytical or demanding and whose need for proof and perfection may put the brake on their willingness to share referrals with others.

Anyone who doesn’t fit into the platinum, gold, or silver category has limited referral value to your business. Some trainers advocate purging iffy contacts out of your database, but I don’t share that view. After all, how hard is it to include the extra names when you distribute your e-mail newsletter monthly, at absolutely no extra cost? Once the data is collected and contact permission is obtained, the hard work is over. All you have to do is hit “send” on a regular basis, backed by an occasional snail mail communication.

Consider creating a bronze category just to keep remote possibilities in your contact circle. Especially when your overall database is small, you want to wring potential out of every hope. Inexpensive, regular contacts are a good step in the right direction toward engaging the interest of these contacts and developing them into future referral sources.

Leverage your relationships

In your every-day dealings, you come into frequent contact with people who, with a little effort, you can lead up your relationship ladder and cultivate into referral sources.

For many newer agents, these daily encounters are centered around the lives of children – through meetings with teachers, participation in school events, visits with other parents, sideline conversations at soccer and T-ball practices, the list goes on and on. Beyond that are all the people you meet in church groups, golf or athletic clubs, neighborhood associations, and other social outlets. Cast your net carefully, and you’ll bring many of these people into your referral circle.

Be aware, these sources don’t develop into referrals automatically. Far from it. It’s your obligation to let people know what you do, why you’re best, and how you deliver successful outcomes.

As you proceed to leverage personal relationships, start by setting a high expectation for the quality of communication and service you’ll deliver. At the same time, set moderate to low expectations for quick referral results. Cultivating acquaintances into referral affiliates takes time, patience, and persistence.

Published: May 8, 2009

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Dirk Zeller is a sought out speaker, celebrated author and CEO of Real Estate Champions. His company trains more than 350,000 Agents worldwide each year through live events, online training, self-study programs, and newsletters. The Real Estate community has embraced and praised his six best-selling books; Your First Year in Real Estate, Success as a Real Estate Agent for Dummies®, The Champion Real Estate Agent, The Champion Real Estate Team, Telephone Sales for Dummies®, Successful Time Management for Dummies®, and over 300 articles in print. To learn more regarding this article, please visit www.realestatechampions.com.