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Sunday, July 29, 2007

Image from and a special card designed to implement Walt Hailey's N.E.E.R. principals. See this reference: The Famous NEER Referral Card.

About the N.E.E.R.

It's been a few years since I relayed to employees and friends the secrets we discovered at a seminar in the summer of 1995 in Hunt, Texas. The mother of an orthodontist friend of ours had loaned me the book "Breaking the No Barrier" by Walt Hailey, and something clicked. I could see that, accidentally, we were achieving our highest sales volumes by practicing his concepts. What if we built our business model around deliberately using the supply chain principals explained as "Naturally Existing Economic Relations" or N.E.E.R. in short.

Almost broke at the time, working 70 hours a week, I scraped enough money to head with Vivian to Hunt, Texas for the three day "Boot Kamp". (Hunt is in the Hill Country near San Antonio). We found ourselves at a ranch owned by Mr. Hailey, a very short guy who had achieved tremendous success in the insurance business by tapping the cornerstone of relationship business-to-business relationship marketing models.

Hailey's concept utilizes the principal of the "you scratch my back, I'll scratch yours" but looks at business as a continuing chain; the challenge is to create natural value through the supply chain to build real demand and respect for your product or service.

In its simplest form, his principals are an extension of barter-type relationships. Say you buy a lot of stuff from someone and you have something to sell that the person who buys from you could use. Do you think your chances of getting a foot in the door to make a presentation -- and sale -- are somewhat higher in this situation than a complete stranger?

Of course, the reason for this respect is a combination of access (you aren't going to avoid a call from a good customer) and respect. It is hard to insult someone you do business with as a client and say you will never buy from them.

Hailey realized you could take this principal a step further, to generate a truly incredible stream of referrals. Instead of looking just for your friends and associates, or previous clients, Hailey advocated a systematic referral development system -- look first to the clients of the organization to which you ultimately want to make a sale. Get a referral from them, and then you have an inside track to solid and valid business.

And that is where an insight hit me -- we had published project reports and company profiles before, but I never realized why they worked better than regular advertising. Now I realized the key to the whole thing -- if we encourage a company that we are publicizing to refer its suppliers to advertise, we would not lack for business. And, indeed, when we systematically applied the methods, our sales skyrocketed.

Nothing is perfect; and even the best ideas in the business world evolve over time toward entropy. Our success spawned direct competitors. More importantly, we needed to learn how to respect and nurture these N.E.E.R. referrals-- when an advertiser purchases an ad in a special feature because his client requests it, that advertiser has become our own client, and we should respect the advertiser as much as the company that referred the business to us!

But this business model has practical application for many contractors and sub-trades as well as suppliers, and I'll share an example with you to show how it works.

Say, you are a mechanical contractor looking for more business. You send a few hundreds of thousands of dollars annually to your wholesaler. You might ask the wholesaler's president: "Could you connect me with the businesses in our joint market area from where you purchase your products and services, to introduce them to me as the best plumber in town?"

I'm sure you are thinking of the logical objection here -- your wholesaler after all serves other mechanical contractors. Why should he favour you with this request? Well, this may be a valid question but I am going to base this observation on your being one of the wholesalers' better clients. And I'm also going to speculate that virtually none of your competitors has the insight to even ask the question. You will get the referrals, simply because you ask.

This process can be taken on other levels, depending on where you are in the supply chain and how you relate to your network of vendors; and how the marketplace connects with them. I'll share some other examples in future postings.

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