REFERRALS: The Sales Professional's Best Friend

When you ask for and get referrals from existing customers or business associates, you accelerate your ability to obtain new business. Learn to maximize Referrals: The Sales Professional's Best Friend.

The top sales technique for acquiring new business is not done through your sales force. The best method for getting new business comes through referrals from your existing customers. There is no faster, stronger or better way to build a business than through referrals of new customers.

In fact, if you're not doing referral selling, you're losing 25% of your potential business. Why is the referral so valuable? Here are a few reasons:

Referrals come from people you already know
You shorten the cycle of familiarity by simply working with someone who knows someone you know. Common ground already exists through a friendship, acquaintance or business relationship. This eases the pressure on the initial getting-to-know-you steps of selling.

Referrals extend the network
You widen the circle of relationships with each new referral, increasing your ability to tap that network for additional business, new business and more referrals.

Referrals reduce sales expenses
You reduce not only time but expense by asking for and following up with referrals. It costs six times more to sell a new prospect than it does to sell a referral. Think about it: A sales force is full of expenses for a business; customers are inexpensive because you already "own" them.

Referrals add value to the source of the referral
When you follow up on referrals, get the business and create a new delighted customer, value is delivered to the party who gave the referral. Your new customer often credits and thanks the referrer. And many companies emphasize value by offering credits for those who refer new business.

Referrals help you use your best sales force
Happy customers constitute your strongest sales force because word-of-mouth is the single most effective form of advertising. Product or service claims that you make often require proof sources for credibility in prospects' eyes. However, claims from existing customers carry instant credibility and seldom require additional information. (This is why unhappy customers can be such a detriment, because their claims of poor product or service performance are likewise seldom questioned.)

The Trust Bond in Action
When you ask for and get referrals from existing customers or business associates, there's more than simple familiarity working in your favor. You tap into strong, existing relationships, which can and do accelerate your ability to obtain new business.

Trust is a strong basis for the buying decision. In typical selling situations, trust is the first and foremost issue in prospects' minds. "How do I know I can trust this person and this company?" prospects ask themselves. Knowing that, you work hard and invest in the proper look of printed materials, show the right testimonials, ask good questions and listen closely to the answers, all for the sake of trust.

Brian Tracy, one of the top sales training professionals in the world, cites building the trust bond as the critical first step in the selling process. He says building trust with customers is 40% of the process, followed by uncovering needs, presenting solutions and asking for the decision.

The value of the referral in this sense is simple, as illustrated below:

                            Customer
                                   ••
                                •     •
                    Trust•          •Trust
                            •             •
                          •                 •
                 You•                     •Referral
                      •                         •
                    •••••••••••••••
                                Trust

Trust bonds already exist between you and the customer, and between the customer and the referral. The referral process instantly creates a level of trust between you and the referral, a great advantage for starting the selling process.

Obtaining The Referral
People you already know, both inside and outside of your business relationships, can provide you with valuable referrals. These people aren't likely, however, to be seeking you out daily to give you the names and phone numbers of qualified prospects. So how do you get them? Ask for them. Oversimplified? Yes, and yet there are certain approaches proven to be effective in asking for the referral. How you ask for referrals is a key point in the process. Consider this approach:

"Do you know anyone who can benefit from our services?"

In this situation, you give the referral source a choice between yes and no. This gives you approximately a 50/50 chance that the answer will be no.

Let's increase the odds in your favor. First, you need to help your referral source by starting the thought process on his/her behalf. Next, you need to move from the yes/no choice to a choice between yesses. Compare this more specific approach:

"Which businesses in your office complex could benefit from our services?"

Or

"Who among your neighbors would benefit from the special package you've chosen?"

By being more specific, you help the referral source focus on a single area and increase your chances of getting a name or two. In working with delighted customers, try this approach:

"Much of our new business comes from people such as you who are already doing business with us. Who among your friends elsewhere in the industry could benefit from similar results?"

This reinforces the value you add to your current customer and opens the door for referral opportunities with non-competing organizations. This can be particularly valuable when your customer or client views your work as a competitive advantage.

Contacting the Referral and Referrer
Critical factors in following up on referrals are timeliness and the initial contact. Timeliness is important because the referral source often tells the referral that her name has been passed along to us. The more time that passes between that communication and your follow-up, the colder that opportunity can become. The reason is that a long time between the two events might be interpreted as not caring much abut this new business opportunity or as your own lack of organization, both of which can be detrimental to your chances with the referral. First impressions are lasting, so follow-up quickly and professionally to make the most of the referral opportunity.

Equally as important as the timing is the approach in the initial contact. Often, you might not be certain of the level of relationship between the referral source and the referral. To compensate for this lack of information, make your approach as strong and effective as possible. With little planning or forethought, you might say, "Joe Jones said I should call you." But this puts the burden of detective work on the referral and could start things off in a less-than-ideal fashion. In fact, the referral is likely to start asking you questions, which is exactly the opposite of how you want this conversation to begin.

Try this approach:

"Joe Jones asked me to call you, and I promised I would."

In this day and age, anyone who follows through on promises gets high marks. Mentioning your intention this way puts a much more positive light on the conversation to follow. This allows you to move directly into setting an appointment, qualifying or asking good questions to get key information on the prospect's situation or needs.

Consider this bit of wisdom: "The more you give thanks for, the more you have to give thanks for." This especially holds true for those who provide referrals. To show your appreciation and to keep the pipeline full of future referrals, always follow up with those who refer business. A handwritten thank you note, periodic reports of how the new relationship is proceeding and similar contacts all provide positive reinforcement to those who refer business to you. This follow-up also emphasizes the win for your referral source. As mentioned earlier, some companies offer financial incentives for referrals that turn into new business. The win in this situation is obvious. Even more valuable for the referral source are the positive feelings from the referral as she begins to benefit from what you provide. "Thanks for thinking of us," is a typical response in this situation, strengthening the relationship between the referral and the referral source.

Getting More Referral Business
Here are some final tips for getting more referral business:

• Look at everyone you meet as a potential source of referrals. Casual or business in nature, any of your existing relationships can generate referral business.
• Hold a referrals game for your sales team. Put an additional incentive on referral business gained during a specified period. Have individual as well as team rewards for hitting certain numbers of referred business.
• Coach your people on steps to getting more referrals. Once they get the hang of it, they'll want to do more and more asking for referrals and less cold calling. You'll both be better off for it.
• Lead by example. Ask your own network of customers, friends and suppliers for qualified referral prospects. Follow up on them yourself, or hand them off to team members who can see how quick and easy it is to pursue and close referral business.

Referrals will get you 10 times the profitability at less than 1/5 the cost of other methods of selling. None of us does it as well as we should, but don't let anything stop you from trying to increase your referral business.