The Value of Sales Referrals

Let’s face it, referrals make for stronger leads. One reason is because potential customers give us more credibility when someone they know is already using our product or service. Another reason is that we subconsciously believe a lead has more potential simply because it is a referral. Researchers have shown that when salespeople are given the same cold leads but told they are referrals, they sell more. Why? They believe more.

Having more of your sales come from referrals then makes sense. How do you find and gain these referrals though?

Finding Referrals
Network with businesses and companies that sell products/services related to the products/services that you sell. For example, a company that manufactures and sells custom shoe inserts could network with personal trainers, doctors and physical therapists, and local sports programs. Reciprocate and become a referral source for others as well. For companies that have websites, inquire about allowing your link to appear on their site. Be prepared to reciprocate though by allowing their link to appear on your website. Conferences and trade-shows are good places to seek out connections that could become resources for referrals.

Tap into your existing client base. Check in with your existing customers regularly. Discuss openly and frankly the results that your products and services have brought to them. Chances are these clients have a network of other friends, businesses, partners, and even competitors that they can refer to you. When you communicate the desire and the capability to help businesses succeed, you will quickly be put into contact with their business friends and partners. Whenever possible, always thank others for their referrals by writing a hand-written thank you.

Ask for referrals from clients who did not purchase from you. If you had a quality sales presentation and discussion with a client, then they must have seen some value in what you were offering. It may not have been exactly what they needed, or not the right time for them, but they probably can name more than a couple of their business contacts that could benefit from your service. So ask for it. The time you spent with this client won’t be for naught.

Ask for referrals from customers who recently had an issue resolved. Yes, they may have had a problem with your product or service, but your company has proven itself by resolving the problem. Customers who have had issues resolved often become the most loyal customers because they have confidence in you. It’s a perfect time to ask for referrals. Any time your company has gone over and beyond the expectations of a customer, you should use that opportunity to ask for a referral. A customer who feels slightly indebted to you for going the extra mile for them will gladly recommend your services to one of their contacts.

Asking for referrals can be a routine part of your overall customer service methodology. Having a proactive customer service system where your staff makes regular contact with customers and where issues are resolved quickly and effectively before they erode a customer’s opinion of your company means you have a customer base that will be confident in recommending your service to others. Solicit feedback from customers regularly and keep open lines of communication for customers to give their feedback whether negative or positive. Respond to customers promptly and ask about referrals. Offering incentives such as discounts and free gifts is also a way to illicit referrals from a satisfied customer base.

Ask for referrals from new accounts. Salespeople should be following up with new accounts and this is a good time to ask if the new customer knows of others who could benefit from your products and services. Since the sales process is still fresh in your new customer’s mind, they are more likely to identify similar needs in others.

Ask administrative assistants, operations managers, and support staff—the people who are in direct contact with a company’s network of customers and partners. They are sometimes more aware than their owner or CEO of other companies that might be encountering similar problems or have similar needs.

Asking for Referrals
When it comes to asking for a referral, remember the difference between a closed-ended and open-ended question. Look at the difference:

This is a yes/no, closed-ended question. Compare that to…

Or better yet…

Phrasing your question to be open-ended will solicit more response and you’re more likely to end up with a few referrals.

Make asking for referrals a habit rather than just something you do once in a while when your pipeline is getting thin. If you consistently ask for referrals, others will learn to bring referrals to you as they think of them.

Give out special referral business cards that have a space for customers to write “referred by ___(their company name)___. That way you will know who to thank when another company approaches you with this card.

Remember to reciprocate. Check in with your clients. Ask what they need from you, especially when they have been a good source for referrals.

Selling the Referral
Just because it is a referral, doesn’t mean you change your sales methodology. A referral is no more than a prospect that may perhaps listen to you for a few more seconds because you mention that you were referred by someone they know. You still need to qualify, determine need, customize a solution, and expect objections.

When contacting referrals, mention who referred you, and be specific about what results and value you brought to the company that referred you. You may not even know if the company that was referred to you is a partner or competitor of the company that gave you the referral. Either way, you are safe talking about specific results—in clear, numeric terms when possible. For example:

The bottom line is, referrals are an excellent source for generating additional sales revenue and make the initial call with a customer much easier. Weight lifters understand this basic principle – the longer you rest between sets, the more you are able to lift during your set. Guard against burnout. When you are stressed, overworked, and tired, no matter what you do, you’ll do it much less effectively than when you are focused. Learn to focus and accomplish the most you can in the least amount of time so that you can actually schedule time for rest, leisure, reflection.

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