Referral selling: A strategy that will leave your competition in the dust

Salespeople who contact prospects through referrals have a 75% chance of converting them to customers. Compare that to the roughly 3% payoff for salespeople making cold calls.

There’s no other sales strategy that delivers more qualified prospects to a salesperson’s door that referral selling.

Four other benefits of referral selling:

1. Reduced prospecting time. You get to see prospects who want to meet with you. You skip over the awkward first steps involved in cold calls. When you’re referred, the sales process accelerates quickly, because you don’t waste a lot of time trying to see people who don’t want to see you.
2. Increased revenue and profits. Referral customers buy more and have more loyalty over the long term. They are less likely to complain about price, so profit margins may increase.
3. Obtains customers faster. For every four potential customers a salesperson meets, three of them will become regular customers.
4. Eliminates unproductive selling. Referral selling allows salespeople to spend less time prospecting while getting more business. They spend their time on viable business opportunities, not chasing after business that has a slim chance of closing.

You have to ask

There are three reasons why you have to cultivate referrals instead of waiting for customers to offer them:

1. Customers don’t spend their days worrying about how to grow your business. They are focused on their own businesses and challenges.
2. Good work is not enough to automatically win referrals. We assume that if we’ve delivered results for our customers they will refer us. Maybe, maybe not. Customers are focused on the day-to-day workings of their businesses. It’s not a top priority for them to refer us. Some may even believe that if they refer us, we will have less time to dedicate to their priorities.
3. We might appear to be too busy already. Some salespeople assume that appearing to be incredibly busy with customers sends the message that they’re successful enough already. The fact is that if a salesperson appears overwhelmed, why would a customer try to overextend him or her?

Before you ask

Before you ask for referrals, try to remind customers of the value of the results you deliver. Pinpoint results they have achieved by working with you. Remind them of why they made the decision to buy from you, and try to find out specifics about how your products, services or solutions have impacted their business results.

Here are a few questions that may help you get the information you need:

• How does your customer feel about the service you have delivered? What has the customer’s experience been working with you?
• Why did the customer choose you over the competition, and has their judgment been validated?
• What results have been achieved, what savings in dollars have been realized or what problems have gone away?

Contact them now

When you ask for a referral, you’re asking for immediate action. It’s critical that you ask your referral source to introduce you to the prospect now while the benefits you offer are still clear.

If you call someone who doesn’t know you and is not expecting your call, you’re performing a cold call. Think of the difference between calling and using someone’s name versus calling after you have been introduced.

Here are three acceptable ways for a customer to introduce you:

1. Phone. Ask your customer to call the contact. It’s best if the customer picks up the phone now and calls while you’re still in the office. It’s also acceptable if he or she agrees to make the call in the next few days. Follow up until the call is made.
2. Email. Some customers may prefer an email introduction. E-mail introductions may produce significant results. Suggest that you be allowed to provide some of the text. Try to keep it short, in bullets and aimed at the needs of the prospect.
3. In person. If your customer has a close relationship with the person being referred, an in-person meeting may be in order.

Give thanks

Always thank your referral source for making the referral, regardless of the outcome. Keeping in touch with your referral source over time will ensure you have a great source for further referrals.

Voice mail or email may be in order, but sending a handwritten note may have a better payoff. Most customers get so few handwritten notes today that when someone takes the time to send one, it stands out.

Adapted from “No More Cold Calling,” by Joanne S. Black, a recognized expert in referral selling and her clients include Charles Schwab, the Marlin Company, the Mechanics Bank, Wells Fargo Bank, and the California State Automobile Association.