If you read my initial blog post here at AllBusiness you’ll recall the theme of my discussions here will be how to grow your sales in the context of the current recession. I mentioned that I’d be looking at a number of traditional prospecting and personal marketing methods, looking for ways to make them more effective, as well as addressing some less used strategies.
Let’s start with one of the potentially most effective growth strategies available to sellers that is also one of the least productive—referrals.
For most sellers, referrals really are the single most productive pipeline building strategy there is.
Yet, asking for referrals is probably the biggest time and energy wasting prospecting method next to cold calling for most sellers. In fact, it is such a pathetic waste of time that over 30% of sellers never even ask for a referral and another 30% only ask on occasion. That’s over 60% of sellers who are so enthralled with referrals that they’ve virtually completely eliminated them as a business building tool.
You have probably received the same referral training most of us in sales have received—virtually none. More than likely your training consisted of being told to do a good job for your customer and then after the sale, ask every client or customer for the name and phone number of someone they know who might be able to use your products or services.
If you received “advanced” referral training, you were taught to ask for referrals more than once.
If you learned to sell in the financial services arena, you were probably taught some variation of “I get paid two ways, the commissions I earn and the referrals you give me.”
Certainly, “asking” for a name and phone will on occasion get you a new client. A few sellers have even managed to build their businesses by asking each of their customers for a name and number or two. But most salespeople have found “asking” to be close to worthless.
For good reason.
The vast majority of sellers find that most of the names and phone numbers they get from clients are no better prospects than if they had just opened the phonebook and pointed at names at random.
The problem isn’t with the concept of referrals. As I said earlier, referrals can and should be the foundation of most salespeople’s business.
The problem is that what you’ve been taught is completely, totally, 100% wrong.
Simply “doing a good job and asking for referrals” creates so many problems that it actually discourages clients and customers from giving you a quality referral, much less giving several quality referrals.
How can asking a simple favor of a client create so many problems that it ends up discouraging them from doing what you asked?
Think about how most sellers ask for a referral. Typically they’ll say something like:
“Ms. Client, most of my business comes from the referrals my clients give me, who do you know that might be able to use my products or services?”
Or, “Ms. Client, if you happen to run across someone who might be able to use my products or services, I’d appreciate it if you’d give them my card.”
In most instances these questions are asked after the sale has been completed, the service or goods delivered, and the seller is following up with the client. Many times the question is asked literally as the salesperson is walking out the door.
In my next post I’ll discuss a process that turns the worthless effort of “asking” for referrals into a disciplined, predictable, effective process to generate referrals, but before we discuss that, we have to understand what the problems are with the typical way salespeople try to get referrals so we know what not to do.
Why Asking for Referrals Doesn’t Work
That innocent sounding referral question creates a whole host of issues that prevent the salesperson from getting quality referrals:
? It ambushes the client. The subject of referrals has not been mentioned until the last second, as the salesperson is wrapping up with the client. Then, without warning the salesperson is putting the client on the spot asking an unexpected question and standing waiting for an answer. This is generally an uncomfortable moment for both the salesperson and the client. The salesperson instinctively knows they’ve put their client in an uncomfortable position and the client resents being cornered.
? Doesn’t give the client time to get comfortable. Certainly there are some clients who will gladly give referrals at the drop of a hat. Most clients, however, need time to get comfortable with the idea of giving referrals. For us a referral is simply a suggestion of someone the client knows who may be in the market for our product or service. For the client a referral is far more serious. A referral for the client is an endorsement, a statement to the referred prospect that the prospect should trust their judgment and that the prospect doesn’t need to investigate alternative sources because the client has already done so and this salesperson and their product or serice is the best around. That’s a big statement for a client to make and they must be given the opportunity to become comfortable making that statement.
? Doesn’t give the client needed information. Most of the time the salesperson doesn’t even define for their client what a good referral for them is. They assume the client understands who they’re looking for. Bad assumption. While the salesperson is standing there thinking, “Give me someone just like you,” the client is standing there thinking, “What does this person what and how do I get rid of them?”
? Doesn’t give the client time to think. Typically the salesperson is literally, or figuratively if on the phone, standing in front of the client waiting to get a referral or two. The client only has 10 or 15 seconds to go through their mental file cabinet to come up with one or two quality referrals. That, for most people, simply isn’t realistic.
? Doesn’t give the client a reason to give referrals. As mentioned above, there is a relatively small group of clients who will gladly give referrals when asked. Most clients, however, are reluctant to give referrals. Since clients are human, they tend to do things for the reason most humans tend to do things—they perceive them to be in one way or another in their own interests to do them. Asking for referrals doesn’t give them a “what’s in it for me.”
? Doesn’t give the client an objective way to determine if you’ve earned the referrals. Not only do clients believe that when they give a referral they are putting their reputation on the line with the referred prospect, most also assume that the person they refer you to will be more critical and more demanding than they have been. They must know that you will not embarrass them. They need assurance that you will do exactly what you say you will do. They need an objective way to determine whether or not you have earned their referrals, and simply asking for referrals at the end of the sale doesn’t do that.
? Makes the client do all of the work. Even if we give the client a reason to give referrals, the primary beneficiary is us, not the client. Asking for referrals is asking our client to assume the burden of doing our prospecting for us. Without our help and guidance, that is asking more from our client that should be expected.
What Must A Referral Process Do?
What then must an effective, disciplined, predictable referral generation process do in order to be successful?
? Give the client plenty of time to become comfortable with idea of giving referrals
? Let the client know exactly what constitutes a good referral for us
? Give the client plenty of time to figure out whom to refer
? Give the client a good reason to give referrals
? Give the client an objective way to determine whether or not we’ve earned their referrals
? Make it easy for the client to give a number of high quality referrals by us doing most of the work for the client
Instead of wasting time and effort asking for referrals, we have to have a process to generate them. Next post, we’ll dig into what that process is.