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Growing your Revenue through Referrals
By: Alan Roberts
One of the best techniques for acquiring new business is not through cold calling or prospect lists. Yes, you heard right. The best method for new business comes through referrals from your existing customers.
Why is the Referral so Valuable?
1. 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 steps of selling.
2. Referrals extend the network.
You widen the circle of relationships with each new referral, thereby increasing your ability to tap that network for additional business, new business and additional referrals.
3. Referrals add value to the source of the referral.
When you follow up on the referral, get the business and create a delighted customer, value is delivered to the party who gave the referral. The referral source is credited and often thanked by your new customer. Many industries emphasize value by offering credits for those who refer new business.
4. 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 we make often require proof for credibility in the eyes of a prospect. 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 a referral from an existing customer or business associate, there’s more than simple familiarity working in your favor. You’re tapping into strong, existing relationships, which can and do accelerate your ability to obtain new business.
We know that trust is a strong basis for the buying decision. In typical selling situations, trust is the first and foremost issue in the mind of prospects. "How do I know I can trust this person and this Company," the prospect asks himself/herself. 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 percent of the process, followed by uncovering needs, presenting solutions and asking for the order. The value of the referral in this sense is simple. 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.
Where to Look for Referrals
So where can you find the best referrals? Here are a few places to look:
• Customers: This is obvious in the sense that most referrals come from delighted customers. It is mentioned here because we often fail to ask long-standing clients or customers on a regular basis, such as monthly. When they love you enough to continue doing business with you, it’s very likely that they can and will continue to send new referrals for additional business. When these customers mention to the referral how beneficial you’ve been to them, the referral is much more strongly predisposed to do business with you as well.
• Friends: Your circle of friends can be a tremendous source of referral business. Because of this, it’s important that your close friends know what you do and how you add value to your existing customers. When your friends also understand your ideal customer or client profile, they’re better able to look around for prospective referrals for you.
• Family members: This is a red flag for many who have sworn not to mix business with family. Nonetheless, those who have benefited from referrals through family know the value of asking politely and following up promptly.
Obtaining the Referral
As mentioned above, people you already know, both inside and outside of our business relationships, can provide valuable referrals. These people aren’t likely, however, to seek 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 very 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 “my company”?" 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 yeses. Compare this more specific approach: "Which businesses in your office complex could benefit from our services?" By being more specific, you’ve both helped the referral source focus on a single area and increased your chances of getting a name or two. For referrals in the same company: Is there another department in your office who could benefit from our services?”
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 our company?" 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 with him/her as a competitive advantage.
Contacting the Referral
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 his/her name has been passed along. The more time that passes between that communication and follow up, the colder that opportunity can become. Leaving a long time between the two events might be interpreted as not caring much about 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 you need to follow up quickly and professionally to make the most of the referral opportunity.
Equally as important as the timing is your approach in the initial contact. Often we’re unsure of the level of relationship between the referral source and the referral. To compensate for this lack of information, you need to make our approach as strong and effective as possible.
With very little planning or forethought, you might say, "Joe Jones said I should call you." This puts the burden of detective work on the referral and could start things off in 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. As a result, you put 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 you. To show your appreciation and to keep the pipeline full of future referrals, you should 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.
One Final Tip
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.
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Alan Roberts has been a senior executive in the Graphics Arts industry for more than 30 years with two of the largest print-for-pay organizations in Canada as Vice President Marketing and General Manager. Currently, Alan is Director of Operations for Patient News Publishing in Haliburton, Ontario. Patient News Publishing provides direct marketing products and services for the dental industry throughout North America and the UK.
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