Asking a client for a referral is like asking a friend to set you up on a blind date.
You’re a little nervous; after all, you’re admitting that you can’t find this person on your own. But you also know that you might just find your next true love — or huge deal.
But the probability of success depends on whom your ask. Not only do you need to phrase it correctly, but you need to focus on referrals throughout the sales process so your customer is primed to say, “Yes.”
You’re probably familiar with the reciprocity theory. This theory states that when someone voluntarily does something for you, you feel compelled to return the favor.
Many salespeople say, “Well, I’m doing a great job — so why aren’t my customers reciprocating with referrals?”
Well, to the customer, the salesperson’s “reward” for doing his or her job is the sale.
To take advantage of the human inclination to reciprocate, you have to go above and beyond.
Adam Peterson, a salesperson for Morris & Garritano Insurance in San Luis Obispo, California, said that he tries to stand out from “the typical salesperson,” by “expressing an interest in them, asking a lot of questions, demonstrating my curiosity, and ultimately building a relationship.”
For example, maybe he learns that his client loves barbeque — so in thank-you note after the sale, he include a recommendation to a local barbecue joint.
Basically, you should be constantly thinking, “If I were the customer, what would I expect?” Answer, and find a way to exceed your answer.
As Peter Levitan, author of Buy This Book. Win More Pitches, explained: “Happy customers or clients — I like to call them ‘delighted customers’ — want more of your services, spend at a higher margin and will gladly make introductions to their colleagues and friends.”
Set up a referral rewards program
The reason many referral-rewards programs fail is because they tend to generate sub-par leads. Maybe Person A would never have referred Person B . . . except you offered a 10% discount, and now he’s willing to refer Person B and Person C.
The best way to get around this problem? What Levitan calls “intelligent execution.”
We suggest refraining from announcing to customers that you’re giving out bonuses. Instead, wait till they’ve referred someone, then reward them.
It might seem counterintuitive, but here’s why it works.
Person A: Hey, you know how I just referred you to that company?
Person B: Yeah, I’m actually speaking with one of their reps later this week.
Person A: If you go with them, you should definitely refer someone yourself. They gave me a huge discount because they were so appreciative I passed along your name!
Person B: Hmm, I wonder which contacts I have who’d be interested in this product...
By generating positive word-of-mouth around your referral campaign, you’ll prime people to generate positive word-of-mouth around your product.
Incorporate referrals into your sales process
While you don’t want to annoy your customers with never-ending referral requests, you do want to make it clear you’d appreciate introductions or leads.
How do you communicate this desire? Build it into your sales communications.
Peterson will identify who he’d like to be introduced to before his first meeting with a client.
“I’ll visit their LinkedIn page, see whom they are connected to and write down the names of those connections whom I would be interested in working with,” he said. “At the end of our meeting, I’ll ask my client if they can introduce me to those connections.”
Alternatively, Adam Buchbinder, a salesperson for Boston-based Listen Current, suggested that, when you first start talking to a potential customer, say, “My goal is to make you so satisfied that you introduce me to two other people who could benefit from our product.”
Once you’ve cultivated some goodwill, he said you can gently ask, “Would you be open to introducing me to one or two people you know who might also like (product name)?”
To make referrals part of your sales process, schedule “referral request” as an activity in your CRM. You should plan on asking each customer one to three times.
Make referring easy
Many customers will reject your request simply because referring takes energy. So, to boost your referral rate, Buchbinder suggested making the process as painless as possible for your customers.
First, define for them exactly whom you’re trying to meet.
Here’s an example: “I’m looking for middle school teachers at medium to large schools who want to automate their grading process.”
(Not only will being so specific help the person doing the referring, it’ll also improve the quality of your leads.)
Next, give customers a template they can use to make the connection. This template should include an explanation of who you are, how your client knows you, the product and why your client is introducing you to this third party.
“This reduces the time and effort required for a customer to refer new business, and you own your company’s messaging,” Buchbinder said.
The best way to refine and improve your referral strategy? Keep track of what works and what doesn’t.
If you’re logging your referral requests and keeping track of who’s referred whom — which you should be — looking at the bigger picture is easy.
Go to the Statistics section of your dashboard, and look at the number of referral requests you made versus how many you added. If those numbers aren’t close, ask yourself why.
Need a final dose of motivation? In 2011, a research study published in the American Journal of Marketing found that referred customers have a higher retention rate and are more valuable than customers brought in through traditional methods. So if you’re trying to boost your sales numbers, getting referrals will definitely help.