Referral sales is a valuable tool that sales reps can use to get new business. According to SaaSquatch’s 2020 State of Referral Marketing report, referred customers are 18% more loyal, spend 13.2% more money and have a 16% higher lifetime value than non referral customers.
So, if you’re trying to boost your sales numbers and improve your bottom line, getting referral sales will definitely help.
That said, the probability of success depends on whom and how you ask. Not only do you need to phrase sales referrals correctly, you also need to focus on referrals throughout the sales process so your customer is primed to say “Yes".
In this article, we’ll share advice for how to ask for referrals in sales the right way.
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 new clients, the salesperson’s “reward” for doing their job is the sale.
To tap into the human inclination to reciprocate, you have to go above and beyond by nurturing customer relationships.
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 barbecue so in a thank-you note after the sale, he includes a recommendation to a local barbecue joint.
Basically, you should be constantly thinking, “If I were the customer, what would I expect?” Think of an answer, and find a way to exceed those expectations.
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.”
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 when figuring out how to ask for referrals in sales? What Levitan calls “intelligent execution”.
We suggest refraining from announcing early to customers that you have a referral program and you’re giving out incentives. Instead, wait till they’ve referred someone, then reward them for every successful referral. This could be in the form of rebates, gift cards or other things to delight your customers.
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 or testimonials around your referral campaign, you’ll prime your customer base to help by referring new customers for your product/service.
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 can account executives like you communicate this desire? Have your sales team build it into your sales communications.
Peterson will identify who he’d like to be introduced to before his first meeting with a client by doing research on their social media networks.
“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 if you need to follow up.
Many customers will reject your request simply because referring takes energy. To boost your referral rate, Buchbinder suggested making the process as painless as possible for your current 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 text or email template they can use to make the connection. This referral email 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 customer 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 metrics for referral requests you made versus how many you added. If those numbers aren’t close, ask yourself how you can further integrate customer referrals into your sales strategy.
Need a final dose of motivation to refine your referral process? Referral sales often lead to customers that generate higher margins with higher retention rate and customer lifetime value. These benefits should give you ample reason to use customer referrals for lead generation and outreach sales.
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