Ahhhh, referrals. The golden ticket of sales. Wouldn’t it be awesome if 100% of your sales were referral-based? Abso-freaking-lutely!
So why do referrals continue to be a low percentage of the average salesperson’s business?
After coaching thousands of salespeople over the past 25 years, as well as working thousands of referrals in my own business, I clearly see why salespeople don’t get more referrals (and also why they should).
First, let’s talk about the huge benefits of referral-selling and why you should do your darndest to get good at it.
Advantages of Referral Selling
- You are given more credibility. Psychologically, people trust others who are a mutual friend far more than a total stranger. No matter how amazing your product or service is, you will get your foot in the door far easier when you are referred to someone by a trusted source.
- People buy based on the decisions of others. Your prospect Bob is more likely to buy when his buddies Frank, Tom and Jeff also bought from you.
- Referrals are the only way many CEOs and other big names will open your email. If you don’t have “Referred by Tom Smith” in the subject line, chances are that your email is ending up in their trash folder.
- Referrals helps generate more referrals. When a new customer knows you were referred to them, they are more likely to give you additional referrals.
- Your closing percentage will double. Yes, double. At least mine did.
- Your sales job because a lot more fun when you are on a referral streak. Sales is far more fun when you are hearing more ‘Yes’s than ‘No’s.
- Once you get on a roll with referrals, that’s when you can start working fewer hours because you are working smarter (not harder) and your are seeing quality prospects (not quantity prospects).
- Referral-based business has a lower cancellation rate and higher retention rate. You work hard for new business. You want to keep that business on the books, right?
Mistakes Salespeople Make When Working Referrals
- They ask for referrals in way too broad of an area
- As a result, they end up “chasing” referrals across a big city, state or region
- They don’t ask the right way
- They don’t have an organized way to track and map the referrals they are given
- If you are a high-pressure salesperson, unethical or annoying, nobody is going to give you referrals
How to Ask For Referrals the Right Way
First, it’s important to understand that asking for referrals is a mini sales pitch in itself. It’s critical to establish a buying atmosphere and cover objections in this process.
If you just say “Hey Bob, who can you refer me to?” you aren’t going to get a positive response.
A few important notes:
- You want to set the tone that you are happy to show this to everyone, regardless if they buy or not.
- Never use the word ‘referral’ when asking for referrals
- Ask for referrals in a very specific location.
- After you get one or two referrals, ask “Who else would appreciate knowing about this?” (Don’t stop after 1 or 2)
- Use a sales tracking software like Sales Rabbit – you can tag referrals on their mapping system and enter important notes
Here is word-for-word what I say:
Bob, thank you so much for your business. I have one last favor to ask. Everyone (every doctor, every HR manager, every business owner, every mom, insert who you sell to) has been very thankful to know about this. Even the ones who haven’t been able to do business with me have been super thankful I stopped by. Who do you know in this (medical plaza, building, neighborhood very specific location where you currently are) who would appreciate just hearing about this? Would you mind if I jot down two or three people? (break eye contact. Put your head down and ready to write. Don’t say a word. Keep your head down (Your body language communicates ‘I’m waiting for you to give me referrals’)
- If they hesitate and say “Gosh, I just can’t think of any”, help rack their brain.
- Do you need to grab your phone to think of a few people?
- Who is your favorite colleague who works in this building/office?
- Who is the last person you talked to before me?
- Who do you know who needs (insert emotional need your product fills)
- Who are your best friends?
- If they say “I don’t know who would be interested” or “I don’t know who can afford this?” say “Gosh, no big deal at all. It’s important to me just to show this to everyone. Half of the people I talk to buy, and the other half don’t. I just want to give everyone a chance to hear about what I’m doing.”
When you get referrals, make sure you:
- Get as much contact information as you can: First and last name, phone, email and address where they work. If you plan to visit them at their home, get their home address. This is where Sales Rabbit is critical. If they don’t know the exact address, they can at least point to the general vicinity on the map and point you in the right direction.
- Ask them to warm up the situation for you (I never did this myself, but many salespeople I coach say this is working well for them). Say to your customer “Would you mind dropping Steve a text and letting him know I’ll be calling him. Just something simple like ‘Hey Steve, a girl named Kate will be calling you. Give her a few minutes of your time. She has something you might want to take a look at”. Coach your customers how they can help you out.
- Say ‘thank you’. Referrals are a gift, not required to be given by your customer.
- Offer referral incentives. People love to eat. If more than one person bought from me, I would call my customer and say “Hey Bob, your friends Jeff and Steve both bought from me. As a thank you, I’d like to have a pizza delivered to you. What type of pizza do you like and what time do you eat lunch?” A large pizza only cost me $10 – but the response was overwhelmingly positive. You can call the pizza delivery company, pre-pay and set a day and time to have the pizza delivered. Takes the load off your back.
- Be exceptionally kind to someone’s referrals. If you call on someone and they happen to be rude or cold, simply say ‘thank you’ and move on. If you get testy with a referral it will blow up in your face.
How to Approach Referrals
You now have referrals. Hooray! Now you want to get your foot in the door with this person.
Your approach should be extremely short. Do not add extra language. It does not work.
This is what I say:
Hi, is this Bob? Hey Bob, your friend/colleague Frank Smith suggested I introduce myself to you. I’m the one talking to all of the (doctors, attorneys, moms, HR Directors) about a/that (product sexy description) that (product emotional purpose). Frank thought you would appreciate knowing more about it. I’m going to be in your building tomorrow morning and also Thursday afternoon. Which of those could I catch you for a few minutes?
What Is ‘Product Sexy Description’ and ‘Product Emotional Purpose’?
I have sold educational books and cancer insurance. But I never said when I approached a prospect ‘I’m selling cancer insurance’. How unsexy, right?
My sexy product description for cancer insurance was “I’m talking to all of the families about a program that protects your family financially when you go through cancer.” Now that got their attention.
(‘A program’ was the sexy product and ‘protects your family financially when you go through cancer’ was the emotional purpose)
When I sold educational books, I didn’t say “I’m selling educational books”. My sexy product description was “I’m showing all of the moms an educational system to help save time with homework in the fall.”
(‘an educational system‘ was the sexy product description and ‘to help save time on homework in the fall‘ was the emotional purpose)
Does this make sense? What is your product or service’s sexy description and emotional purpose? Write down the approach I gave you above word-for-word and insert the language relevant to your business. Stick with this. Don’t add anything extra. It works!!
It takes time to get good at referrals. You must commit to it 100%. I have worked with many salespeople who “try it” for two days and then say “it doesn’t work”. Agh!
On average, it takes 60-90 days, going through the motions every day, just to get comfortable asking for referrals. And it will take longer to really get on a roll with referrals. The quicker you commit to it, the quicker your learning curve will go by.
But once it clicks, the heavens will open, the birds will start singing and you will be on track for your best year ever.
Have fun out there and share your referral stories below in the comment box!