Articles
How to do referrals the right way
If salespeople should avoid asking for referrals,
then how should they leverage their customer relationships to grow their
business?
by John GrahamWhat sounds good doesn’t always work very well
If referral programs were as successful as their advocates claim, there would
be so much new business that the need for prospecting, marketing, advertising
or selling would disappear. It’s blatantly obvious, however, that this
isn’t the case.
For the most part, “asking for the referral” is a con job on salespeople.
Rather than give them the marketing and sales support needed to attract customers,
the onus is placed on them to schlep around to find someone who will listen to
their story. In other words, most salespeople who say they “work only by
referrals” don’t eat too well. Sure, a small percentage may actually
achieve this goal, but to suggest that most salespeople should expect to have
a high level of referrals is fantasy.
There may have been a time when customers were willing to give salespeople names
of friends and associates, but not today. We don’t want to do anything
that might disrupt a relationship. What if the salesperson offends our referral,
even inadvertently? Will the recommendation come back to haunt us? What if the
friend buys and is then disappointed? How will that reflect on us?
Why asking for referrals hurts sales
Is there ever a good time to ask for a referral? To make it as easy as possible
to understand, the answer is no. That’s right. Never, ever ask for a referral.
Here are the reasons why:
1. Asking for referrals harms the customer-salesperson relationship. More
often than not, the salesperson asks for referrals just as the sale is
concluded. “There’s just one question I would like to ask you,
Ms. Yeager, who of your friends and associates could benefit from my services?” However,
the question is phrased, it sends a powerful message: Am I being used?
Worse yet, it places the customer in an uncomfortable position of having to do
something more for the salesperson. “I have just given the salesperson
the order and now she wants me to do more for her. It should be the other way.” Asking
for a referral just after the deal is done is courting disaster. It sends the
message that the sale is all about the salesperson, not the customer.
2. Asking for referrals sends the wrong message. A few days after buying
a new car––but before I took delivery––a letter arrived
from the salesperson congratulating me on my purchase. I appreciated the gesture––until
the last paragraph. It was there that the letter lost its effectiveness––the
salesperson asked for referrals. I had not even taken delivery on the car and
I was being asked to make recommendations. But even if I had been driving the
vehicle for a few days, asking me to be a shill for the salesperson is insulting.
How much more effective would it have been if he had sent a letter congratulating
me on my purchase, expressing his personal commitment to serving as my liaison
and advocate with the dealership. How would you respond if salespeople described
how they were going to serve you and then did it? You’d be comfortable
recommending them to just about anyone.
3. Asking for referrals can blow the opportunity to write new business. This
is, by far, the major reason why referrals fail. The customer gives you a couple
of names or even contacts the people on your behalf. While this may seem to give
you a proverbial leg up, it doesn’t mean you’re going to get the
account or make the sale––or get an appointment.
The referral problem
Just because you receive referrals doesn’t mean they are either interested
or ready to buy––even though they are qualified prospects. It’s
the process that’s the problem. Here’s what happens: You give me
a referral when I place the order, renew the policy or make the purchase. Then,
a day or two later, I call the person to get the appointment. In reality, it’s
little more than a cold call. I may get a courtesy appointment. The chances of
closing the sale are diminished.
What does all this mean? The goal of the astute salesperson is
to find ways to create customers––not just to find someone
to make a pitch to. It’s to prepare the soil properly so the seed
(lead) grows into a customer––someone who places the order.
Turning referrals into customers
It’s absolutely true that customers can be a source of new business. And
implementing a process that achieves this goal can maximize their effectiveness.
Here are some suggestions for accomplishing this objective:
1. The post-sale letter. After a sale, write a letter to the customer expressing
your personal appreciation for the order and indicate you will be staying in
touch regularly. If the customer doesn’t already receive your newsletter
or e-bulletin, let them know they will be receiving them.
Then add, “Most salespeople ask for referrals at the time of a sale or
in the days that follow. That’s not what I do. I want you to be satisfied
with your purchase, with me and with our company. I recognize this takes time.
Some months from now, I will ask you for suggestions of those who might benefit
from receiving my newsletter and e-bulletin and seminar information. My approach
is to give them an opportunity to get acquainted with what I do and how I work
before contacting them. I find this is a good way to build my business.”
2. The prospect contact letter. After receiving the names from satisfied
customers, the next step is to start the cultivation process. The first contact
letter includes who gave you the person’s name, the length of time the
individual has been a customer (very important to show satisfaction), and how
you are helping the customer. The letter then indicates that you will be staying
in contact with the prospect and that they will be receiving information regularly.
Finally, invite prospects to contact you if they have a need.
3. The 90-day call. While it might be longer, it should certainly not be
sooner than 90-days. The goal is to let the prospect “get acquainted”
with you and what you do before making personal contact. The call may result
in an appointment; if it doesn’t, let the person know you will continue
to stay in touch. If an appointment doesn’t lead to a sale, let the
prospect know you will continue to remain in contact.
If it seems as if this process is demanding, requires careful management, good
planning and consistent execution, it does. That’s what makes it work.
Without it, it’s just business as usual.
It’s so much easier just to ask the customer for names and hope to get
one or two. If you luck out, then make the calls and keep your fingers crossed
there will be a live one.
Whatever else this is, it’s an inefficient way to prospect. If it were
so successful, then why are salespeople always asking for leads? It doesn’t
work and that’s a fact every salesperson knows too well.
Sure, there are exceptions. But that’s the point: they are exceptions.
Of course, what’s needed is a systematic approach to prospecting, one that
operates in the background day-in-and-day out, and, more importantly, one that
is successful.
John R. Graham is president of Graham Communications, a marketing services and sales consulting firm. He is the author of The New Magnet Marketing and Break the Rules Selling, writes for a variety of business publications, and speaks on business, marketing and sales issues. Contact him at 40 Oval Road, Quincy, MA 02170; 617-328-0069; jgraham@grahamcomm.com.