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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?
What 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.
© 2005 Graham Communications
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John R. Graham is president of Graham Communications,
a marketing services and sales consulting firm. Mr. Graham is the
author of four books on marketing and sales, including Break the Rules
Selling: Success Strategies that Beat the Competition (Superior Books).
Mr. Graham writes for a variety of marketing and sales columns for
business and trade publications and he presents his Magnet Power presentations
at company and association meetings. He can be contacted at 40 Oval
Rd., Quincy, MA 02170; by telephone at 617-328-0069; by fax at 617-471-1504;
or by email at j_graham@grahamcomm.com. The web site is grahamcomm.com. |
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