Building Your Business Through Quality Referrals

Keeping the pipeline well stocked with new prospects and new opportunities is a critical prerequisite for sales success.  For many salespeople, it means spending a substantial amount of time on the phone cold calling prospects who may not even want to speak to them.  For most, this activity is at best a necessary evil they would gladly trade off for more time spent with their customers.

For a few exceptional sales professionals, a well-stocked pipeline is a reality.  They have been able to achieve a continuous, seemingly effortless flow of new prospects and customers, all while investing less time on cold calls.  In fact, when they are on the phone, they are usually talking to qualified prospects who certainly want to take their calls or at least finding themselves engaged in a very intriguing conversation.

What is their secret?  They have the ability to get a high percentage of their business from customer and prospect referrals.

Making a “simple” request for referrals is one of the most commonly recommended and frequently neglected strategies for building business.  Though a referral conversation is one of the most important conversations a salesperson can have, most pay little attention to it and miss valuable opportunities.  Often, salespeople find that their requests for referrals fail to yield good quality results, even from satisfied customers who are willing to give them a lead.  Most do not consider the possibility of asking prospects for referrals, even prospects who turn out not to be good candidates for quality business.

Let’s take a look at why so many requests for referrals produce so few useful results, and how it is possible to have profitable referral conversations with both customers and prospects.

For starters, when salespeople do ask for a referral, they simply ask for a name. “Do you know anyone else who would be interested in our solution?” or worse, “Do you know anyone else thinking of buying one of these?”  If you put yourself in the position of a customer or prospect being asked, it’s obvious this is not really such a simple request.  To respond properly, the customer or prospect must think of another person and his or her business situation, guess the potential level of interest, and predict whether the individual might buy — and especially from this particular salesperson.  No one wants to lose respect from a peer by sending a salesperson to them who will intrude on their valuable time. The potential risk is that someone will act in less than a professional manner and want have a sound business case for being there in the first place.

Salespeople might not think they have asked for all that analysis, but the truth is, that’s exactly what they are asking a customer or prospect to do. If people don’t think through all these issues thoroughly, they may fail at providing a referral, or the referral will fail to provide results.  Consider the typical responses to the request, which often sound something like, “Not off the top of my head, but if I think of anyone I’ll let you know,” or “I’m not sure I can give you a name right now, but I’ll keep it in mind.”  At some level, customers realize this is a poorly defined, unrealistic request that carries a high risk of failure.  It’s not surprising that the response gives us “nothing.”

So let’s go back to those sales professionals who are so successful, and consider a very different, but exceptional approach.  The secret is in knowing when to ask for the referral and what to ask for.  In the case of a customer, the “when” is logically right after you’ve delivered your product, service, or solution and your customer is experiencing the value they were expecting.  At this point, your customer should have a clear awareness of the value delivered, and will have a correspondingly high sense of satisfaction.  For a prospect, the “when” is the point in your diagnosis when you realize they aren’t experiencing the issues you are able to address, and you’ve suggested that they may not require your solution.

The “what” should focus on recognizing symptoms or indicators of issues similar to the ones you have been discussing, or which you have helped your customer resolve.  The questions you might ask include:  “Have you heard others in the organization talk about experiencing similar symptoms to what you were seeing?” or “When you meet with your peers in similar businesses in your industry, does this issue come up…and if it does, does it ever seem to be a pressing concern?”
When you ask the question this way, you are not asking the customer to take a risk.  Rather, you are asking them for a factual observation that does not require them to qualify and pre-sell the referral.  You’re simply asking if they know of someone who has the symptoms.  When they do give you a referral, it’s your job to determine if the symptoms exist and if you can help provide a solution.

By using this approach, you are using processes and skills that are very similar to those of a doctor.  In our research, we’ve found that the characteristics of an exceptional sales professional are similar to those of a good physician. Using this analogy, it is easier to understand why even a prospect might respond favorably if your request for a referral follows a thorough and professional diagnosis, even in those cases where the outcome was discovering that your solution wasn’t required.  Think about whether you might refer a friend to a doctor who did a great job of diagnosis, and found that you did not need surgery after all, or uncovered an issue that is of great concern and detrimental to your well being.

When you take the time to conduct a careful diagnosis of the business situation, both customers and prospects recognize that they are receiving value from the substance and style of your communication.  They are far more likely to share names and will be confident that their peers and colleagues will not be subjected to a hard sales pitch.  These names will also have a much higher probability of being the high quality leads you need to create a rich pipeline and to expand a profitable portfolio of business.