Most salespeople and entrepreneurs appreciate the power of referrals. Receiving a strong endorsement and warm introduction from an existing client is incredibly valuable. Referrals get your emails opened, calls returned, and sales meetings scheduled. If you are introduced to a prospect through a referral, it can accelerate the sales cycle and increase the likelihood of the deal getting closed.
Referrals work for two reasons: Trust and social proof.
Usually when you approach a prospect, the customer’s defenses go up. This might be because of a negative prior experience – a purchase gone bad or a general resistance to “being sold.” In either case, it’s because they lack trust and confidence. Salespeople can obviously rebuild this through empathy, professionalism, credibility and reliability. But if the prospect is introduced by a friend/colleague, their defenses are slightly less triggered.
The social proof provided by a referral helps prospects manage the risk of making a mistake. It explains why companies plaster the websites and pitch decks with logos of prominent clients. It also makes it easier for prospects to assume that having a sales conversation with you is worthwhile, if it comes from someone they respect who you’ve also spoken to or worked with.
Given their effectiveness, here are some actionable guidelines on how best to use referrals to ramp up your sales:
Develop the Habit
The most important step in harnessing the power of referrals is to develop a habit of asking for them. You will rarely receive what you don’t request. Therefore, an effective salesperson needs to embrace referrals as an important part of their job and request them at every possible opportunity.
One simple step might be adding a statement that you welcome referrals at the bottom of your email signature. You can also remind customers to make referrals at the end of each invoice – sometimes with a significant incentive attached, like a gift card or ipad.
Develop a regular habit of asking the question: “Do you know anyone who can benefit from having this conversation?”
Delivering this question ideally occurs face to face, but you can also do it over the phone. This question should coincide with the salesperson delivering value. Take note that a referral request can be made after the first sales conversation, assuming it goes well.
Not all requests will be successful, but a surprising number will lead to new potential clients. The secret is developing the habit of asking, regardless of the consequences. Commit to making the request at the end of every sales conversation or setting weekly goals. The focus should not be on the result, but on building the muscle to ask.
Social media is the one of the best things that ever happened to the sales profession. LinkedIn probably made the biggest difference, by encouraging people to post their resumes online and connect to professional contacts.For a salesperson, this information allows you to locate target customers. It has revolutionized the referral game, by allowing you to see who your contacts are connected to.
Follow these steps to boost referrals on LinkedIn:
- Connect to all prospects and current customers on LinkedIn
- Before making the request, search through their contacts for 5-10 well-targeted prospects, employed by your ideal customers
- No more than 5-10 prospects or you risk coming across as greedy or overly demanding
- Print out the list, edit for professionalism, and present on nice looking letterhead
- At the end of a conversation with a prospect or customer, ask whether they found value in your conversation. This puts them into a positive, reciprocating mindstate.
- Make the request as follows:
- Tell the prospect/client that your business is built off referrals and people you meet who know the value of your service
- State your “marketing research team” noticed that they had connections to individuals who work at target firms. (Show the prospect your printed list)
- Explain that you’re planning to reach out to these individuals/companies, but would like to tell them you’ve spoken to/worked with the referrer
- Ask whether the referrer would be OK with using their name when reaching out
- Promise not to use the referrer’s name with anyone they don’t select.
- Wait for response
More often than not, the referrer will select the names of two types of people: (1) close contacts or (2) people they only barely know, with whom they wouldn’t mind losing credibility. This is to manage the referrer’s biggest fear – that you’ll bother their contacts and they’ll lose status with the person they’ve referred. Understand that some of those referrals will not be as strong as others, but you’ll have them and still be able to reap the benefits of having a referring name.
After the referrer has selected contacts from the list, thank them and reiterate your promise not to reach out to those they didn’t approve. Offer to send the referrer a draft of the email language you plan to use or copy them on the first email. Most referrers won’t take you up on these, but they will appreciate your effort.
Ask for Introductions
An alternative to a LinkedIn approach is to ask the referrer to make the introduction for you. This holds greater influence and maximizes the odds of getting the meeting. It also leaves the execution and timing of a referral in the hands of your prospect/customer.
This is not always an ideal alternative, as the referrer is significantly less interested than the salesperson in actually making the introduction. It is much better for the salesperson to retain control of the process, and accept whatever lower efficacy occurs by being the one reaching out.
Trust in a salesperson can also be hurt if the referrer later speaks to one of the people he or she approved on your list and discovering that they never reached out. There’s no excuse for this. Follow through on your word by reaching to leads promptly.
When doing so, it’s best to reference the referrer early in the contact. One successful tactic is to include their name in the subject line of the email – for example, “Intro from XXXX.” If possible, raise a commonality shared between you. Suggest that the target’s name recently came up in a conversation with the referrer, as someone you should meet. It is important to establish relevance, by touching on the general topic of the sale.
A personal touch goes a long way. Try sending a handwritten note thanking your prospect or customer for the referral. Personal letters stand out and reinforces your professionalism. Inform the referrer about possible meetings that came out of their referral. This keeps them in the loop, while also alleviating any residual fear of connecting you to their professional contacts. A small gift to the referrer is appropriate if any business comes out of their introduction. This shows appreciation for their efforts and increases the likelihood of future referrals.
Introductions from prospects and existing customers decrease buyer resistance and accelerate sales by leveraging trusted networks. Receiving warm introductions from common ties is the most effective and efficient way to connect with new people.