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Most sales professionals wrongly believe that a referral takes place when a customer is nice enough to give you the name of another potential customer. Referrals don't have much to do with friendliness but are rather about risk and trust. To make referrals, your customers must be willing to risk their credibility and/or relationships with others -- because when they pass on friends or business contacts to you, they trust you to deliver top-notch products and services.
Therefore, as Jeffrey Gitomer, author of The Sales Bible, argues, referrals collectively serve as your sales report card, because they tell you how good you are at building business relationships. As explained in an article in Selling Power magazine, Gitomer reasons that referrals are not given, but earned.
Which Referrals Are Most Valuable?
Some referrals are more valuable than others. The least valuable is a solicited referral, which is what happens when you request and receive a referral from an existing customer. More valuable is the proactive referral, which is when an existing customer calls to give you the name of a potential new customer without you requesting it. The most valuable referral is unsolicited, in which an entirely new prospect calls, because an existing customer recommended you.
Timing Is Everything
Most salespeople are told to solicit a referral whenever they close a sale. However, at this point, the customer is taking a risk by buying from you. Why would the customer compound it by immediately recommending you to friends and contacts?
Rather than ask for a referral at the point of sale, use a post-closing conversation describing the actions that you will take in order to earn the trust that would naturally result in a referral. Heed this example:
Customer: OK, I'll buy.
Salesperson: Great! Thank you so very much for being my customer. We're going to perform for you so phenomenally that you're going to be completely amazed and delighted. But here's what I want you to do for me. I want you to be thinking of a few people who you think should be doing business with us, if we are as incredible as we say we are. But before you give me any names, I'm going to give you a chance to decide how well this works out for you. How does that sound?
Get Referrals from Existing Customers
If your company already has a relationship with the customer, a good way to earn a referral is to ask for a testimonial. Tell the customer that you'd like to share his opinions and perceptions with prospective customers. Ask questions like:
- What could we be doing better?
- What have we done right for you so far?
- What would it take for you to refer other people to us?
Listen very carefully to the responses, and write down any comments that might prove valuable. If the customer's responses indicate that you've built up enough trust to expect some referrals, ask (with a smile): "So, who are you thinking of referring to us?" Chances are the customer will laugh and give you a few names.
Give a Personalized Gift
Unsolicited referrals result from building a strong relationship with the customer, combined with superlative products and services. A good way to encourage unsolicited referrals is to provide the customer with an excuse to talk about you when other people visit her office.
Don't bother with cliched gifts like coffee mugs, though. Instead, give the customer a personalized gift that will become an office conversation item. If a customer is a baseball fan, for instance, you could have everybody on your team autograph a baseball and present it to the customer with a stand that says, "Thanks for Helping Our Team." Devise a gift that will remain on display and continue to generate positive comments.
