Common sense tells us that referrals are always the best type of leads, yet the majority of salespeople fail to ask for referrals from their customers.
As many salespeople and business owners know, referrals are sales gold.
Take this study completed by the University of Pennsylvania’s Wharton School of Business in 2011: After surveying 10,000 customers over the course of nearly three years, the study’s authors found that referred customers had a higher margin and retention rate, and were more valuable (by at least 16 percent over non-referred customers) in both the short- and long-term.
But you could have guessed that, right? Common sense tells us that referrals are always the best type of leads and that the best sales reps would do everything in their power to generate as many of those referrals as possible, right?
You would think so—but in my experience, that’s not what happens.
In fact, I’ve found that far too many sales reps fail to make referrals a consistent part of their prospecting strategy. Instead, they reactively wait for those referrals to come to them, figuring that if a customer is delighted enough with the solution, he or she will gleefully and willingly volunteer referrals.
Why Taking a Proactive Approach to Referrals is Critical
Unfortunately, that’s not how referrals typically work. In most cases, customers won’t think to refer you unless they are directly asked to do so.
Think about it: Businesses that have an unmet problem are more likely to internalize it than they are to share it with their peers until it becomes oppressive and they must address it. It can be embarrassing, for instance, to admit that your computer network keeps failing, or your ecommerce software is dropping orders, and you’re not likely to survive the year without some help.
That’s why the onus is on you—and your reps—to be proactive about seeking referrals.
Your customers’ peers aren’t going to swap stories about how they’ve been hacked a dozen times in the last year and could really use some help solving their IT security problems. It’s up to you to ask happy customers to refer you to their peers, and then you can do the investigative work and needs analysis once you get the prospect on the phone.
What Keeps Sales Reps from Requesting Referrals
That seems simple enough, so why do so few reps proactively probe their happiest customers for those referrals?
Throughout my career, I’ve interviewed quite a number of sales reps about their fear of asking for referrals and I’ve heard a common refrain: I don’t know how to do it in a way that doesn’t sound like an imposition.
Here’s my answer: Referrals aren’t an imposition if you request them from truly delighted customers. In fact, most happy customers simply need (or want) your help figuring out whom to refer.
So, when you ask for referrals, frame it in a way that allows customers to immediately narrow their list of contacts to the companies who could most use your help. For instance, you might ask questions such as: “Who do you know that has had similar security issues to yours?” or, “Who do you know that considers the security of their customer information as critical as you do?”
At the end of the day, if a customer is happy with your product or service and believes a friend, peer or colleague could reap some of the same rewards, he or she won’t view your request as an annoyance. The customer probably will jump at the opportunity to recommend you.
Kendra Lee is a top IT Seller, Prospect Attraction Expert, author of the newly released book, “The Sales Magnet,” and the award winning book, “Selling Against the Goal,” and president of KLA Group. Specializing in the IT industry, KLA Group works with companies to break in and exceed revenue objectives in the Small and Midmarket Business (SMB) segment.