This is the post you’ve been waiting for. Here are the five rules for getting referrals that generate sales:
Rule #1: Earn trust first. Before asking for a referral, you must establish in the referrer’s mind, that you can be fully trusted. To earn that trust you should ideally have all three of the following attributes (although even one is sometimes enough):
- Prior success with a customer. If you’ve already delivered successfully for the potential referrer (or somebody whom the referrer knows well), you’ve earned the right to ask for a referral.
- Superlative sales skills and industry knowledge. If it’s obvious that a company would normal pay to have you as a consultant, the potential referrer will be more willing to refer.
- Being referred by somebody else. The fact that a previous referrer has already “endorsed” you creates “social proof” that you can be trusted. Referrals have a snowball effect and thus get easier over time.
Rule #2: Ask when it’s natural to ask. When you’re asking for a referral, you’re performing a “social” function rather than a purely business one. Because you’re leveraging a social connection, you need to ask in the context of the inevitable social behavior that’s part of every sales call. The time to ask is when the “feeling” of the business meeting has the flavor of a meeting between friends (or potential friends) rather than a formal interaction between the sales rep and a customer. Needless to say, you’re not likely to get a referral if you ask during a “you have ten minutes why are you here?” type of meeting. But if you’re “clicking” with the potential referrer, you should be able to sense the right time to ask.
Rule #3: Be specific about what you want. Rather than asking the potential referrer to do your marketing, briefly define the type of person, and company, that’s most likely to need what you have to offer. If your most likely prospects are people with the same job title, and the same industry as the potential referrer, this is easy. But if the referrer is an atypical customer (orsomebody who’s not a customer), you’ll need to explain what you’re looking for.
Step #4: Ask for an action, not a contact. A referral is only useful for developing new business when the referrer takes some action to bring you together with a prospect. Rather than asking for a contact name, ask the referrer to call or e-mail the prospect, and then get back to you to confirm that the action has been taken. Hint: without this confirmation, you won’t know whether the referral has actually taken place, or whether it will be useful if it has.
Step #5: Follow up three times. First, contact the potential referrer within one day of your request and express gratitude for the referral. This is not only polite, but gracefully reminds the potential referrer of the commitment. Second, after you have contacted the prospect, send a thank-you e-mail to the referrer and give a brief status report. (E.g. “You were right; Fred is a smart guy.”) Third, if the referral generates a sale, send another thank-you.
Why do I know these rules work? Primarily because I got them from conversations with the brilliant Joanne Black, author of No More Cold Calling, who’s become the world’s expert on referral selling and has helped dozens of companies build sales without resorting to high-priced marketing and demand creation. But I’ve also used these rules to develop my own business, so I know firsthand that they really work.
By the way, you’ll note that the rules don’t assume that referrals only come from existing customers. While existing customers do make for good referrals, they’re not the only source, and sometimes not even the best source. Tomorrow, I’ll explain why the traditional way of getting referrals doesn’t work.
