In my previous post, “How to Find New Customers (Pt. 1),” I pointed out that there are three basic approaches to finding new customers:
- Cold-calling. You go out and find new customers.
- Networking. Your current customers find new customers for you.
- Demand creation. You create conditions where customers come find you.
In that post, I gave a quick overview of how to prospect using cold-calling. Today, I’m going to do the same with networking or “referral selling” as it’s sometimes called.
- Rule #1: Ask people who trust you. The most effective referrals always come from people who already know and trust you. Because of this, many of your most effective referrals will come from people whom you know from outside the business world, such as relatives, neighbors and friends. That seems counterintuitive, but it’s true. When you’re bootstrapping a network, you’re better off using your personal contacts than your business contacts.
- Rule #2: Ask at the right time. If you’re going to ask your existing customers for a referral, don’t ask when your first sale is closed. But you have not earned the customer’s trust, so you don’t have the right to ask for a referral. The best time to ask a client for a referral is after you’ve proven you can deliver. You can ask earlier than that, but only if your sales skills and industry knowledge have created enormous credibility.
- Rule #3: Ask at the natural time. There is no point in the sales cycle that is always the right time to ask. When you’re getting referrals, you’re leveraging social connections, even when those connections are in a business context. Ideally, each contact with a potential “referral source” has more the feeling of a meeting between friends (or potential friends) rather than a formal interaction between the sales rep and a potential customer.
- Rule #4: Ask for an action, not a contact. If all you get from the Referral Source is some contact information, you’re just setting yourself up for a cold call. While you can always say something like “Joe told me to contact you,” such phrases are used so frequently that they’re meaningless. For all the contact knows, Joe might have given you his or her name just to get you off the phone! Rather than asking for a name, ask the Referral Source to call or e-mail the contact, and then get back to you to confirm that the action has been taken.
- Rule #5: Follow up religiously. Contact the Referral Source within one day of the conversation and express gratitude. This is not only polite but it allows you to gracefully remind your contact that of the commitment to make the referral. After you have contacted the person to whom you were referred, send another thank-you/status report e-mail to the referrer. Finally, if the referral does result in a sale, send another thank-you.
The above is based upon a conversation I had recently with the amazing Joanne Black, author of the book No More Cold Calling.
This post is continued in “How to Find New Customers (Pt .3)“, where I discuss instant demand creation.
