Referral based selling is one of the most effective ways to 1) close more deals, 2) shorten the sales cycle, and 3) force-multiply your sales budget. It’s so important that if you don’t have a referral system in place, you’re 100% leaving money on the table. Don’t believe me? The Harvard Business Review conducted an eye-opening study on business referrals.
So maybe you don’t live under a rock. Maybe you know that referrals are important … no … vital for your success. You might even know referrals are the lifeblood of many eight-figure B2B companies. But chances are you don’t truly know how to leverage referrals to increase your own bottom line. Well, today I’m sharing everything you need to know about referral based selling.
First, What is Referral Based Selling?
Referrals are your ace-in-the-hole. They are your ticket to the front of the line. A referral is when you specifically ask a current client or customer for the name(s) of another decision maker who could benefit from your offering. To take it a step further, you may ask for the contact info (direct dial number) or, depending on the relationship with your current client, you may even ask for a personal introduction to the referral. The latter is the holy grail of referral based selling.
Some sales leaders (including myself) believe that referral selling should take center stage in your overall sales strategy, rather than playing a supporting role, or worse, an extra in the background. But unfortunately, most companies relegate the referral to the background, simply because they don’t know how to get the referral engine humming along.
Advantages of referral based selling include:
- Shorter sales cycle
- Little to no client acquisition cost
- Business relationship starts strong (trust)
- Minimal effort for sales teams
RELATED: How to Ramp Up the B2B Sales Cycle
Leveraging Trust to Win Referrals
Before I get into how to go about landing a referral, you should know that the very essence of referral based selling is about leveraging trust. The more trust you’ve built with your client, the more they will be willing to help you out.
Think of it like a bank account. If you’ve made several “deposits” of goodwill and good work over the months or years, you can make a “withdrawal” without depleting the account. On the flip side, if you haven’t made any trust deposits, you can still ask for a referral, but the check might bounce. Make sense? So at the foundation of the referral is relationship and trust.
Referral source makes a very personal introduction. So when you do reach out, the referral is expecting your call.
Five Steps to Asking for a Referral
Step 1 – Ask!
Generally speaking, people are happy to help. All you need to do is ask. Try something like, “Kyle, I know we’ve been working together for some time now, and I’m glad you’re seeing positive results. Do you know of anyone else who could use our services?”
Step 2 – Get the Details (it matters!)
If they seem happy to help and share contact info, be sure you get the correct spelling of the referrals name, their direct dial phone number (not email), and any other necessary information. And, if you have a particularly good relationship with the referral source, ask them what the referral is interested in (hobbies, sports teams, restaurants they like, etc.). This insider knowledge helps you to really relate to the prospect.
Step 3 – Hurry Up and Wait (but not too long)
OK – remember you’ve asked for a favor here. Sometimes in business we have to wait for our referrals once we ask for them. This usually isn’t more than a week or two, but oftentimes your existing client won’t go rattling off names right when you ask him or her. So patience is a virtue here. I’d say if it takes longer than two weeks, feel free to give them a gentle nudge.
Step 4 – Ask Immediately, Don’t Let it Sit
Once you get the referral, call that new HOT prospect right away. Don’t let this one sit and die on the vine. Immediacy matters, otherwise you will lose the motivation and it will fall through the cracks. Reach out to your new referral the same day or next day.
Step 5 – Showcase Work You’ve Done
This is the perfect time to showcase what you’ve done for their friend / business associate. This will resonate with your new prospect more than if you were to give a case study of a random client of yours. To really drive this home, get a testimonial from your referral source and share it right after your case study. This one-two punch really works, as it reinforces mutual trust.
RELATED: Best Cold Call Opening Lines
Other Tips and Tricks for Referral Based Selling
- Timing matters. It’s probably not best to ask for a referral the day your client signs with you (unless it’s a lower-ticket sale). If it’s a high-ticket sale, like custom software for instance, give the relationship time to bud into something great. The more comfortable your client or customer is with you, the more willing they are to recommend you to their friends and business associates.
- Ask for five referrals. Why not? Here’s the thing – you usually get what you ask for. If you ask for one referral, you’ll get one. If you ask for five referrals, chances are you’ll get a few. Now imagine you’re asking 10 different customers for referrals – that’s the difference between getting 10 referrals and 50 referrals. And it takes no extra energy to ask.
- Feel it out first. You shouldn’t ask every client or customer for a referral. Ask yourself: how long have I worked with this client? How attentive am I to their account? Have they praised me for my work in the past? Etc. The majority of your answers should be positive. And if they are, ask!
- Create a referral system. You need to create a system and integrate it into your everyday sales process. If you lead a sales team, you need to get your sales people on board and ensure they realize this isn’t some experimental initiative; rather it’s make or break for the company and their individual sales numbers. Don’t ask for it, require it.
- Track your metrics. This one is pretty self-explanatory. If you track the metrics (i.e. how many referrals asked for compared to referrals received; close rate on those referrals; etc.) you can improve over time and crush the referral based selling game.
So this has been your crash course on referral based selling. If you and your sales team implement the big ASK into your process, you’re bound to see more sales come from it.
Just don’t forget that the biggest thing with referral based sales is trust. You have to have mutual trust to really make this work for you. And if trust and goodwill is there, the sky’s the limit with referrals. I’ve had multiple sales opportunities come out of one referral source, and you can too.
Follow the tips and tricks I outline above, and go get those referrals!
Until next time…