Study: 87% of your customers will give referrals – if you just ask
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Study: 87% of your customers will give referrals – if you just ask

Wouldn’t you love to get all your business from referrals? After all, that means no more cold calling, phone lists or trade show leads from the Marketing department.

And there is plenty of evidence to back up the value of referral business. For example, a cold lead or a random inbound lead has a 25% to 30% chance of closing, while the closing rate on referrals is double that, or even better.

So, with the odds stacked so high in favor of referrals, how come more sales reps don’t ask? After all, satisfied customers say they’d be happy to provide leads. A recent study by Bain & Co. indicates that 87% of contented customers would pass along names, but only 7% of sales reps ever asked them.

Roadblocks: Fear and ego
Two issues stand in the way: fear and ego. One big factor is fear of rejection. Even though rejection is something sales reps face daily, somehow a rejection seems more, well, personal, when it involves asking for referrals.

In addition, asking for a referral opens the door for negative feedback about the relationship as a whole. As a result, sales reps often avoid the referrals issue entirely – to keep the relationship positive and avoid putting a foot wrong during the sales process.

Another factor is that sales reps generally have healthy egos. You have to have a lot of confidence, after all, to successfully meet sales targets despite day-to-day adversity.

That can lead to a “lone wolf” approach and the idea that asking for a referral is too much like asking for help – a sign of weakness.

A related thought: “If I ask for referrals they will think I’m not as successful as I’ve led them to believe.”

Of course, all of this is bunk. And there are plenty of top performers who have built an excellent book of repeat and referral business. There is a right way and a wrong way to go about it.

Don’t just ask
While the majority of sales reps don’t ask for referrals at all, those that summon the courage to do so tend to ask in a weak, general sort of way. Examples: “Mike, do you know anyone else who could use my services?” or “Would someone in another department find this product as valuable as you have?”

There are several problems with asking like this, even when you do it at the end of a successful customer project or installation. A typical scenario:

Sales rep: “Do you know anyone else who might benefit from my products?”

Customer: “I don’t really know.”

Sales rep: “It would help me a lot if you could refer me to a couple of other companies that could use me.”

Customer: “Well, you could call Frank Smith over at XYZ, Inc. They’re small, but might be able use you.”

Sales rep: “Great! Anyone else?”

Customer: “Try Clare Voyant at Global Widget. I think they just installed a system like yours.”

Can you see the problem? An on-the-spot customer comes up with two names, neither of which look like real prospects (one is too small, the other just bought from someone else).

A better method
You are much better off implementing a system that helps the customer understand your need and desire for referrals, and defines what you consider a quality referral.

Of course it is critical that you perform exactly as the customer expects, in matters both large and small. That will generate the high level of trust that is essential to getting their cooperation.

Successful referral systems include three key building blocks:

1. Plant the seed. Allow customers to get comfortable over time with the idea of giving you referrals. Best bet: Let clients know your business is built on referrals and plant referral seeds during the sales process.

Prospects and customers who hear referrals mentioned casually will realize they are important to you and will be expecting you to ask for them.

2. Find out who your customer knows. Do some detective work. Discover, as your relationship develops, who they know that you know you want to be referred to.

Pay attention! Who do they mention in conversation? Who is on display in their environment (pictures, association directories, memberships, etc.)? Where did they work in the past? Are they involved in any joint ventures or partnerships?

3. Ask for introductions, not referrals. Ask for a specific introduction. Example: “Bill, I’ve wanted to connect with Martha Smith but haven’t had much success. You mentioned working with her. Would you be willing to introduce me to her?”

You know Bill knows Martha, so you are not wasting Bill’s time, but asking to connect. Think of the time and energy you’ll save.

Source: Based in part on “Understanding Referral Generation,” an e-book by Paul McCord. For more, visit


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