Are Business Referrals Worth the Hassle?

by: Joe Connelly (VP Sales)

In the old days seeking new business was not done electronically, or even with direct marketing. It was done by “spreading the word”. Professionals would get new business by obtaining referrals from past or current clients who were happy with their service or product. Nowadays with the onset of elaborate direct mail campaigns, automated CRM systems, a reliance on the web and social media, the art of “asking for a referral” seems to be on the decline. Here’s why this is a mistake for anyone who is in Sales (and, by the way, when hunting for referrals EVERYONE in the company is in Sales):

  1. Referral hunting is normally the cheapest way of finding new clients
  2. People give up way too early in the process (it needs to be a process with multiple steps)
  3. Some basic training is required (but not much!)
  4. Everybody knows somebody who knows somebody who … (this is the whole idea behind LinkedIn)
  5. Entire businesses can be sustained just through referral hunting

So what are the chances of getting a business referral the first time you ask someone?  In my experience it is almost zero. People will commit to giving you a referral but most, for some reason, just don’t seem to get around to it. So what’s the next step? ASK AGAIN! The odds of success improve when you ask again a few days, or weeks, later (not dramatically but the chances are better). I actually use the ‘Magic Rule of 3’. When you ask for a referral for the 3rd time, the chances of success go up significantly. By the 3rd “ask”, people know you are serious and they are uncomfortably aware that they have made a commitment to you which they have not fulfilled.  Be friendly and use humour in your requests, but be persistent.

They say that the typical Canadian knows more than 200 people. When you meet someone in a business environment, don’t think of just that person but also of the other 200+ people they know that you probably don’t. It pays to network and it really pays to ask for introductions or referrals consistently.

Of course it takes more than just asking.  You need to earn the right to ask for referrals by building a reputation for delivering excellent value to your customers.  But assuming you’ve built that reputation, how many referrals did you ASK FOR in the last day, week, or month? Imagine if you were spreading the word about your business and asking for referrals EVERY DAY – yes, every single day. If you and your colleagues were to do this with EVERYONE you met, would your business have more high quality leads? At Stratford Managers, networking and referrals (built on a solid reputation) is how we have grown our own business significantly in the last 18 months.

Try it – referrals are yours for the asking and it is most certainly worth the hassle!

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