Adjust how you allocate your time spent on sales and marketing, and you might see even greater numbers of sales being driven by referrals.<\/p>\n
So why are referrals such an effective sales tactic?<\/strong><\/p>\n For one, it puts the onus on your current customers to do the hard work for you. You also benefit from \u201csocial proof<\/a>.” Leads generated via referrals are more likely to convert, simply because they trust the source of the introduction.<\/p>\n What\u2019s more, referred customers typically stick around longer and spend more than customers acquired by other means. One study found that<\/a> \u201creferred customers spend 10-25% more on their initial purchase and make significantly more repeat purchases.\u201d The average lifetime of a referred customer is also around 16% longer than customers acquired from other channels.<\/p>\n But despite all this, referral marketing is still a woefully underused sales tactic.<\/p>\n There are numerous reasons companies fail to ask for referrals. Just for starters:<\/p>\n Or, as sales guru Joanne Black<\/a> states in the podcast “Stop Cold Calling and Get Referrals Instead<\/a>“:<\/p>\n None of these, however, are reasons to avoid asking for referrals.<\/p>\n We already know referred customers stick around longer and spend more than customers acquired by other means. We also know that while rejection sucks, when you do get a \u201cyes,\u201d the odds that lead will convert are pretty damn high.<\/p>\n Basically, there\u2019s no good reason <\/strong>not<\/em><\/strong> to be asking for sales referrals.<\/strong><\/p>\n So what\u2019s the next step? How can you start asking for sales referrals and maximize how many of those referrals you convert into new business?<\/p>\n If you want your organization to invest in referrals, you need to develop a defined process. Asking for, following up on, and converting referrals should become an innate element of your sales process<\/a>.<\/p>\n However, as Black suggests, don\u2019t assume that salespeople will naturally think to ask for referrals. <\/strong>It\u2019s a different skill set, and not one that people are naturally comfortable with \u2013 even your most skilled and experienced salespeople.<\/p>\n Asking for referrals should be something that\u2019s happening every single day. In order to make that happen, you need to devise a strategy and a process, track the right metrics, and train your salespeople on the right way to ask for referrals<\/a>.<\/p>\n Asking for referrals requires a little finesse and a consistent plan that\u2019s repeatable. Here are a few questions to help you get started:<\/p>\n Once you have your strategy, it\u2019s time to figure out the best way to execute it. What should occur to ensure successful referrals aren\u2019t forgotten, conversion rates are as high as possible, and introductions actually take place?<\/p>\n You\u2019ve made serious headway with your strategy and execution plan, and now it\u2019s time to ensure you see results. Here are some must-track metrics to gauge the success of your referral campaigns:<\/p>\n Formula:<\/em>\u00a0Take average purchase value and multiply by the average purchase frequency to find customer value. Then, take customer value and multiply that by the average customer lifespan to find LTV.<\/p>\n To many salespeople, asking for and converting referrals is a brand-new skill. Learning that skill takes training and practice.<\/p>\n Implement a training program designed to teach your salespeople (or yourself) the right way to ask for referrals, and the right way to nurture and convert the ones they secure.<\/p>\n Setting up a referral request process that brings in real results takes time and patience. Even naturally adept sales reps require consistent training to hone their skills.<\/p>\n Multi-day training days can be effective in certain contexts, but too much time off the sales floor can be costly. Instead, focus on micro-learning opportunities in team meetings, core groups, or one-on-ones where they can review referral request best practices and try them out with a colleague or a manager.<\/p>\n Take advantage of call recording software and spend time studying past calls of successful referral requests to share success with the team.<\/p>\n Once you have your process in place, you need to actually make that all-important ask.<\/p>\n You don\u2019t have to ask every customer for a referral. Start by asking your advocates, those who are not only happy to refer you, but will be able to \u201ctalk you up\u201d appropriately.<\/p>\n If you\u2019re not sure who your advocates are, you can find out using a Net Promoter Score<\/a> survey. Using a scale of 1-10, simply ask your customers to rate their satisfaction with your product or service. Those who rate you a 9 or 10 can be placed in the \u201cadvocate\u201d column, and should be approached for referrals first.<\/p>\n You can work your way down from there and ask for referrals from customers you know are happy but might not reach advocate status. Just don\u2019t ask for a referral from those who rate you below a 5.<\/p>\n As with most things in life, there is a right and a wrong time to act. In this context, the right time to act depends on who you\u2019re asking.<\/p>\n When it\u2019s the right time to ask for a referral:<\/strong> Black states that the best time to ask for referrals is when you prove value to the client. If you don\u2019t ask then, you risk never asking. You\u2019ll convince yourself that it isn\u2019t the right time over and over again until you\u2019re too far out to ask.<\/p>\n When you’re talking about an advocate, it’s always the right time to ask. They already love you, so they won\u2019t be offended or put off by it.<\/p>\n When it\u2019s the wrong time to ask for a referral: <\/strong>When a customer has just recently come on board or they\u2019ve recently complained. Give customers a chance to become acquainted with your product and realize its benefits before asking for that referral.<\/p>\n The right way to ask for a referral primarily depends on who you\u2019re asking. The nature and size of your business are factors as well.<\/p>\n Asking advocates for referrals: <\/strong>In this instance, the ask should be super-personal. If you talk to them often, just bring it up in conversation the next time you speak.<\/p>\n You might say something along the lines of \u201cHey, I was wondering if you would do me\/us a favor … Can you think of anyone who might be interested in our product? Are you able to introduce me?\u201d<\/p>\n If you know a customer is an advocate but you never actually speak<\/em> to them, send a highly-personalized email<\/a> instead.<\/p>\n Asking happy customers for referrals<\/strong>: Not every customer who is happy is an advocate, but this doesn\u2019t mean they won\u2019t willingly refer you to someone else.<\/p>\n Again, if you talk to the customer often, just bring it up in conversation. If you don\u2019t, email them.<\/p>\nWhy Companies Aren\u2019t Asking for Referrals<\/h2>\n
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Develop a Sales Referral Process
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<\/h2>\n1. Devise a strategy<\/strong><\/h3>\n
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2. Create a process<\/strong><\/h3>\n
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3. Track the right metrics<\/strong><\/h3>\n
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4. Implement a training program<\/strong><\/h3>\n
How to Ask for Sales Referrals<\/h2>\n
Pick the Right People
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<\/h3>\nTime Your Ask Right<\/h3>\n
Ask in the Right Way<\/h3>\n
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