re-fer-ral (noun) an act of referring someone or something for consultation, review, or further action.
Growing a business is hard. Unless what you have to offer is cutting-edge, standing out from the crowd can be a grind. And let’s face it, most of us aren’t selling something truly innovative. We sell commodities, a product or service that’s readily available from another provider. For us, finding a way to differentiate yourself from the competition can prove difficult.
There’s plenty of evidence to suggest that word-of-mouth advertising is one of the most effective methods of generating new business. It’s certainly the most economical. If generating referrals isn’t a significant part of your marketing strategy, then you’re missing out.
In my experience, people think of referrals in two ways. With the first, employees interacting with existing employees make note of an additional product or service the customer isn’t taking advantage of and suggests they take action to fill the gap. In the second, customers and business partners are encouraged to proactively approach members of their network on behalf of the organization, recounting their positive experience and suggesting their contact give them a try.
Both referral scenarios can add significantly to your pipeline, but in my experience, few people are comfortable with the referral process. They hesitate to make referrals and, when they open their mouths to speak, the words don’t come easy.
But it doesn’t have to be this way. Making referrals, like any other business activity, is a learned skill. All it takes is the right attitude, the right approach, and practice. Here are 10 tips to help you become a master at referrals. Let’s start with ideas for referring additional products to an existing customer.
1. Think of referrals as a service rather than a chore. Your customer or contact is missing out on a valuable product or service. You have knowledge that could help them solve a problem. Why are you holding back? Referring someone to a product, service, or colleague that could benefit them is not just good business, it’s a part of providing good service. What better way to take care of those who already trust you enough to business with you than to share information that could prove valuable to them?[Tweet “Making referrals is not just good business, it’s good service.”]
2. Study up on the subject of your referral. People often hesitate to make referrals because they aren’t confident in their own knowledge of the product or service in question. If you find yourself unsure of whether or not you are competent to speak to the quality of a product your own firm provides, don’t make the referral. Educate yourself first, make sure you know enough to speak intelligently before opening your mouth.
3. Refer to the expert. By definition, a referral is made by someone who cannot complete the sale themselves. If I can complete the sale, then my conversation with a prospect is a sales call, not a referral. Referring is the act of suggesting a connection between two other people, meaning you are not required to answer every single question the customer might have. That’s the expert’s job. While it’s important to know something about the product or service that sparked the referral idea, what you are really referring is someone else’s expertise. Don’t refer to people you don’t know. Make sure you can vouch for the expertise and character of the person you’re looking to send your contact to.
4. Refer selectively. Not every customer you come in contact with is a candidate for a referral discussion. Make sure the customer could actually benefit from the service you’re thinking of recommending. This is made easier if you’ve been listening for cues and looking for clues during your interaction. Don’t machine-gun spray your customer list. You’ll come across as insincere and lose credibility.
5. Speak to what you see. Something caused you to think about making a referral to your customer. Start by mentioning that trigger:
- “Mr. customer, from what you’re saying, it sounds like you could benefit from …”
- “According to our records, you’re not currently taking advantage of …”
- “After our last conversation, I got thinking about your account. I think we may be able to help you even further…”
- “You know, a lot of my customers have said they really appreciate the way we helped them with…”
6. Speak naturally. When the time is right to make a referral, speak as if you’re talking to a friend. Think about the last time you tried a new restaurant and shared that information with a friend. You didn’t slide into a fake, infomercial type spiel. You spoke on a personal level. You shared your experience and knowledge, then suggested your friend try it out for themselves. That’s what a referral should sound like – one friend trying to help another one out.[Tweet “A referral should sound like one friend trying to help another one out.”]
Now, let’s look at a few tips for encouraging referrals from others.
7. Educate your customers and business partners. You can’t assume that just because people know who you are and what you do that they will be comfortable referring business to you. Make a point to educate those around you. Share bits and pieces of information when appropriate so they feel educated enough to confidently speak to your expertise. Give them a story worth relating to someone else.
8. Make it easy for others to refer business to you. Most people like making referrals. Personally, I get a great sense of satisfaction when I connect two people I know in a way that helps them both out. As your customer, I’d like to refer business to you. The problem is, I don’t know everything about your particular product suite or the myriad of services you offer. However, there is one product I am intimately familiar with – the one you sold me. Make sure every new customer gets a couple of business cards and ask them to pass them on to people who could use the same service they are currently benefiting from.
9. Make referrals yourself. You have to give to receive. If you want business partners to send referrals your way, start by sending a few in their direction. Sending me a referral creates psychological pressure on me to reciprocate. When you help me out, I want (and need) to do something for you in return. Prime the referral machine by making a few deposits of your own. [Tweet “Prime the referral machine by making a few deposits of your own.”]
10. Ask for them. If you want more referrals, ask people for referrals. Business is rarely a case of “if you build it, they will come.” If you want something, you have to ask. “Hey, if you come across someone who could benefit from what I have to offer, do me a favor and hand them my card. I’d appreciate the referral.”
There’s one final tip I’d like to share for those seeking to earn more referral business. Be someone worthy of a referral. Do good work. Produce a superior product. Provide excellent service. Operate with integrity. Seek to be the kind of person others want to be associated with. If you focus on building solid relationships, you’ll have more referrals, and more business, than you can handle.
If you’d like to have a discussion regarding some specific referral strategies for your business, give me a call. If you have strategies that have proven successful for you, please share them on our Facebook page.
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