I couldn’t believe what I was hearing.
A teller with a leading community bank (a former employer of mine) had sent me an email, saying she wanted to speak with me for a few minutes. She was looking for referral advice. Naturally, I expected her to ask for tips on making referrals. Perhaps she wanted help on identifying referral opportunities. Maybe she wanted some assistance in identifying the appropriate time to bring up the concept of a new product or service with her customer or acquaintance. Or maybe, I thought, she’s struggling to find the right words to use and wants to bounce some ideas back and forth. I certainly was not prepared for her actual request.
“Scott,” she said, “making referrals is hard. I’m shy and it takes a lot for me to speak up and suggest my customer consider an additional product.” I agreed. After all, making referrals is a leap of faith. You’re opening yourself up to potential rejection. Customers might not welcome the intrusion and, depending on how the conversation transpires, mistake the referral for a high-pressure sales pitch.
She continued, “I do it anyway, though. We all do. We love our customers and know a big part of our job is finding other ways the bank can help them.” I was pleasantly surprised at her level of commitment and encouraged her to keep at it. “So, what part of the referral process can I help you with?” It was her answer to this question that threw me for a loop.
“We’ve been sending a lot of referrals to the lender at our branch,” she said, “but he never follows up. I just spoke with a lady I referred to him last week. When I asked how their conversation went, she told me she’d never received a call from him. She wound up going to another bank for the loan that I suggested she look into. One of my coworkers told me that she has the same problem and has actually started sending her customers to a lender at another branch who always follows up. I hate to do this, but I also hate looking bad when my own go-to person doesn’t seem to appreciate the referral. What should I do?”
Referrals represent the holy grail of marketing. What better way to generate new business than to have other people selling for you? How better to qualify prospects than to have partners making one-on-one recommendations to people they’ve identified as great candidates for your product? And how much easier can it be to overcome the credibility barrier when the recommendation comes from someone the prospect already has a relationship with and trusts?[Tweet “Referred customers carry a lifetime value 16% higher than the norm.”]
Referrals are timely, targeted, and carry no upfront costs. Furthermore, referral leads convert at a rate 30% higher than those obtained through any other type of marketing. Add to that the fact that referred customers carry a lifetime value 16% higher than the norm and it’s easy to see why smart business owners attempt to leverage this strategy as much as possible. But sadly, 48% of referred leads never make it to the next step of the sales cycle.
Referral marketing only works when referrals are acted on. Without follow up, referrals don’t turn into sales. They turn into poor service experiences, disappointed customers, frustrated referral partners, and missed opportunities.
When you find yourself the fortunate recipient of a referred lead, take these steps right away.
- Act on the lead. 50% of buyers choose the vendor that responds first. The sooner you follow up on a referral, the more likely you are to actually get business from it. You need to act while the prospect is thinking about taking the next step, and the propensity to buy is highest right after a quality referral is made.
- Deliver exceptional service. Referral leads should be treated delicately. The expectation of performance is high – after all, you did come with a personal recommendation – so make sure to shine. Even if the sale doesn’t close, your interaction with the lead impacts your reputation as well that of the referring party and the organization. The way you follow up on any given referral can influence how many more come your way.[Tweet “The way you follow up on any given referral can influence how many more come your way.”]
- Follow up with the referrer. Thank them for sending someone your way, even if things didn’t work out. Let them know how the conversation went and, if necessary, provide any tips for better qualifying prospects in the future. The more you develop this partnership, the more likely you are to see additional referrals come your way.
Of course, if you’re not interested in referral business, simply ignore these steps. In fact, ignore any referrals altogether, just like this banker did. Feel free to thumb your nose at a strategy virtually guaranteed to provide a steady stream of qualified business to your doorstep. Just don’t be surprised when all that business winds up being referred somewhere else.
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