Sales referrals are one of the best – and easiest – ways to find new opportunities, but they’re often overlooked.
“I don’t want to seem like I’m begging,” moan some sales reps.
“Customers never have anybody to refer,” complain other sales reps.
Some business owners share their primary new business development strategy is through referrals. Others have included asking for referrals as part of their B2B sales lead generation system.
And so, it should be.
You know that some of the best leads you get are referrals from customers who love and trust you. But do you have a proactive approach to asking for referrals as part of your lead generation system?
It’s time to do that and get more referrals!
How Many Referrals Should You Target?
We recommend to clients that 20% of all new leads originate from referrals annually. Take your new business development target and plan to get 20% of the leads you need from referrals. Now you have a target.
Unsolicited Referrals
A percentage of these will be inbound referrals from existing clients.
How unsolicited referrals happen
Your clients’ peers ask, “who do you work with for…” or “are you getting good results from that company helping you with…”
If your clients love the results they’re experiencing from working with you, they’ll happily recommend you.
What your clients do for their colleagues
With these unsolicited referrals, your clients:
- Make an introduction to you
- Briefly explain the problem their colleague is experiencing
- Give a glowing recommendation
They make it easy for you and their peer to connect and set a first appointment.
Close rates you can expect
These new prospects don’t feel the need to shop around with your competitors because they have heard all about the work you do from a person they trust – your client. As a result, your close rate is the highest of any type of lead.
It’s not unusual to have 80%+ close rates with referrals from delighted clients. If your referral close rates are average, step back and examine why your close ratios aren’t this high.
While you want as many unsolicited referrals as possible, generally, they don’t equate to the 20% of new leads you want. That’s when you need to get proactive.
Proactive Referral Requests
To accomplish your referral goal, you have to get proactive and make asking for referrals a part of your company sales and account management processes.
Don’t wait for unsolicited referrals
This way you aren’t waiting for clients’ colleagues to realize they need an introduction. Rather, you’re exploring with clients who they know that might need your services.
With a good process in place, you create a steady stream of referral prospects while letting your customers know how important referrals are to you.
Why clients will give referrals when you ask
When your clients are delighted with your solutions, they want to see you be successful. When you’re successful, you’re investing in your solutions, staff, and processes. Your business grows and you have even better service or more solutions your clients can gain from in their companies.
Close rates you can expect when you ask for referrals
Close rates for referrals you ask for from clients will be 50%+ depending how qualified the prospect is. The slightly lower close rate isn’t because of increased competition. It’s more a factor of if the prospect is ready to address the problem. If the prospect isn’t ready, you’re in the door early for when they are ready.
Who Should Ask For Referrals?
Depending on your new business development target, 20% may be a significant number of referrals to secure. You know not every referral will close. If you only have one salesperson, and that salesperson doesn’t have a relationship with all your clients, you’ll need more help.
Different roles in your company who can ask
You can enlist everyone in your organization who works with your clients and may have a network to ask for referrals. In addition to your sales team, some roles to consider are:
- Technical support and customer service who speak with clients every day
- Marketing who interfaces with customers gathering testimonials, writing case studies, and running events
- Executives who conduct executive-level client meetings and have wide networks
- Anyone who answers the phones
What Holds People Back from Asking For Referrals
Salespeople are groomed to ask what are perceived as tough questions of clients, but technical support and marketing are not. Their questions are information gathering related to a solution. Not asking for what they might perceive as a favor. You need to help your staff overcome their concerns.
There are three things that stop your staff from requesting referrals today:
- Awareness of how important it is for the company
- Uncertainty about how and when to ask for referrals
- Fear of rejection by customers
Creating a referral gathering process and providing your staff how to ask for referrals training can address all three.
Asking for referrals doesn’t have to be scary
Get training and unleash your referral stream
5 Steps To A Better Referral Process
Use these five steps to set up your process to ask customers for referrals.
1. Paint a picture
Asking for referrals can be scary. It’s another opportunity for rejection. Perhaps your client isn’t as happy as you thought or may not want to disclose names. With this in mind, you want to be sure you’re asking people with whom you have the best potential for success.
Create a profile of the characteristics of the ideal client to ask to paint a picture in your staff’s mind.
Perhaps it’s a business owner or IT manager who has been working with your company for 6 months without issue. Or it may be an executive whose team recently experienced a significant issue and you addressed it quickly.
A client profile helps everyone on your team envision who they’re asking.
2. Identify 4 perfect points to ask
Knowing who to ask is only one piece of successful referral gathering. There are points in your sales and account management process that are natural opportunities to ask for referrals.
There are also points in your delivery process when it’s natural to ask customers for referrals. Clients are happy. Discussions are valuable. They’ll be more than willing to recommend people to you.
Determine which 4 are your best points and integrate them into your processes.
3. Create natural opportunities
Clearly you don’t want to ask for referrals every time you see a client or prospect. For most of your staff and clients, that’s uncomfortable.
If you want to extend beyond the 4 perfect points you identified in your sales, account management and delivery processes, create some other genuine circumstances to ask, such as quarterly business reviews or project close-out meetings.
Don’t add too many or it will be hard for your staff to remember.
How often should you ask for referrals?
As a guideline, ask for referrals once every 3 or 4 months. When you ask regularly, your clients become accustomed to it and start to pay attention to who they should recommend when you inquire. They may even provide referrals before you ask.
4. Script it
Normally I am not one to recommend a script. But, if your staff all know exactly what to say to ask for a referral, they’re more likely to work it into the conversation.
Have them choose one question they’re going to use every time they ask for a referral
Then teach your team how to frame their referral request, including how to transition from the topic at hand to the question.
The training doesn’t need to be a half-day session
Use an hour at a company meeting or your Monday morning meeting. The goal is to make people comfortable with asking for referrals. The quickest way to do that is to practice together.
Your sales team may want more than a single question. For them, create a call guide they can use to interweave referral gathering into their conversations.
5. Measure referrals.
Referrals are one of 15 sales metrics you should monitor. Not only will this validate that your process is working, it shows your team the impact they’re having on growing the business.
One client of ours implemented a referral gathering initiative, trained all their staff, and started measuring results. Within seven weeks they saw a 328% increase in referrals. Over one year, they realized a 31% increase in net new clients.
Create a lead source code in your CRM or marketing automation tool and you’ll be able to measure sales results from referrals and even the lifetime value of referrals.
You Can Get More Business Through Referrals
Once you take a proactive approach and make referral gathering part of your sales, account management, and delivery processes your whole company will get comfortable asking. Train them. Hold them accountable, and you’ll have a steady flow of warm prospects.
If you want to get serious with formal referral training, we train how to get referrals in 2 one-hour sessions. Contact us and we’ll get your team proactive about asking for referrals!
This post was originally published in August, 2018 and updated in August, 2022.