None of us would deny the immense value of referral business. A few weeks ago a past client of mine recommended my executive coaching services to a company he was working with. They contacted me, and we spoke for less than 30 minutes. The next day I began working with the executive leader, full-fee, pre-paid.
That’s exactly how referrals work. There’s a high degree of trust because of the existing relationship and, as a result, price and terms are not an issue. The best part, however, of generating referral business is that the cost of acquisition is low. This particular referral cost me a few phone calls. That’s it. The more you build referral business, your overall cost of client acquisition drops dramatically. In fact, various referral studies point to a four times higher close rate on appointments made through a referral relationship at a mere fifth of the cost.
Secret One: Ask Specifically
Simply defined, a referral is asking someone you know for an introduction to someone they know. The problem is, most of us ask for referrals in such generic, non-specific terms that the person’s response is just as generic and non-specific. “If you know anyone …” we mutter. Which elicits the response, “Okay.” And what happens? Nothing. Referrals must be asked for in a clear, direct manner.
For instance, if I were talking with a CEO at a company with whom I’ve engaged in successful sales development work, I would ask, “What other CEO’s do you know whose companies have experienced inconsistent sales performance and are falling short of their revenue goals?” This request is very specific regarding the kind of person I’m seeking for a referral, other CEO’s, and specific regarding the reason they would recommend my services, inconsistent sales performance and falling short of revenue goals.
If I were talking with a consultant whom I’ve been mentoring, I would ask, “What other solo consultants do you know who are tired of struggling to make ends meet and want to earn a six-figure income in their practice?” Again, note the specific person I’m looking for in my referral request and the specific problem I can solve.
Secret Two: Follow-up Religiously
Even using the right wording, you still could get blank stares. Your clients are busy, distracted people; you probably caught them off-guard, and they need to think about it for a second or two. This is why every referral request must be followed up in two key ways: in the moment and after the moment.
In the moment, immediately follow-up a request for referrals with a brief brainstorming session about the kind of people that might be good referral candidates. The deer-in-the-headlines look is not because they don’t have any referrals for you, or don’t want to recommend your work to others. They just need a minute to get their head around the question. You help them do that with pre-determined questions that stimulate their thought process regarding the right kind of prospect for the products and services you provide.
Alan Weiss, author of the soon to be published book Million Dollar Referrals, suggests ten areas to do this brainstorming in:
- Buyers in the parent organization
- Buyers in subsidiary organizations
- Professional colleagues
- Acquaintances and friends
- Client’s trade associations
- Client’s media contacts
Even after brainstorming, though, a person could come up blank. That’s okay. It may take two or three passes at this for them to share with you some names. Give a specific time when you will connect with them again, and follow-up without fail. Sure, it may take two or three extra calls to a customer to get a good referral, but that beats 10-15 phone calls and email a day to total strangers, doesn’t it?