We Love Referrals, Right? Here Is How To Get More.
Referrals from happy customers are one of best ways that B2B companies generate new business. Not a huge surprise. However, what is surprising how few companies have a dedicated strategy for fostering these valuable referrals.
Referrals lead as a sales tool for a couple of reasons:
- A referral is a white-hot lead. If we assume that your happy customers are savvy enough to recommend you to the right potential customer then you are well on your way to establishing a valuable conversation and a new business win.
- Most companies do not run highly effective sales programs so the most effective new business tool is by default referrals.
3 Benefits Of Referrals
Back to the idea of white-hot leads. I am sure that you want more of these. There are other business benefits of the referred lead.
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- The closing ratio of referrals is higher (it has been reported that the closing-ratio of a referral is 6 times greater than an unqualified lead.)
- For the obvious reason that a referred prospect is generally a very motivated buyer, the referral-generated sales cycle can be as much as 75% shorter.
- A referral strategy is cost-effective and will reduce your sales expenditures. It is a great place to start.
Net Promoter Score
You can begin to learn about how willing your customers are to refer you, and importantly, use this question as a powerful research tool, by asking the simple question: “How likely would you be willing to refer us to a friend?” in your annual customer survey. Clearly, knowing how willing your customers are to refer you, this is known as a Net Promoter Score, is a very simple method to determine how well your services or products are performing. Knowing what percentage of your customers that are willing to refer you is one of the realistic indicators indicators that you are delivering excellent products or services.
Regardless of how referrals work for you, I am sure that you want more of them. What has surprised me is that many companies do not have an active strategy to grow their referrals. This can be easily fixed and should play a role in your sales program.
4 Effective Referral Strategies
I’ve generated referrals from existing clients and customers using the following set of strategies. Given the fact that you are talking to happy customers or friends, these strategies will be a very efficient use of your “sales” effort.
- Start with an objective. Know what increase in referrals you are targeting and what type of customers you want.
- Determine which of your customers or friends, these could be people you talk with or people you stay in touch with on social media platforms like LinkedIn or Facebook are contacts that might know the people or businesses on your prospect list.
- Ask. Go ahead, and ask for referrals. Some referrals come because your customer is specifically asked if they know of a good company in a your business category. Some come because your customers love you so much they actively ‘sell’ you. Some need to be stimulated to think about how to help you. It’s OK to ask. It is also wise to let them know what type of referral you are looking for. Take away as much guess work as you can. Make it easy for them to refer you.
- However, before you ask, make sure that your current customers are motivated to refer your service or products. You might need a bit of time to massage them though the delivery of unexpected services ahead of directly asking for their help. As they say, give and ye shall receive.
- If you get a referral, make sure that you keep the referrer informed about your conversations and any progress. Don’t forget to say thank you. If you actually win new business, you might want to consider sending a gift as follow-up.
When I worked at a large multinational advertising agency and had General Mills as a client, we knew that any one of our individual clients knew other marketing people who were not yet working with us. We used all of the strategies listed above to stimulate referrals. This active “asking” helped us pick up the Yoplait Yogurt business in addition to our work in breakfast cereals.
We made sure that our specific General Mills’ clients loved us and we actively asked them if they could spread the good word.