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The Underappreciated Power of Referrals

Posted by Mark Gordon | August 14, 2015

Customer referrals drive the sales industry

Referrals are beautiful yet sometimes forgotten in our industry. You probably hear ‘referrals’ often, but a lot of companies fail to go out of their way to get referrals. Like it or not, referrals are the most powerful, yet overlooked and underappreciated way to get sales. An “average” sales rep closing rate is roughly 10%, but that same rep with a referral increases their closing rate to nearly 50%.

How Helpful Are Referrals?

But don’t take our word for the sheer power of referrals. We took a “heat check” on their effectiveness and discussed the topic with a regional manager of a successful sales team.

When asked about referrals, he said the top five reps in his offices do one thing in common and it doesn’t involve canvassing for eight hours or talking to 100 people. The secret to their success is they all ask for referrals.

And why do they ask for referrals? Because like we already discussed, they more than double your sales and it literally takes 30 seconds to ask, without taking time out of your precious day to canvass.

How Do I Get More Referrals?

During our extensive time in sales, we also urged reps to get referrals when possible and discovered the top two reasons reps don’t ask for referrals are:

  1. They fear of asking.
  2. They think they don’t need referrals to sell (arrogance/pride/ego).

We always told our reps “you don’t know if you don’t ask.” And if that still doesn’t push you toward asking, maybe this stat from Dale Carnegie will.

91% of customers say they’d give referrals. Only 11% of salespeople ask for referrals.

The Right Questions to Ask

Here is a quick checklist to ask yourself to make sure your leads appreciate your product and trust you.

  • Did you sell the lead on the how your product/service solves their problems?
  • Was your pitch honest and straightforward?
  • Did you display confidence in yourself, and your product?
  • Were you friendly?
  • Did you show a genuine effort to get to know the lead and build a relationship?

If you answered ‘yes’ to most or all the questions from this checklist, the hard part is over because you put forth the work to invest in your lead and earn their trust! So now is your time to strike while the iron and ask for referrals.

Try it Out For Yourself

For those who think they don’t need referrals to sell, we will be brief. Asking for referrals doesn’t show weakness in your ability to sell. It really shows intelligence because you understand how to work smarter, not necessarily harder. If you still have doubts, try asking for referrals during the next two weeks and see what it does to your sales. Asking for referrals helps you invest more in each customer, which shows you care, which builds a better relationship, which leads to a happy customer, ultimately leading you to fewer canceled accounts. Referrals are a beautiful thing!

Did you find this useful? Anything you would add? Leave a comment and let us know.

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