Two blog postings on referrals hit my blog reader this week. Is this national referral week?
One from Paul McCord over at Sales and Sales Management Blog on developing a Referral-Based Mindset.
Another one came in from Clayton Shold’s Salesopedia where he posts a podcast from Joe Heller speaking on, “Why Referrals Work Best”
Well, of course referrals work best! They always have and always will. And in these days of caller-id and effective spam filters, it’s a wonder that any cold call or cold email lands a prospect.
But I wonder if customers are really the best place for getting referrals. They’re great at giving references (assuming you deserve them) but referrals? I’ve argued before that most customers don’t have the right DNA to actively generate referrals for you. And if you read/listen to these two new blog postings, you’ll quickly realize that generating customer-based referrals is A LOT of work. Maybe cold calling might be easier for some sales reps than these programs. Or maybe using customers for references instead of referrals is a more effective plan.
All About Referral Selling 
Michael,
Although I think your system is quit helpful and will, if used properly, enhance one’s pipeline, I think you’re wrong about the value of direct referrals from clients and customers. And again, you are correct that in order to turn ‘asking’ for referrals from the hit or miss ‘hope’ that is the way most salespeople have been taught to seek referrals, into a logical, predictable, highly effective system to generate a large number of high quality referrals from each client takes a good deal of work to learn and perfect the process.
Nevertheless, there simply is not a more effective method for finding new customers than to have a direct introduction to the prospect from someone they know, they respect, and they trust, who not only knows you and your products and services but also has used them themselves.
Use customers as references? Of course.
Ignore them as the most effective, cost efficient client generation resource at the disposal of a salesperson? Doesn’t make business or economic sense.
Paul McCord
Paul,
Thanks for your comments. I think we both agree that customers are a high quality source of referrals. However, I do not think they alone generate enough referrals because they’re not thinking of my business all the time. If I’m just starting out in a new job, I may not have enough customers anyway. And it’s not only the sales rep who does not know how to ask for the referral but it’s the customer who does not know how to effectively give that referral. So the sales rep has to train their customer on giving referrals. That’s work. I’m suggesting that sales reps consider another source of referrals and that’s the sales rep who’s customers already trust them enough to accept a referral from them. I was speaking to Rick Roberge, who’s commented on this blog before, about this. Rick’s method of generating referrals is to focus on GIVING referrals to his customers. His customers learn from his referrals that Rick is not a transaction-based sales rep but a trusted advisor. Rick does not need to train his customers on giving referrals because he’s at the top of their list already. Because Rick focuses on giving, he naturally gets from two sources – his customers and the reps he gave referrals to.
Michael,
Again, you’re right. Customers don’t know the salesperson’s business.
That’s why the salesperson, if they want to get lots of high quality referrals from their customers must help the customer give referrals. If a salesperson will pay attention to their customer, they’ll learn a great deal about who the customer knows and when asking for referrals will be able to specifically ask about XYZ company and ABC company, both companies the salesperson knows they want to be referred to, that they know the customer knows. If they’ve done their job well and have established a relationship built on trust, their customer will give them the referrals. More than likely, if left to come up with referrals on their own, the customer would not have thought of referring the salesperson to either of these companies, much less both.
Giving referrals to get referrals? Of course. Creating a referral ‘partnership’ with other reps or customers should be a natural part of every salesperson’s business. Unfortunately, just as learning how to generate a large number of high quality referrals through a predictable process is foreign to many salespeople, so is should referral partnerships be. Shouldn’t be foreign, but unfortunately is for far too many salespeople
That’s the challenge, “…both companies the salesperson knows they want to be referred to, that they know the customer knows…” Not only does a rep have to train the customer to do something they don’t naturally know but they also have to know the customer’s rolodex!
Paul, I think we’re agreeing on much of what we’re talking about here. Referrals from customers are the highest quality. We both agree that getting referrals from customers can be difficult due to both party’s lack of knowing how to do referrals. I’m suggesting that sales people know how to give & get referrals from each other much easier than getting them from customers. We do it all the time – over lunch, at poker night, at the exhibit hall during trade shows.
Agree on most. Yes. Getting referrals difficult? Not at all–IF you know the process to do it. The problem isn’t that they’re that difficult, it is that most salespeople don’t know HOW to do it. It is actually that simple.
Referral generation is like any other aspect of the sales process. If you’re too lazy to learn how to do it effectively or don’t know where to go to learn the process, of course it doesn’t work well. It’s hit or miss if you don’t know how, just like closing is hit or miss if you don’t know how.
It isn’t difficult, it takes learning the process.
Michael:
I disagree that it’s a lot of work to get clients to give us referrals. Our clients are the best source of new business, and they are totally under leveraged. They are thrilled to help, when they’re asked. I speak to VPs of Sales and CEOs all the time, and I consistently hear that they haven’t asked their clients for referrals. It’s good money left on the table. There are many sources of referrals, but happy clients are absolutely the best!