Watch out for the gap in your referral business!
It’s an epidemic. Every sales exec says they need more leads in the pipe. That’s a prospecting problem that hasn’t changed in decades and won’t anytime soon. What these sales execs don’t say is they need more qualified leads. Why do they always leave out the word “qualified”? I have a few guesses:
- Maybe they think it’s too tough to get only qualified leads?
- Maybe they think it’s not realistic?
- Maybe they fear they won’t be successful if they limit their prospecting opportunities?
- Maybe they prefer quantity over quality?
Either way, they hedge their bets and don’t make their reps accountable for generating qualified leads. Then they wonder why their teams can’t close, or why reps spend all day cold calling and rarely ever get a bite. Why? Because they’re overlooking something fundamental.
You know who doesn’t have to cold call or struggle to close deals? Referral sellers.
The Problem with Your Prospecting
When it comes to lead generation, quality trumps quantity every time. Too many unqualified leads clog up the pipeline and waste sales resources. Those leads are fluff, not reliable, and can disappear in a nanosecond. Closing them doesn’t just require sales acumen; it requires blind luck.
Perhaps that’s why 61 percent of salespeople say the job is tougher than it was five years ago, even though they have better sales technology and even though their companies provide at least a quarter of their leads. In the same study, 71.4 percent of salespeople said that 50 percent or fewer of their initial prospects are a good fit.
In a separate HubSpot study, salespeople were asked which part of the sales process is most difficult—prospecting (42%), closing (36%), or qualifying (22%). But here’s the thing: If you start with qualified referred prospects, closing isn’t so hard. Neither is prospecting. You simply have to ask your clients for referrals.
That, it turns out, is not so simple. Nor is it very common.
How to Generate Only Qualified Leads
I know what you’re thinking: Just because people are referred doesn’t mean they’re qualified leads—unless you ask the right way. That means you:
- Clearly describe your ideal client—exactly who you want to meet.
- Let your referral source know the business reason for introducing you.
- Get as much intel on the prospect as possible and ask the question: Why do you think your contact would talk to me? (You’ll learn the business issues you can solve. Obviously, you have a lot of discovery to do, but you’ll have a head-start.)
- Ask for a referral introduction—your referral source reaches out to the prospect, introduces you, and gets the prospect’s agreement to meet with you.
You’ll know for sure the lead is qualified because your prospect has agreed to talk to you. Isn’t that better than a lot of smoke and mirrors in your pipe?
Watch Out for the Referral Gap
Referral business was a hot topic at a recent conference I attended. At lunch, I sat next to Sam, the EVP of sales at a mid-sized tech company. He had an impressive history of sales leadership and was savvy about building skills for his team. He told me they had a robust prospecting plan in place, and they were getting referral business. He thought they were doing a pretty good job of it, actually.
I could have left that comment alone, but I had one more burning question: How about your current clients? Are you asking for referrals from them? Sam thought a minute and said: “We could do a much better job of that.”
It’s not just Sam. It’s everyone. How did I get this flash of the blindingly obvious? Well, it wasn’t so obvious until two recent client engagements.
I interviewed a dozen senior leaders in preparation for a presentation to more than 100 of their consultants (who also needed to sell their services). The topic was referral selling and how to build a referral culture. I asked each person how they currently attracted new clients. They told me three ways:
- A client goes to another company and brings them in.
- Someone in their consulting firm goes to corporate and brings them in.
- Internal referrals from other divisions call on the same buyer.
Sounds good, right? One element was clearly missing. I inquired whether they were asking their current clients for referral business. Big pause. The exact response was: “That would be a really good idea.”
Another client was dedicated to building a referral culture. Their goal was to get more referrals by expanding their network of referral sources. They understood that referral introductions ensured qualified leads. They built a referral strategy, invested in referral skills for their managers and salespeople, and set KPIs for asking for referrals. Sounds on target, right? Yes. But they were still missing something.
This company had many sources of referrals, but they relied on one group as their primary referral channel. They kept going back to the same well, which was slowly drying up. They never considered asking neighbors, friends, colleagues, and business associates for referrals. But the most eye-opening of all, they weren’t asking for referrals from their current clients. They were leaving money on the table every day by ignoring their most powerful source of referral business.
You Must Ask to Receive Qualified Leads
And there’s the gap in your referral business—your clients. Current clients are your best referral sources. They know first-hand how you took them from agonizing over a serious problem to building their sales team, revenue, and profitability. They know the expertise and insights your sales reps regularly deliver. Your clients can become your own private sales team. But therein lies the problem. They don’t know you want them to refer you, until you enroll them in your referral strategy.
Clients will gladly introduce you, but they’re not mind readers, nor do they spend much time thinking about you. They’re running their businesses and are moving as fast as (or even faster than) you. As odd as it sounds, they don’t know that you want referral business. I’ve had clients actually ask if I need more business.
Most clients won’t think to refer you unless they’re asked. And your team probably won’t ask unless asking for referrals is integral to your go-to-market strategy.
Make a list of your current clients—everyone you’ve met during the sales process. Not just your buyer, but everyone with whom you’ve interacted at the client company. Organize the list by the people with whom you have the best relationships. Then start at the top and keep going until you’ve asked every single one of them for referral introductions. The result will be a stream of well qualified leads.
If you’re committed to referral selling, recognize the gap in your referral strategy, and are willing to commit to building referrals and being accountable for results, then contact me at email@example.com to discuss how to build a referral culture. Picture a world where your clients become your outsourced sales team, and you get only qualified leads in your pipeline. Your prospecting will never be the same. Pretty cool, yes?