It’s time to get serious about business referrals. In spite of numerous misconceptions and poor implementation, referrals in business are where the power is. But the first step to harnessing this power is understanding just what referral selling is and how it feeds your sales machine.
Is Winning Cheating?
“Sales is hard enough. Let’s cheat and ask for referrals.” Those were the exact words of a sales executive when asked about the top business development activities for sales reps. I almost fell off my chair. He had just presented the audience with a five-step prospecting plan that included many lead generation techniques—including cold calling, emails, voicemail, and social media touches. Then he told us we can actually shortcut the sales process and “cheat with business referrals.”
Are you as flummoxed as I was? B2B salespeople have worked hard to elevate the reputation of our profession, establish ourselves as valuable business resources, and distance ourselves as much as possible from the image of loud-mouthed, arrogant, product-pushing salespeople (think car sellers, who are consistently among the least trusted professionals).
We’ve all met B2B salespeople like that. They don’t care about their buyers. They just want to make quota—whether it’s end of the month, end of the quarter, or end of the year. We know when it’s crunch time for them, because they suddenly offer price discounts if we sign by their date (not ours).
Yes, we know those salespeople, and we don’t want to be lumped in with them, nor do we want to be like them. And then an executive at a major sales conference says we need to cheat. Worse yet, he said referrals are cheating, when referral leads are the most trusted leads of all.
Let’s clear this up right now. Business referrals aren’t cheating. That’s just one of many myths that stand in the way of sales success.
The Multiplier Effect of Business Referrals
What’s the #1 sales execution challenge for most teams? The ability to generate enough qualified leads. That’s according to CSO Insights, and a variety of other reports. Matthew Cook, founder of SalesHub, puts it this way: “Professional sellers are working on honing their ability to not just find viable prospects but to find the right stakeholders at these companies.”
That’s exactly what referrals do. Reps receive introductions to their prime prospects. They’re not just calling names on lists; they’re calling bona fide decision-makers who expect to hear from them and want to take their call. They get meetings in one call, get in early, uncover pressing problems, build strong relationships, get introduced to others in the organization, and cement their status as a preferred vendor.
But wait, there’s more. Referred reps have already earned trust and credibility before they even place the first call to their prospects, because they’ve been referred by people those prospects know and trust. That trust is transferred from the referrer to the sales rep and sets the tone for the conversation, which is a big deal, considering only 18 percent of reps are trusted during the B2B sales process.
Referred reps don’t get put on the spot and asked who they are and what they’ve got. Buyers know referred reps will share best practices, insights, and an outside perspective—not just pitch products. They know the business reason for the meeting and are curious about what the rep has to offer.
Best of all, the conversion rate with referred prospects is well more than 50 percent (usually more than 70 percent). Try beating that with any other touted business development activities. It’s no wonder that high-growth businesses—companies with double-digit growth—rank customer referrals as one of their most successful sales strategies
Do You Have False Referral Business Ideas?
Before you can put a referral system in place to generate those hot, high-converting leads for your team, you must believe without a doubt that business referrals are the key to qualified lead generation. That means clearing up any misconceptions about referral sales, for yourself and for your team.
Here are the most common myths regarding business referrals —and why they’re busted:
- Business referrals take too long.
Really? How many new clients does an account executive need in a year? Probably not 100, probably not even 50, maybe not even 20. On average, a cold outreach takes about eight touches to reach a prospect. What a dismal cold calling success rate and a total waste of time.
When salespeople receive referral introductions, they get meetings with one call. Here’s how it works:
- The salesperson reaches out to the referral source, describes the ideal client he wants to meet, and explains the business reason for asking for a referral. The salesperson gathers as much “intel” as possible about the prospect—what’s she like? What’s her communication style? What’s important to her? What are the business issues? What do you think would be my best approach?
- The referral source provides an introduction—via email, a conference call, or an in-person meeting—and suddenly the prospect goes from cold as ice, to looking forward to the conversation.
- The salesperson schedules a call with the prospect and gets the meeting.
That’s it. One referral, one call, one meeting with a VIP decision-maker.
Then it’s up to sales reps to model the behavior of a top salesperson—to listen intently, ask good questions, share insights, and refer someone else if their solution doesn’t fit. Yes, they’ll walk away, but not before they help their prospect. That’s the kind of salespeople that buyers want to work with and send business referrals. And isn’t that really the kind of salesperson that most account executives want to be?
So, why would a middle-market or enterprise salesperson waste time with arduous cold calling strategies? (That’s a rhetorical question, by the way.)
- Asking for business referrals is asking for favors.
Business referrals are not cheating, and they’re not favors. Think about a time someone you know well asked you for a referral or recommendation—for a great restaurant, a great book, a great hair stylist. Did you feel like you were doing anyone a favor by sharing your opinions and insights or your connections? Probably not.
When someone offers you a referral, they’re not only helping you out, they’re helping the person referred. They trust that you will share insights and best practices, not a sales pitch. They’re also positioning themselves as a valuable resource and connector. It’s a win/win/win—not a favor.
- You can’t depend on business referrals as your only source of leads.
When I talk about the value of referral selling, most people nod their heads enthusiastically. They know it works. But when I say that business referrals should be their #1 outbound prospecting methodology, they stop nodding and look freaked out.
Don’t freak out. Outbound is the operative word. Instead of spinning your wheels with a cold outreach, adopt referral selling. Everything else stays pretty much as is. Marketing still runs nurturing campaigns, provides relevant research, writes blogs, initiates and promotes podcasts and webcasts, and forms a partnership with sales to advance and close deals (hopefully).
Social media activity is table stakes. If you’re not in play on social media, you’re not in business. LinkedIn is the professional network. Salespeople should use it to begin conversations, share content, contribute content, and share/comment on posts from prospects and clients. That’s how they gain visibility and become known as thought leaders and go-to experts in their field.
But when it comes to outbound prospecting—how salespeople spend their time and build their pipelines—cold calling is a frustrating and unproductive strategy. That includes cold emails or cold LinkedIn messages. Referrals are HOT, HOT, HOT!
- We already “do referrals.”
Telling your sales team to go out and get business referrals is not referral selling. Referral sales requires a strategic, disciplined system, and it all starts with commitment from sales leadership.
The responsibility for a major change always starts at the top. If the CEO or division head doesn’t support the shift to referral sales, it’s not going to happen. Referral selling must become a priority. It cannot be an afterthought or something the organization does from time to time.
For this to become the way you and your team work every day, you must create metrics, invest in skills-building for your team, ensure accountability, and implement with precision. Referral selling is a behavior change that takes practice and ongoing reinforcement and coaching.
Bottom line: If you’re just telling your team to get referrals, they won’t. If you’re not committed to transforming your lead generation system through well-formulated referral business ideas and practices, please don’t even consider starting the process. When it doesn’t work, you’ll just contribute to the list of myths.
Don’t Let the Good Stuff Pass You By
Most reps dread prospecting, and I understand why. They’re cold calling, leaving voicemails, sending emails, and reaching out on social media. There’s no conversation and no relationship. It’s a numbers game, and given the dismal cold calling success rate, the numbers aren’t good.
“Sales prospecting is a grind.” That’s another quote from the sales executive who said business referrals are cheating. When I asked why he made no mention of referrals in his five-step lead generation system, he said he didn’t need to. He learns about his prospects on social media and reaches out with a profound message about why they should talk.
He finally admitted that most sales reps don’t know how to ask for a referral and that they need a referral play, a process. Obviously, referrals were an afterthought. He was so wedded to his methodology that he had no bandwidth for alternate approaches. That happens to many of us. We are heads-down proving our points of view. We forget to get our heads out of the sand and entertain other—even controversial—methods.
What will you do to ensure business referrals trump all your other business development activities? I have an idea. Take the next step and answer the 14 “Yes/No” questions on my Referral I.Q. Quiz. This will take you just a few minutes to complete. It’s your checklist for selling with business referrals. Most people find the results enlightening.