Guest Blog by Jonathan Farrington

Did you know that?

  • 40% of salespeople are failing in their sales careers.45% of all salespeople earn the average income for their industry.
  • A typical salesperson devotes only 10 to 20% of their time to actual selling because a large proportion of their available time is devoted to cold calling.
  • 85% of all salespeople do not generate enough quality referrals.
  • Salespeople who actively seek and exploit referrals earn 4 to 5 times more than salespeople who don’t.
  • Referral business closes and converts more than 70 percent of the time.

Man at race star lineWhy Is Referral-Based Selling So Powerful?

A referred customer is already pre-sold on the credibility of the salesperson, their company and the relevance of the products/services sold. These types of opportunities are much warmer than a cold-call based opportunity because it maximises the goodwill, inherent in the relationship between the referred customer and the referring person.

By association, salespeople are consequently perceived in a different light compared to those that have made contact “out of the blue.” The costs of selling to a referred customer are reduced because they are easier to see, and are likely to be reasonably well qualified so that the probability for converting the business is much higher. Generally speaking referred prospects will accelerate through the sales pipeline at a much faster rate than other types of opportunities, and they will also be more receptive towards providing future referrals.

What Are the Biggest Barriers to Getting Referrals?

If asking for referrals has not been included and communicated in the sales process, this will deter salespeople’s focus, as they will see asking for referrals as a “nice to do” rather than a “must do.” This in turn usually means that there is no rigorous method for measuring and monitoring how many referrals are generated and what the conversion ratios are for closing referred customer business.
Energy goes where attention flows, so without specific attention to this salespeople are unlikely to invest their energy in this direction. (Even if they are firm believers in the positive impact that referrals can create!). For many salespeople asking for referrals is uncomfortable because they feel unsure about how to do this effectively, and they aren’t confident they will get their desired response.
If people don’t know how to do something and they believe that what they are doing will damage their existing relationships, then it’s better to avoid it all together. Additionally, if salespeople make the common mistake of asking for referrals too early on in the relationship this can result in more refusals that further erode salespeople’s confidence.

Three Tips to Maximize Your Sales Organization

Therefore, to optimize the use of referral-based selling the following components are vital:

  1. Asking for referrals and acting on them needs to be incorporated in the overall sales process.
  2. Metrics around referrals should be sought and evaluated on a regular basis, because this contributes towards furthering the rationale for generating them.
  3. Development and training needs to be delivered to the sales team so they can maximise the impact of referrals and feel confident with this skill.

When Is the Best Time to Ask for Referrals?

People will freely give referrals when they have benefited from your product/service and have an established relationship with you. This rarely occurs during the initial meeting because whilst they may like you, they haven’t yet validated what you can do for them. That’s why asking for referrals should be when the relationship you have established is strong enough to ensure their trust and belief in you.

So, there we go, my most recent thoughts on the importance of referral selling, but if you are serious about learning more about this very sophisticated subject, I recommend you go spend some more time on Joanne Black’s site because Joanne is the leading expert in the world.

Jonathan Farrington is a globally recognized business coach, mentor, author, and consultant, who has guided hundreds of companies and thousands of individuals around the world towards optimum performance levels. He is Chairman of The JF Corporation and CEO of Top Sales Associates. You can discover more about Jonathan here: