Research shows cold calling scripts and tricks don’t work, but referrals do.

When will sales leadership wake up? They still measure the number of dials and emails sent in a day, when the return on these sales activities is dismal. The last I heard, it took eight to 12 touches to reach a prospect—and that was before the world started working from home. Perhaps it takes so many touches because salespeople use cold calling scripts, talk about themselves, and ask dumb questions like:

  • Are you the person responsible for…?
  • Who is the person I should talk to about …?
  • Do you have these pains? (Lists them)
  • Can you help me? I’m trying to find the person responsible for … (fill in the blank). Is that you?

If the prospect says yes, there’s another barrage of questions:

  • Do you use (whatever they’re selling) or outsource it?
  • How’s that going?
  • Are you getting the results you need?

If they’re satisfied, the salesperson compliments them first. (Flattery can get you everywhere–or at least keep someone on the phone that bit longer.) Then they launch into their tried-and-true (and oh-so-boring) sales pitch. It’s not the reps’ fault; it’s what sales leadership expects from them. But it alienates and annoys prospects.

(Photo credit: Alesya-Lesechka)

We all recognize cold calling scripts for what they are—forceful intrusions into someone’s day. Whether the outreach is by phone, email, or social media, it’s ice cold. The prospect doesn’t know the salesperson, doesn’t expect to hear from them, and doesn’t want to.

Several business leaders have told me that once in a while, they’ll listen to a cold caller. Sometimes it’s because the caller has a good line. Other times they feel sorry for the salesperson who’s just doing his job. But really, why waste your reps’ prospecting time, when they could devote that time to sales activities that guarantee a meeting with an ideal prospect?

Data Shows Sales Leadership Is About Relationships

I’m often asked if there’s research to support my position on referral selling. My data shows that salespeople:

  • Arrive with trust and credibility already earned, because the prospect’s trust for the referral source) gets transfers to them.
  • Get every meeting in one call, because they receive an introduction and their prospects know the business reason for the meeting.
  • Ace out the competition. They get in early and build relationships. The deal is there for them to lose. (That’s a sobering thought.)
  • Convert prospects to clients more than half the time. Most say the conversion rate is greater than 70 percent, because salespeople understand that lead qualification trumps lead quantity every time.

This is my “feet on the street” research—conducted over the last 24 years speaking with salespeople and sales leadership. But that’s not enough for some analytical types. Thankfully, other people have collected plenty of data to support my claims.

Referral Sales Is the Most Successful Sales Activity

Jonathan Farrington, director of research at the Sandler Research Center, recently shared some powerful data with me. Their study, The Hunt for New Clients, attracted more than 1,500 respondents from around the world, the majority of whom held senior roles.

The research premise was that sales leadership should focus a percentage of time on hunting and attracting new clients. Few sales organizations have a clearly defined lead generation strategy, and researchers wanted to discover what is working for the most successful companies, and why, and share their secrets. This is one of the first questions they asked:

It pains me to see the focus of sales leadership on cold calling and emailing. However, I was excited to see that referrals jumped ahead of all other sales activities. Sales leadership is finally waking up to referral selling as the #1 way to not only attract new clients, but the right kind of clients, and most importantly, to retain them.

There you go. That big green graph tells it all. The researchers concluded:

“Despite the fact that Cold Calling was named as one of the top three methods used, it was also described as the least successful, as were E-Mail Marketing, Exhibitions, and Social Selling. Conversely, the most common method used was also the most successful—Referrals.”


The Value of Referrals for Sales Leadership

If you’ve been following me for a while, you know my position on referral leads—they’re less time-consuming and costly to acquire, more likely to convert, and more likely to yield even more referrals. Here’s additional data from Sandler’s research:

“By association, referred salespeople are consequently perceived in a different light compared to those that have made contact ‘out of the blue.’ Additionally, the costs of selling to a referred client are reduced because they are easier to meet with and are likely to be reasonably well-qualified. As such, the probability of converting the business is much higher …

Generally speaking, referred prospects will accelerate through the sales pipeline at a much faster rate than other types and they will also be more receptive towards providing future referrals.”

Two essential points here are velocity and future referrals, so let’s take these one at a time:

  • Velocity: Sales leadership always talks about more velocity in the pipe, and some organizations actually measure it. But that’s a result metric and a lagging indicator. Your reps will get more velocity if you measure and manage the sales activities that got them there. Instead of telling your reps to get more leads in the pipe (many of which are unqualified), show them how to get qualified leads through referrals, and link KPIs to specific requirements for lead qualification.
  • Future Referrals: Your clients are your best source of new qualified leads. They understand the impact you made on their business and would gladly introduce you to others. (Just not their competitors, of course.) However, they’re busy working on their businesses, and you’re just not top of mind for them. Therefore, you must actually ask them to introduce you to other divisions in their company or to their counterparts in other organizations. As odd as this might sound, clients don’t always realize you want more business until you say so. Treat your client referrals like gold, and they’ll actually become your outsourced sales team.

Move deals faster through the pipe, close business sooner, reduce the cost of sales, and increase rep productivity. That’s the output of referral selling. Sounds like a winning combination to me. Want to dig in more? Learn what your referral program is missing and what to do about it.

Talk to Joanne about how to build a winning referral program, even when your team and clients are working from home. Choose a date and time to schedule a complimentary 30-minute call.

(Note: The full report from Sandler Research Center—which contains the authors’ thoughts, observations and recommendations—is only available to survey respondents. Data has been used here with permission from the organization.)

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