Referrals as a Prospecting Strategy

Published: Monday 9th September 2013

Do you ask for referrals as a way of expanding your list of potential prospects?

Referral marketing is a cheap, quick and effective way to widen your circle of potential clients. For example, according to Tom Hopkins in “Sales Prospecting for Dummies”, the closing ratio for non-qualified leads is 10%, vs 60% with referred leads. The referrer is giving you credibility which increases trust. You simply cannot beat a good referral!

If it is so easy, why do so few businesses do it?

Because it feels uncomfortable – there is a high-vested interest in asking for a referral, a massive fear of rejection and the implication that you then owe them something in return. To be successful, it needs a high-level of trust on both sides – a bit like asking for a job reference.

Even if you get past this uncomfortable feeling, you may be asking the wrong type of client at the wrong time and this can be damaging. Most agencies don’t treat referral marketing with the same rigour as the rest of their marketing strategy so think about what percentage of your business you anticipate coming from referrals, how many clients you can ask and when you will ask them. As with any other part of your prospecting strategy, you need to plan.

Is there an easier way?

Yes…turn it on its head. If you switch to the viewpoint of giving referrals as a way of expanding your circle of influence then this can feel much more comfortable. In particular, the reciprocation trigger now works in your favour! 

Just remember the 3 rules of giving a referral:
1. The referral must be relevant
2. The referral has to deliver (if the referred business or contact messes up, it looks bad on you)
3. The referral has to feel authentic

If you become remembered as a source of quality referrals this can have an incredibly positive impact on your prospects, with clients seeking you out rather than the other way around. You can build on your reputation for referrals by actively promoting your knowledge and capabilities using social media, when you email prospects and existing clients, on your website and making full use of any referral tools that social sites have.

Lastly, don’t forget to reward those who refer you. A simple thank you note is often enough to build your mutual trust.

If you would like to hear more about using referrals to generate new business opportunities, we will be covering this and much more on our New Business Skills Day on 23rd October 2014.

Please get in touch for further details