In today's world of Yelp reviews and Google searches, it's easy for businesses to forget about the power of customer referrals. You see, prospects are
bombarded by loud advertisements and slick salespeople all day long. But that's far from what they really want.
What they really want is this: to learn about a business or service from trustworthy friends and acquaintances that vouch for it themselves. As a result,
every business needs a robust referral system to continually connect with highly qualified prospects.
But don't just take it from me! Recently, I had the incredible opportunity to sit down with Bill Cates, founder of Referral Coach International and author of the new book, Beyond Referrals - How to Use the Perpetual Revenue System to Turn Referrals into High-Value Clients. During our chat, he explained why businesses must have a referral system in place, and shared the keys to establishing a successful referral system. His advice can help you dramatically increase your business immediately.
Cates calls referrals "forgotten gold." Most businesses are aware that they should be focusing more on getting referrals -- but they don't, because they
don't have a referral system already in place. Building such a system from the ground up can seem like a time-consuming and challenging task. But before
throwing in the towel on establishing a referral system, first consider the upside to getting more referrals:
1. There is no cost: When Cates first began working with one of his clients, Anderson Windows, they calculated their cost per lead to be a
whopping $400. Once they developed a referral system, says Cates, their cost per lead dropped precipitously.
2. You'll increase your closing ratio: The closing ratio of a cold call is typically under 1 percent. The closing ratio of an inbound lead
usually ranges between 15 percent and 30 percent. In sharp comparison, the closing ratio of a strong referral can be as high as 80 percent.
3. You'll make larger sales: In today's market -- where prospects are hugely distrustful of salespeople -- it's difficult to close larger
sales. When a prospect is introduced to your organization through someone that he trusts, you are more likely to close a larger sale as a result.
4. Referrals beget referrals: When you make a sale from a referral, that new client is going to be more inclined to refer you to others in
his network as well. Think of it this way: You're creating an army of unpaid salespeople who recommend you to other potential prospects.
Now that we've discussed the benefits of referrals, let's explore the key elements to an effective referral system, according to Bill Cates:
1. Have a referral mindset: It all begins with becoming aware of the opportunity that's in front of you and taking advantage of that
opportunity. Most salespeople let referral opportunities slip by when their customers give positive feedback. Don't be one of them!
2. Work on your "referrability": You need to become referable to your customers in two ways. First, you need to make sure that it was a
total pleasure to do business with your company and that you were invaluable to your customer. Second, you need to be aware of how you stay in touch with
your customers over time. Do you fall off their radar once you do business together or do you stay closely connected? Make sure it's the latter.
3. Be proactive: It's your job to promote referrals all the time. The next time your client praises you, Cates recommends that you reply
with this: "Thank you so much! Please don't keep me a secret." And then, more important, actually ask for the referral! Salespeople often try to get referrals without asking. Customers
are not mind readers -- it's your responsibility to ask.
4. Turn referrals into introductions: Referrals are no longer enough anymore -- you need to be connected through an introduction. This
means that you must ask to be introduced directly, through the most appropriate medium -- face-to-face meeting, phone call, or e-mail.
5. Manage your referrals: How you treat a referral will determine whether that referral source will give you more referrals. So be
meticulously organized with your referrals, calling them immediately. Be sure to keep your referral source in the loop and send him a handwritten note with
a gift.
By developing a referral system, you create a company culture based on servicing your clients. Your customers are a sales force in their own right -- don't
let them keep you a secret!
How do you get more referrals from your customers? Please share below in the comments.