By Alan Rigg

No matter what business you are in, one of the best (and most overlooked) sources of quality sales leads is referrals. Just to be sure we are on the same page, let’s define a referral as an introduction to a potential prospect that is made by someone the prospect KNOWS and RESPECTS.

Respect is a very important issue when gauging the quality of a referral. The more respect the person being referred has for the person who is making the referral, the greater the likelihood the person being referred will make the time to have a MEANINGFUL conversation with you.

Why are referrals such a great source of sales leads?

Think about it - what could be better than a respected businessperson bragging about the quality of your products, services, and/or customer service to their equally well-respected friends and associates? Do you think this kind of input might jump-start some sales cycles? Plus, which is more fun (and profitable): working with prospects who already think favorably of you and your company, or trying to get the attention of people who have no idea who you are, what you do, or the level of service that you provide?

This brings up a very important point, which is that all referrals are NOT created equal! Here are four categories of referrals, ranging from MOST effective to LEAST effective:

1. Live, In-Person Introduction

This is when your contact walks you over to a potential prospect and makes a live, in-person introduction. Ideally, the introduction includes a glowing testimonial about you, your products or services, and your company.

2. Live Telephone Introduction

If time or circumstances do not permit a live, in-person introduction (for example, your contact and the prospect work in different facilities), the next best option is a live telephone introduction. This can be a conference call or a call from a speakerphone in your contact's office. Your contact may participate in the entire conversation, or they may leave the call after making introductions.

3. Electronic Introduction

If you cannot arrange for a live in-person or telephone introduction, the next best option is for your contact to speak with, leave a voice mail for, or send an e-mail to the prospect PRIOR to you contacting them. When you make your introductory call, be sure to mention that "(Name) recently contacted you to introduce me and explain why he/she thinks it would be a good idea for us to get together."

4. Authorized Name Dropping

The least effective referral is when your contact gives you a prospect's name and phone number and permission to mention their name when you call the prospect. This is certainly "warmer" than a cold call, but it is not as effective as the other types of referrals.

Why do we overlook referrals?

Like many of the activities involved in selling, asking for referrals requires a little practice before it feels comfortable. It is not difficult to ask for referrals (“Hey, Bob, who do you know - friends, family, or business associates - who might benefit from the things we have been discussing?”). But, you need to make a CONSCIOUS EFFORT if you are going to ask for referrals as frequently as you should. Once you get in the habit of asking for referrals, it just rolls off your tongue naturally.

How do you earn referrals?

The absolute best way to earn referrals is by providing great service to your customers. It is also helpful if you set an expectation right up front that referrals are one of your preferred rewards for providing exceptional service.

When should you ask for referrals?

When you do a favor for a customer, ask for referrals. When a customer places an order, ask for referrals. If a customer comments they are happy with something that you or your company did, ask for referrals. When you help a customer solve a problem, ask for referrals.

Customers are not the only source of referrals. Anyone you speak with is a potential source of referrals. If you feel you have built credibility with someone, or they seem interested in what you do, do not hesitate to ask them for referrals.

Conclusion

Referrals can be one of the most productive and profitable lead sources available to salespeople. However, it takes some practice to get comfortable asking for referrals. Plus, there are different kinds of referrals that produce different levels of results.

If you want maximize the positive impact of referrals on your sales opportunity pipeline, follow these steps:

1. Practice what you are going to say when asking for referrals until it rolls off your tongue naturally.

2. Hold yourself accountable for asking for referrals at EVERY opportunity. If you realize you forgot to ask for referrals during a specific meeting or phone call, no problem - call your contact back as soon as possible and ask for referrals!

3. Keep in mind that not all referrals are created equal! When you ask for referrals, always ask for in-person introductions first. If your contact can’t arrange an in-person introduction, work your way down the list of referral types from most effective to least effective.

Best wishes for sales success!

Copyright 2005 -- Alan Rigg

Sales performance expert Alan Rigg is the author of How to Beat the 80/20 Rule in Selling: Why Most Salespeople Don't Perform and What to Do About It. His company, 80/20 Sales Performance, helps business owners, executives, and managers DOUBLE sales by implementing The Right Formula™ for building top-performing sales teams. For more information and more FREE sales and sales management tips, visit http://www.8020salesperformance.com

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