This is how you encourage your business contacts to refer you to new customers

For new and growing businesses with limited marketing budgets, a personal referral can be one of the best ways to get new business done.

A referral is a business contact that tells one of their own business contacts that they would recommend you. He asks that person if they’d love to hear from you directly and then gives their details to you if they say yes.

To be very clear, a referral is not the same as a lead or even a referral.

Online inquiries can often be referred to as leads, but the truth is, leads are any piece of information that can help you make a sale. Offline, this can be as small as a hint to someone who might be interested in your product or service. A referral can be a good online review or a passing positive comment that is great but doesn’t actively bring a customer to your door.

However, a referral is a warmed up opportunity to do business – a personal introduction to someone who has shown a special interest in hearing from you and is waiting for your call. In fact, it’s a lead and a recommendation combined.

The benefits of referrals over leads or passive referrals cannot be overstated. With a referral, you will be actively recommended and speak to someone who specifically wants to hear from you, which means the chances of conversion skyrocket. In comparison, leads give you a mountain to climb, even talk to the right person, convince them, hear what you have to say, and ultimately, persuade them to buy.

With referrals, you leverage the compelling science of authority that Professor Robert Cialdini speaks about in his book Influence: The Psychology of Persuasion. This immediately builds rapport and confidence in you as you have been given “expert” status by simply being referred as someone in the prospect who may be able to help them with their problem.

For all the tremendous benefits warmed-up introductions offer, many make the mistake of putting all of their efforts into leads and taking a passive approach to referrals by simply crossing their fingers and hoping that customers or employees will recommend them to their contacts.

Here are my top tips for taking a proactive approach and maximizing your ability to build your business through referrals.

Create incentives for referrals

Always look for a way to motivate your contacts to pass on your recommendations. E-commerce is constantly using incentives. For example, websites that offer a discount on your next purchase when you leave a review are effectively offering a cash incentive for your referral. But how can we create incentives for our existing customers without offering cash that can look a bit like a “brown paper bag”?

A great way to incentivize a current customer while protecting your face is to turn them around when they ask for a discount. Let’s face it, most B2B customers charge some cash off the advertised price almost by default.

Offering a discount in exchange for a transfer is a great way to process the request for a discount without devaluing your product or service. Instead of just being seen your prices dropping under pressure, you can offer a discount while maintaining a respectable level of value exchange by asking for something in return.

A similar approach can be applied to existing customers, where you can proactively offer a customer a discount on their renewal fee or their next purchase in exchange for a referral. When you can do this well, you can effectively combine a sales promotion strategy with your referral strategy. And if they are a customer who offers you repeat business, chances are they could become your referring goose, especially if they are customers who are well connected with other prospects.

Reduce friction

Don’t make it harder for your customer or contacts to pass on recommendations than it needs to be. Just do it. Time and again, I see sellers asking customers for recommendations but not giving them clear instructions – or even the exact kind of recommendations they need. My biggest tip is to create a template email that your customer can easily send straight to their own potential referral contacts.

Keep it short and punchy, but also make sure it includes information about why that person might want to hear from you. If you can add specific details about the work you’ve done for the referrer, it is even better as it sounds more like a personal recommendation than a general recommendation.

Do not be shy. Write what you think your customers would say about you and they’ll usually be happy to pass it on and glad you saved them the hassle of writing.

Then you can just pass that on to your customer or contact and they can just pass it on without worrying too much about how they are going to sell you. Or worse, you’re being sold the wrong way – so technically you get your referral, but it turns out bad because your contact didn’t properly explain what you’re offering.

The easier you can make it for your customer or contact to recommend you, the more successful your recommendation strategy will be.

ask

After all, the biggest tip for getting recommendations is to ask about them. It’s an old saying: if you don’t ask, you won’t get, so ask. I’ve heard from so many business people and salespeople that they regularly ask for referrals, but if you listen to them on the phone or in a pitch, they just never do.

Research from the Dale Carnegie Institute found that 91 percent of customers would be happy to make a recommendation if asked. But only 11 percent of sellers actually ask for recommendations. Likewise, only one in four salespeople actually asks about the deal. Ask, ask, ask – and you will be received.

Matt Simmons is the Senior Sales Training Geek at Sales Geek.

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