When you ask how their companies got off the ground, business leaders will often say “word of mouth.” But if you follow up by inquiring about their process for collecting referrals, odds are you’ll be greeted with a blank look.
This is a shame. Referrals are a remarkably effective avenue to growing your business by tackling new customer segments, or further penetrating existing ones. According to NoMoreColdCalling.com, the close rate of referred leads is approximately 50% -- considerably higher than the rate of a non-referred prospect.
Referrals can also be closed faster. HubSpot Principal Account Executive Greg Brown can close an inbound lead in 10 hours. But that number gets slashed to two hours in the case of a referral.
The reason I like referrals so much is simple: Everyone has relationships. The people I know and the people they know are a great untapped resource in scaling business fast. Let’s do the math.
According to the book How I Raised Myself From Failure to Success in Selling by Frank Bettger, the average person has 200 close relationships. If you go one step further and consider the 200 people each of those 200 people are close to, suddenly you have a network of 40,000 contacts that are just one or two degrees away.
How long would it take you to get to 40,000 contacts without the help of referrals? If you met 100 per week (an ambitious goal), eight years would pass before you reached 40,000. The internet, social media, and inbound marketing would help you in this goal, but it would still be very difficult.
The value of referrals is clear to most business leaders, but what’s not is the process behind getting more. Today, the most commonly used referral-gathering avenues are networking events and direct inquiries.
Neither of these is ideal. When you attend a business lunch or a conference, you might collect some business cards and schedule a handful of follow-up meetings. But it’s hit or miss -- how many times have you looked at your collection of cards at the end of the day and thought ‘did I really get any value from my time?’
And directly asking for referrals can be downright uncomfortable. Business leaders often feel awkward about putting their clients on the hook, and the response is usually a lukewarm “I’ll think about it.”
We need a better process.
The Referral Mindset: Give to Get
Rick Roberge, trusted advisor and coach to sales rock stars, espouses a “give some to get some” referral process. How does he know it works? He’s grown his own business almost entirely from referrals. He calls this giving approach possessing a “referral mindset.”
So each time you meet someone new -- in person or online -- think: Do I know someone who could benefit from my new acquaintance’s product or service? If you do, reach out to them and ask if it’s appropriate to make an introduction.
Taking a step back, even sharing content on LinkedIn or Twitter can be a way of demonstrating a referral mindset -- you’re exposing others’ businesses to your network. If you have a specific person you’d like to refer in mind, informally introduce the content author and your acquaintance by tagging both in a retweet or LinkedIn share.
Do this enough, and you’ll create a network of people who feel positively toward you, and might even want to return the favor.
Another tip that can help you get more referrals besides giving more is to clearly state what type of customer or business you’re looking to bring on each time you introduce your company to a new contact.
In a non-sales example, I visited with a job seeker for an informational interview several years ago. After he established his qualifications, he presented a list of target companies that he wanted to meet. His preparedness impressed me, but more than that, he helped me help him by being so specific. Because I clearly understood his targets, I was able to easily identify any mutually beneficial introductions I could make.
Now, I wouldn’t recommend carrying around a list of target accounts in your pocket. But it is helpful to have a positioning statement along the lines of the following at the ready:
We are looking to work with [this type of company] who has this [type of problem] oftentimes brought on by [trigger event]. We like to work with people at these companies who are [traits and roles].
Weave this statement into networking, cocktail chatter, and on other occasions with potential referrers, and you’ll help new acquaintances establish a connection between you and your ideal prospects. They might not hop online and make an introduction immediately, but you’ve planted the seed in their heads so that next time they come across someone who could use your business’ help, you’ll come to mind.
And this works both ways, in the true spirit of give and get. You should strive to understand new contacts’ ideal prospects to be able to provide them valuable referrals. That's the referral mindset at work.
It’s important to note that this referral process isn’t linear. If you give someone one referral, it won’t always result in exactly one received. But according to Rick, the more you show you are willing to help others, the more help you will get in the long run.
Want to learn more about establishing a referral process and adopting a referral mindset? Join the live webinar How to Get Referrals with Rick and myself on 8/14 at 1 PM EST.