Generating Referrals
Interpreting the Trait(s) Associated with this Challenge
Social Drive (Sd) – Level of need to make social connections and receive recognition
Individuals with high Sd are socially impulsive and driven by their need for status/prestige recognition to collect casual relationships. They are motivated to higher productivity by public recognition and peer competition.
Individuals with low Sd are socially controlled, quite selective in making new relationships, and rarely motivated by public recognition.
Detail-orientation (Do) – Style of decision making—intuition versus analysis
Individuals with High Do are more analytical and philosophical and prefer to spend time preparing and analyzing information. They use the parts to understand the whole (the “trees” to understand the “forest”).
Individuals with low Do are visionaries who look at the “big picture” and delegate the detailed analysis to others. They use the whole to understand the parts (the “forest” to understand the “trees”).
Need to Nurture (Nn) – Level of need to take care of others
Individuals with high Nn are often sensitive to the needs of others and are motivated to be of service, no matter the sacrifice in time and energy. Because they are so vulnerable and open with their emotions, they can be sensitive to criticism or rejection.
Individuals with low Nn are better at time management, less vulnerable to criticism, more business-like in their demeanor, and less nurturing to fellow employees or customers.
Skepticism (Sk) – Level of trust in others
Individuals with high Sk are more distrusting of the intentions of employees and management and are less transparent with their emotions. They are highly selective when choosing relationships with fellow employees.
Individuals with low Sk do not pre-judge others nor are they skeptical of the intentions of the manager. They treat everyone without bias and find it easy to relate to other employees.
Why Generating Referrals is a Challenge for You
| Low/Moderate Need to Nurture |
Your natural tendency to be "task oriented" instead of "service-oriented" will cause you to avoid situations where you need to interact with your clients who are prime sources of referrals. |
| Moderate/High Skepticism |
You are naturally inclined to be distrusting and may question the value referrals can bring. |
| Low Social Drive |
Because you prefer to work alone, you will find it difficult to ask others for help in growing your business. |
Why Generating Referrals is Important to Sales
There are many ways to generate leads to ensure a steady flow of prospects so that you can keep your pipeline full. The graph below shows what percentage of executives agree to meet with salespeople and why. As you can see, referrals are a proven and effective method of prospecting for new leads.
| Phone call from Salesperson |
20% |
| Letter from salesperson followed by phone call |
22% |
| Contact at tradeshow |
22% |
| Referral from a person outside the company |
42% |
| Inside recommendations |
82% |
Why Generating Referrals is Important to You as a Salesperson
The nationwide statistics on referrals are very encouraging for B2B sales--54% of pursued referrals will result in a sale and 92% of those sales will remain as a customer for life. Unfortunately, 87% of referrals are not properly pursued! Some reasons are:
-
The lead is not qualified
(this is the only valid reason for not following up on a referral!)
- Fear of rejection
- We are too busy
- We are too lazy
- We have no system or process to use for follow up
- We do not make the minimum number of contacts required to make a sale
Your best customers are your best coaches and cheerleaders. The person referring you makes an excellent coach for both you and the buyer—he or she can give you the necessary information to qualify the lead and tips on how to make the best proposal. He or she can also provide positive feedback about you to the buyer.
One of the most compelling ways we can understand the “power of the referral” is to evaluate our own actions when we are looking for a new product or service. For small things, we might search the internet or look in the yellow pages, but for the “big stuff,” all of us almost always “ask around” to our friends and colleagues. We want to find someone we know and respect who has had a similar need and has been “delighted” with the product or service. Why? Because we reduce the risk of a bad outcome by using a “proven” service provider or product.
As a result, the number one item on everyone's list when looking to buy is a personal/peer recommendation.
This is the reason for the statistics above on executives agreeing to meet with salespeople. People “hate” meeting with a stranger who is also a sales person. We all dislike being “sold” to. However, the vast majority of us (82 %!) will meet with a sales person based upon a personal recommendation from someone we respect and trust. If you increase the number of times you “get in front of the decision maker,” you will automatically increase the conversion rate of your prospects and suspects into customers.
The number one way to find qualified prospects who will agree to meet with you is to ask for and follow-up on referrals.
Check Points for Generating Referrals
- What percentage of referrals will result in a sale if pursued?
- 22%
- 54%*
- 87%
- What percentage of referrals is not pursued at all?
- 13%
- 66%
- 87%*
Red Flags for Generating Referrals
| Low/Moderate Need to Nurture |
As someone with a Lower Need to Nurture, you avoid situations where you need to build relationships, which is a critical part of generating referrals from clients and vendors. To be more successful, recognize that people ultimately want to help people they like and make an effort to get to know your customers and make them comfortable with you so you will be the first person they think of when someone asks them, "do you know someone who can help me with..." |
| Moderate/High Skepticism |
As someone with higher Skepticism, you are always in question mode and one of the things you will question is the value referrals can bring which includes opportunities to grow your business. To be more successful, you will need to stretch in this area by recognizing the fact that 54% of pursued referrals will result in a sale and 92% of those sales will remain as a customer for life. |
| Low Social Drive |
As someone with Lower Social-Drive, you do not have an inherent need to interact with others and will miss out on opportunities to grow your business as a result. To be more successful, you will need to stretch in this area by recognizing the facts behind the success of referrals--54% of pursued referrals will result in a sale and 92% of those sales will remain as a customer for life. |
Executive Summary: Generating Referrals
Multiple studies over decades of research illustrate that referrals are the best source of new leads.
A personal reference almost always has the biggest impact on people.
Statistics show that executive decision makers are over twice as likely to agree to meet with a sales person with an “outside” referral, and over four times as likely to meet with a sales person with an “inside” referral (where an inside referral is either inside their company, or a trusted friend or colleague who is outside their company but inside their individual “circle of trust.”
One reason why “average” salespeople don't use referrals is that while they have learned in training and in their reading that referrals are the best source of new leads, they have not properly pursued their first referrals (primarily by not giving them enough contacts). As a result, they have come to the conclusion that “referrals don't work for them” and have given up using referrals as “too much trouble.”
Ask the person who refers you to be your coach and to help you succeed with the referral.
Devise a plan to make twelve contacts on the referrals, seven of which must be quality contacts (face-to-face discussions, discussions on the phone, or active email/instant messaging/text messaging exchange).
Watch your sales skyrocket!
Actions for Generating Referrals
- Ask your best customers for referrals
- Create a plan of the twelve contacts that you are going to make on each new referral
- Involve them in the introduction
- Set up a social or sporting event for the three (you, the referring customer and the prospective customers)
- Set up a meal for the three of you
- Set up an in-person meeting or conference call
- Identify a network of salespeople in other industries with whom you can trade referrals
- Join a local networking organization (e.g., SMEI) in order to build relationships with salespeople in other industries in your area.
- Trade referrals with your network and help each other succeed with the referrals.
