In the world of sales, referrals are nuggets of gold. Not only are referrals door openers, they also provide instant credibility. And two of the biggest challenges in sales are getting through the door, and building trust, so referrals address and overcome those two issues. A referral can be the gift that keeps giving. When a referral results in closing a deal, then that new customer could provide a referral or more that can result in closing more deals with more referrals. When done properly it can be like the Eveready Bunny that keeps going and going and going, and giving, and giving, and giving.
There are many types of referrals but in the spirit of keeping it simple let’s divide them into two groups; referrals you pay for (Finder Fee Referrals), and referrals you don’t pay for (Free Referrals). It doesn’t get any simpler than that.
This type of referral provides a “Thank you” to the person providing the referral. The ‘Thank you” can be in the form of a flat dollar amount, a percentage, a discount, or a free service or product provided to the person making the referral. Employee referrals typically fall under this category, since an incentive is offered. The upside to this type of referral is that typically more referrals are provided. The downside to the finder-fee referral is that it has the appearance of being mercenary in nature. Now this may not make a difference to the one providing the referral, or the person receiving the referral, however later on it can make a difference to the person or business being referred. Now if the product or service you are providing is high quality, then it works out for everybody.
However if your product or service lacks integrity, than the person or business being referred can be offended and business relationships can be broken.
This type of referral is more opportunistic in that you are asking anyone and everyone if they know anyone who might be interested in the product or service you are providing.
Anytime is a good time to ask for a referral, however the best time to ask is immediately after making a sale or closing a deal. Another excellent time to ask for referrals is when your customer is re-ordering, or when you are making a service or follow-up call and the results of your product or service are outstanding.
People tend to be more willing to supply referrals when they know that what they are referring is top quality. In essence your customer’s reputation is on the line when they endorse a product or service to someone they know.
Any referral is a good referral, except that some are better than others. Asking for referrals, and getting referrals, and acting on those referrals should be an integral part of your business plan. Don’t be timid about asking for referrals. If you truly believe in your product or service, then you should want everyone to have the opportunity of using what you are representing.