Sales and Sales Management Blog

November 11, 2009

Not Getting Enough Quality Referrals? Here’s Why


Virtually every seller has been taught that generating referrals from clients and prospects is the way to sales success; but less than 15% generate enough referrals to significantly impact their business.  Most of the time, the problems sellers have generating referrals is due to the training—or lack thereof–they have received, rather than with their performance.  The traditional referral training has been to “do a good job and ask for referrals.”  Yet, it has been obvious for decades that it really does not work very well.  Using the traditional approach, the typical seller will get an occasional name and phone number or two from their clients but seldom do these names and phone numbers result in a sale.  Certainly, on occasion, these referrals become clients, but the close ratio tends to be quite poor.

The failure to generate a large number of high quality referrals actually lies in the traditional method’s approach to the client.  The traditional “do a good job and ask for referrals” approach creates several roadblocks to getting referrals.

First, by waiting until the sale is complete and then asking for referrals, your client has not had the opportunity to prepare for your request.  To the client, the request comes from out of the blue.  When you approach your client with your request without giving them an opportunity to think about it, you have put them on the spot.  You are only giving them a few seconds to go through their mental file cabinet to come up with quality referrals and that isn’t realistic.  More than likely in this situation, they will not be able to immediately produce the number or the quality of referrals you want.

Second, even if your client takes a few seconds to think about it, they really do not know what you want.  It may seem obvious to you, but your client really has not a clue what a good referral for you is.  This may seem a little difficult to accept, but it is true.  You assume that because you sell a whole array of financial products and services, your customer is immediately going to think, “Who do I know who needs or uses any type of financial advice, guidance or products?”  Wrong assumption.  What they actually think is “what does this person want from me?”  Or, more likely, “how can I get out of answering this?”  Without having defined for your client exactly what a quality referral for you is, you stand very little chance of getting quality referrals.

Third, the traditional method of “do a good job and ask for referrals” does not give your client a reason to give you referrals.  We make the assumption that if we have done a good job, the client will like and respect us and be willing to give us referrals.  Again, this is far from the case.  Although a small percentage of clients will, most clients will not give good, quality referrals just because they like you or because you have done a good job for them.  You must give them a reason to give you referrals.  We spend a great deal of time in the sales making sure the client understands the “What’s In It For Me,” but when we get to referrals all of the sudden we think WIIFM doesn’t matter?  They need to understand why it is in their best interest to give you referrals—and after the sale is complete, it is too late to try to explain how giving you referrals benefits them.  Clients assume that whomever they refer you to will be more demanding and critical they have been.  When a client gives a referral, they are putting their reputation and image on the line with the person to whom they are referring you.  They are concerned about what their friend or acquaintance is going to think of them, particularly if you mess up.  Consequently, you must give them a good reason why they should go out on the limb for you.

Fourth, the traditional referral generation method does not give the client an objective standard by which to measure the quality of your performance.  You and your client may “feel” you have done a good job, but when you ask for referrals, they begin to think back over the sales process more critically and question whether you have really performed up to standard.  If the two of you agree up-front on exactly what you need to do in order to “do a good job,” they will have an objective basis to decide if they trust you enough and if you have earned the right to be sent to the people they really know and respect.

And finally, although not a direct result of the traditional referral generation method, an equally serious issue is studies show that the majority of the times advisors do not really ask for referrals—rather they suggest referrals.  Instead of asking a direct question seeking referrals such as “John, which of your friends, family members or acquaintances do you know that I may be able help solve some crucial issues?” the typical seller will make a weak request such as “John, if you happen to know someone I can help would you mind letting me know?”  Or, “John, if you run across someone who could use my services would mind giving them my card?”  Rather than a request for referrals, these are throwaway sentences, quickly forgotten by most clients.

Traditional referral training is inherently unfair to you and your client.  It does not give you the tools needed to successfully work with your client to generate quality referrals, and it does not give your client a reason to give referrals, nor does it give them a chance to become comfortable giving you referrals.

Yet, it is possible to generate a very large number of high quality referrals from your clients.  You need to make sure that your interaction with your client eliminates these shortcomings.  Preparing your client during the sales process to give referrals by informing them up-front that your business is referral-based; defining for your client exactly what a quality referral for you is; educating your client on why it is in their best interest to give you referrals; and then coming to an agreement with your client on exactly what you must do during the course of the sale to earn their referrals will quickly give you a large pipeline of quality referrals. 

By recognizing and resolving the problems of the traditional referral generation method, you can turn these issues into your strengths, generating a large number of high quality referrals from almost every one of your clients and prospects.

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1 Comment »

  1. […] This post was mentioned on Twitter by Paul McCord, GoodSelling. GoodSelling said: Not Getting Enough Quality Referrals? Here’s Why http://bit.ly/34VdRf […]

    Pingback by Tweets that mention Not Getting Enough Quality Referrals? Here’s Why « Sales and Sales Management Blog -- Topsy.com — November 11, 2009 @ 10:53 am | Reply


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