Sales and Sales Management Blog

February 21, 2013

Building Your Business on Referrals Pt. 2: Asking for Referrals is Bad Practice


OK, I know, you’ve been told your entire life as a salesperson that you have to ask for referrals and that if you don’t you’ll fail.  But if you’re like most sellers you’ve asked and on occasion get a name and phone number of someone that turns into a new client, but most of the time the names and numbers you get are about as targeted as taking a dart and throwing blindly at the phone book.

The above situation is so common that a great many sellers simply stop asking, thinking that referrals are nothing more than sales mythology, while others, thinking they are the cause of the failure to generate significant numbers of quality referrals, continue to ask with little success and a growing sense of frustration and failure.

The reality isn’t that generating quality referrals are nothing more than a myth or that the seller himself is the root cause of referral generation failure.

Referral generation fails primarily because of the way most sellers have been taught to seek referrals.  The seller isn’t the problem; the strategy they’ve been taught is at fault.

How have most of us been taught to get referrals? 

For the most part out referral training consists of nothing more than “do a good job for your client and ask for referrals with a question such as, ‘Mr. Prospect, do you know anyone else who I might be able to help as I’ve helped you,’ or ‘Ms. Prospect, do you know of anyone who might benefit from my products or services?’

Certainly on occasion the training may be a bit more in-depth—one trainer might encourage sellers to ask the question early in the sale while another stresses the need to ask only after the sale has been completed, or one trainer might use slightly different phraseology or might encourage the seller to ask for a specific number of referrals, but the essence of the training is the same—do a good job and ask for referrals.

The problem is the process taught causes more problems than it solves.

First, the good news—the traditional referral training solves a major problem—it encourages the seller to seek referrals.  Although the success ratio is typically very low, it does produce the occasional prospect that turns into a client. 

Now the bad news—it fritters away one of the most valuable business generation resources a seller has—the potential quality referrals from a satisfied client.

Let’s take a look at the primary problems the traditional referral “method” creates:

  • The Referral Question Comes Out of the Blue:  Most clients are not comfortable when put on the spot to give referrals.  When we ask for a referral we may be thinking that we’re asking a small favor but most clients take the request far more seriously.  When a client gives a referral they believe they are putting their reputation on the line, something most don’t do lightly.  Clients need time to become comfortable with the idea of giving referrals.  If we really want quality referrals, we have to allow our client the time to become comfortable with the idea of giving us referrals before we ask.
  • We Don’t Give Our Client the Opportunity to Give Quality Referrals:  When we follow the traditional training of “do a good job and ask for referrals” we literally stand in front of our client (or are holding on the phone) expecting them to pop off the names of great prospects for us.  We are asking them to go through their mental file cabinet and come up with great referrals in the course of 10 or 15 seconds.  That is simply an unrealistic expectation on our part and we usually get what we deserve when we put a client in that position—little to nothing of value.
  • Our Client Doesn’t Know Who a Great Prospect for Us Is:  Not only do we expect our client to be able to give great referrals just off the top of their head, we expect them to know exactly who we can help when much of the time our client hasn’t had the opportunity to fully appreciate what we’ve done for them, much less know what all of our capabilities are and who is really a top prospect for us.  We’re asking our client to do the impossible—know our business as well as we know it.
  • It Ignores Human Nature:  The traditional referral request is one-sided and offers the client no reason to give referrals.  There are, obviously, clients who will give referrals even when there is nothing in it for them, but human nature being what it is, the referral request can be far more successful if it can be shown that it benefits the client as well as the seller.
  • It Makes the Client do the Work:  Rather than making it easy for our clients to give us great referrals, we make it as difficult as possible by asking them to do something they are ill prepared–and often not inclined–to do.  Giving high quality referrals should be so easy for our client that literally all they have to do is say “yes.”

Although referral generation as traditionally taught is laden with self-defeating issues, referral generation when practiced properly can be a highly successful business generation tool—one that can literally be the cornerstone of a successful business.

Advertisements

7 Comments »

  1. Paul – Receiving referrals unexpectedly is always better than asking for them. This is in alignment with giving referrals first before expecting them in return. Very good post to remind those in business and in sales.

    Leanne Hoagland-Smith

    Comment by thecoachlee — February 21, 2013 @ 10:21 am | Reply

  2. I only do business with people who I was referred to.

    After doing business with a new client I don,t ask, then for referrals but only a few months after the sale.Let them experience my after sales services first.Then set up a “referral meeting” with the client to ask for referrals.It works every time with lot,s of success.

    Comment by Johan Oosthuizen — February 21, 2013 @ 10:34 am | Reply

  3. I respect Mr. McCord’s work and ideas, however…. when done properly, we CAN ask clients for referrals. I do it all the time with great success. I’ve taught thousands of financial advisors to do it as well. you can ask clients for referrals and personal introductions no matter what rung on the economic ladder they may be. The key is knowing how to do it in a way that fits today’s world. We can’t be agreessive. We don’t want this request to come from the blue (so we promote referrals in prior meetings), and, of course, we must be highly referable. Be referable. Promote referrals. Ask for them when the trust level is high. And turn your referrals into Personal Introductions!

    Comment by Bill Cates — February 21, 2013 @ 10:39 am | Reply

  4. As will be seen in part three of the series I’m not advocating that one forget about referrals per se, but I am arguing that in order for referral generation to be highly effective it cannot be done as traditionally taught of simply do a good job and ask for referrals. In fact I don’t advocate the traditional referral of a name and phone number at all but rather a direct introduction to the prospect by the client, and further that instead of asking the client to do our prospecting for us, I believe there is a far more effective way of working with the client so that we’re making it so easy for them to introduce us to someone we know is a great prospect that all they need do is say “yes.”

    Comment by Paul McCord — February 21, 2013 @ 10:50 am | Reply

    • Paul – Looking forward to Part III. I agree – referrals are not enough. We need Personal Introductions!

      Comment by Bill Cates — February 21, 2013 @ 12:40 pm | Reply

  5. […] that I thought would be a good topic for a sales debate. It is about referral practices. The author Paul McCord (@paul_mccord) states in the blog that referrals will lead your business into risk. I know that […]

    Pingback by How Referrals Works | A Sales Representative — May 17, 2013 @ 9:22 am | Reply

  6. […] Ways to Ask for Referrals: Building Business Referrals […]

    Pingback by The Importance of Building Business Referrals — October 10, 2013 @ 2:03 am | Reply


RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Blog at WordPress.com.

%d bloggers like this: