Management, Marketing, Personal Development

What’s Your Referral Strategy?


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When you look at the sales leads you’re generating, are they of the quality you need? Chances are, you’d be better off focusing on strategies to generate more referrals. Yet when I ask business owners what their referral strategy is I’m often met with a blank stare. Let me be clear: A referral strategy does not include “If I wait long enough someone will refer a prospect to me”. Make sure this isn’t your plan! 

The quality of leads can be measured in three ways:

  1. What percentage convert into sales?
  2. How long do they take to convert?
  3. How profitable are they when they do convert?

Leads generated by someone clicking a website and being forced to enter their contact details are typically very low quality ‘cold’ leads. They’re usually a long way from being someone ready to purchase. It’s good to have this kind of activity going on in the background, but generating business today or next month is better achieved with higher quality leads.

At the other end of the scale comes referrals from trusted partners. A prospect who’s referred to you is most likely to be genuinely interested and be ready to buy from you the soonest. But are you getting as many referrals as you could? A poor strategy is to wait for someone to spontaneously refer a prospect to you! As the Chinese proverb says: “Man stand long time in field with mouth open, waiting for fried duck to fly in”. In other words… get off your seat and do something to make it happen!

Referral Sources

  • Create a referral strategy and ask existing/past clients for a referral
  • Create strategic alliances and generate referrals for each other
  • Join a local business networking group
  • Make it clear to your suppliers that you’ll make the most of leads they pass you
  • Get to know the best-connected people in your industry/community

Existing customers should be the first place you should look to for referrals. They know what you do and they know first hand how well you do it and why someone should be your customer. But they’re not consciously thinking about who they know that would be your next good customer. Yes, you actually need to ask them. When did you last ask your best customers for a referral? Typically you find that happy customers would be delighted to refer people to you, they just need prompting – regularly.

Strategic alliances are the next great way to generate high quality referrals. In your industry, what kind of business has the same or similar customer base but doesn’t compete with you? These are people you could initiate a strategic alliance with and introduce each other to your customers. If you do it loosely you’ll probably get results, but if you do it in a planned way you can get regular good referrals (and give them too of course).

Business networking groups are another excellent way to give and to get referrals. Google your local area to find business networking groups and visit one new one each month and you’ll find a few that suit you. There are people in groups I attend who get more than 80% of all their business via referrals from the group! If you’re not in such a group – perhaps you’re only experiencing 20% of the business you could be getting. One point of advice – you’ll get as much as you give.

Suppliers
are often overlooked when it comes to sources of good referrals. They probably have people asking them where they should buy, and they’re probably recommending someone – make sure it’s you! Guess what their biggest frustration is? Having been in this position several times I can say confidently that the biggest frustration is knowing that the company I recommend is going to serve the referred prospect in a really professional manner. Assure your supplier that you’ll look after any referrals well.

Make it easy for all of your referral partners by giving them more than just your name and phone number. And I don’t mean just a business card… but a pile of those would be a good start. Create something that would work well for a partner to hand to a potential prospect, or better still, an introductory voucher that has some genuine value.

Feedback counts – for every referral someone gives you, start by saying thank you, and give them feedback updates so that they know you looked after the person you referred. That way they’ll refer again.

Creating a referral strategy that works for your business is an incredibly effective way to generate high quality leads regularly. But many of the things you need to do that make all the difference are not obvious. If you’d like me to analyse your current strategies and help get you on the right track, call me now and ask for a 2-hour business diagnostic.

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