Referrals make selling easier.
So why is getting and managing them so difficult?
This perplexing research may be the answer: 83% of customers are willing to give referrals. But just 29% of customers do it, a Texas Tech study found.
Apparently many salespeople don’t ask, don’t follow up when they ask or don’t know how to handle the referral.
But, “the referral mindset starts before a sale is made,” says Michael Tracy, Founder of Sales Journey. “See every prospect as a potential referral source. It’s about beginning the relationship with the end in mind.
What goes right with referrals
It’s surprising more isn’t done to manage referrals, considering this research from Heinz Marketing and Influitive Marketing:
- about 80% of sales leaders, salespeople and marketers agree referrals are important to success
- 72% say referrals have a higher conversion rate, and
- 67% say referred customers have higher lifetime value.
Yet 70% of organizations admit they don’t have a formal referral program!
“Without a strong, proactive plan, most … fail to get the introductions and new relationships necessary to drive significant new referral and customer growth in the subsequent months,” says Heinz, Founder and President at Heinz Marketing, and author of Successful Selling.
Here a guide to help build, finesse or maintain that strong, proactive plan.
Formalize a referral program
It makes sense to formalize a referral program. 86% of the companies with formal plans experienced growth year-to-year.
Most customers won’t spread the good word without some kind of prompt from you. Sure, you’ll have some outliers who share your greatness in social media or tell colleagues and friends about incredible experiences. But it’s not enough.
Take these nine steps to build (or maximize) a referral program:
1. Set goals
Salespeople probably already ask customers for referrals from time to time with one, vague goal in mind: close another deal. More specific goals will create incentive to get referrals and give everyone a metric to measure success.
Consider what you want to get out of a formal referral program. Increased customer loyalty? Sales growth? Boosted brand awareness? Improved social media footprint? Market share gains?
No matter if you settle on one or several goals, you’ll want to set a quantity goal (i.e., grow sales 5% in two quarters, increase social media engagement by 10%, boost existing customer sales 7%).
2. Choose your targets
While a referral program should be far-reaching, you want to set some parameters so you don’t bother, overburden or fatigue any contacts.
You can include current and past customers, leads that were good but never closed, industry leaders, vendors, colleagues – people who know you, your brand and reputation.
“You’re always asking, ‘If this prospect becomes a customer what sort of experience will they need to have with my company to refer their friends, family and colleagues to you?'” Tracy suggests. “The other question I will ask is, ‘How much larger would your business be if you still had every customer that purchased from you?”
Your list might start big, but if you’re asking personally for referrals, whittle it down to those who you know believe in you and your solution.
3. Build a clear message
A referral program needs to be clear, easy to understand and easy to do – Just like the material in any lead generation plan. Customers – no matter how satisfied they are – won’t spend much time trying to decipher how a program works, how they’ll benefit from giving a referral and what to do.
The call to action – in email, online, in conversation – should be prominent, clear and easy to execute. For instance, “Click here to refer a friend and get your 20% discount.”
4. Centralize the message
Salespeople may be able to bring in referrals from different sources – meetings, email, conversations, social media, etc. – but you’ll want to establish a central location to capture the referral information. This helps you avoid letting any referrals fall through the cracks (as long as someone – perhaps a Customer Success Manager – monitors the location).
You might dedicate a landing page on your website or an email account for referrals. Include details about the program, its incentives and the call to action.
5. Choose incentives
You can get referrals without giving customers incentives, but research in the Journal of Marketing found rewards increase the likelihood customers will give referrals. Even better is a plan that rewards the person who gives the referral and the person who is referred.
You can mix up referral incentives – perhaps larger incentives for larger accounts, percentage discounts for existing customers and dollar rebates for referred customers. Some companies offer a limited-time premium service for a referral.
The important part: The incentives you choose have to make sense for your customers at the time you ask for referrals.
6. Prepare to measure
Use CRM or sales software or Google Analytics to track referral efforts and results. Keep tabs on how many people drop referrals on your landing page, via email, on social media, through conversations and with any other referral channels you have. Monitor where they come from and how successful they turn out in terms of the number of closes and sizes of deals.
Once you know which channels work best, you can focus efforts on those even more – and work on ways to improve the other sources if you deem them necessary.
7. Market your plan
Having a plan to formally spread the word is just as important as creating the formal referral program. Programs often fail because there’s no organized effort to market it.
Create a schedule to promote the referral program in social media, email, product updates, invoices, newsletters, blog, etc. Essentially, you want to make it part of your lead generation plan.
Even better, create a referral kit for your contacts to share with others. It can include case studies, testimonials, eBooks, blog links – anything that’s already easy to share.
8. Train
Train salespeople, customer service pros, technicians, customer success associates – anyone who has post-sale contact with customers – to spread the word on your referral program. You might even equip them with:
- standardized emails for contacts, telling them about the referral program
- a message they can share that explains the types of customers who are ideal fits
- the link to the landing page or email address where their contacts can give a friend’s or colleague’s information, and
- scripts to explain the referral program.
9. Thank
Build alerts or automatic messaging into your program so you never miss the opportunity to thank the customer who gave the referral for helping. And thank the person who was referred for taking an appointment.
When to ask for referrals
Timing is a critical factor when asking for referrals. Customers are more likely to refer more people when they’ve had a good experience.
Ask when:
Customers’ needs are satisfied
Once you’ve proven value – delivered on the promises, went the extra mile, eased their worries, fixed an issue – you’ve earned the opportunity to ask for a referral. Just don’t ask when the relationship is brand new or you aren’t 100% sure they’re satisfied.
Your pipeline is full
Don’t wait for the pipeline to dry up to reach out to new or loyal customers. Drive in high quality referrals consistently with a formal process.
Customers say they’re happy
When they compliment or thank you for a job well-done, you might say, “I’m glad you’re pleased. If you know anyone else who could benefit in the same way, could you introduce me? I’m always on the look out for others I can help like I helped you.”
You hit a milestone
Perhaps you helped them reach a professional or personal goal. Or you’ve been working together for a significant amount of time.
These are times customers recognize what you’re capable of and are willing to tell others about it.
Customers give a thumbs-up
When customers respond positively to a survey, reach out immediately. Thank them and ask if they know anyone else who would like to experience the same positive results.
Customers give a shout-out in social
Social media makes for an easy grab when it comes to referrals. Ask customers who post if they’d be willing to recommend some of their social followers who saw the post and can benefit from your help.
Customers ask for a favor
Customers sometimes request discounts, free-trails, extended terms or added feature. When possible, honor the request and ask them to share a referral with you.
You’ve posted
Add share buttons at the end of your blog or social media posts so customers (and anyone who sees your post) can refer others to you. It might not be an outright referral, but the share is an endorsement.
Similarly, add share buttons to your website product or service pages so customers can forward the details, preferably with a message of why they’re sharing.
You host a webinar or workshop
When customers sign on for an event you’re hosting, ask them to invite colleagues or friends who they think will benefit from the information.
Lay the groundwork for asking for referrals
Before asking for referrals, make sure to:
Be referable
Forget getting any references if you aren’t actually doing a great job of delivering what you promise, when you promise in the fashion that you promise.
Customers won’t refer you – and risk their professional or personal reputation if you fail to deliver – if you aren’t consistently exceptional.
Educate customers
Regularly check that current customers know something about all of the products and services you offer and how you can help.
It broadens their idea of what you do and how you can help, and increases the chances they’ll think of a good-fit referral.
Set your record straight
When you ask for referrals, build customers’ confidence in you – and deter any fear of risk they have in referring you – by telling them your success rate. Say, “Almost 80% of my business comes from repeat customers” or “I had a 97% satisfaction rating with all the customers referred to me last year.”
Be a partner
Be more than a salesperson and product or service expert. Let customers know you’re their strategic partner, and part of your goals is make sure they succeed. Tell them you hope they’ll consider you the same.
How to get the referral
Just asking for a referral usually isn’t enough. You also want to:
Communicate improvements
Asking for referrals is not about begging someone to send work your way. It’s about communicating how you’ve improved the professional or personal lives of people and/or their businesses.
Emphasize the value your customer notices and talks about most, and then explain how you’d like to help others in the same way.
Give to get
Regularly share valuable content with your customers – information and resources they can share with their network. It might be a research brief, white paper, news on an industry change or an invitation to a seminar on a relevant topic. Then when it comes time to request referrals, you can ask if your customers’ contacts found what you shared valuable.
Refer
You’re better positioned to ask for a referral once you give one. You likely have many contacts and know many buyers who could benefit from your customers’ products.
Refer your customers when appropriate to start the conversation for your referral request.
Be specific
Sometimes, do your homework and know exactly who you to be referred to. Look for one or two customers, vendors or colleagues who are connected with the referral you want.
Then ask those people specifically to help you connect. This is a win-win, according to Heinz: “If they like you and are willing to vouch for you, (you) eliminate the need for them to identify the targets. It’ll make the referral faster and easier.”
Follow up immediately
If you ask for a referral – and are so lucky to get one – don’t squander it by sitting on it for any amount of time. Your customer may have told the other person you’d be calling, and the closer you do it to that moment, the more likely the new prospect will give you time and attention.
Scripts for asking for referrals
Asking for referrals should come naturally since you’re dealing with customers who you already have an established relationship with. But that doesn’t always happen, so having a few scripts handy can help.
Ask. Really, you have to actually ask
Tracy suggests you begin the conversation with a question like this:
“I’m calling to check in and make sure you’re having a positive experience with our company. Are you happy?'”
If they say no, get to work with customer service and get it resolved! If they say “Yes,” the key is to ask for something very small – a conversation or an introduction. Say:
“I’m so glad. Is there is anyone that could benefit by having a conversation with me.”
Toot your horn
It doesn’t hurt to remind customers how the partnership has benefited them before you ask for a referral.
“I’m so pleased you’ve been able to reduce production costs by 2% with our technology. I’m excited to be part of the solution. If you have colleagues in the industry who you think I can help in a similar way, would you put me in contact with them?”
Make it comfortable
This script from Digital Marketing Strategist Shaun Nestor gives customers a way out in case they aren’t comfortable with referring others.
Say: “You are so great to work with, and I would love to find more clients like you. Do you know any other people in (a position like your customers) at (a company in your ideal industry) that need help with (a problem your solution resolves)?”
If they say, yes, you say, “That’s great. Would you feel comfortable introducing me to them? I would really appreciate a quick email intro, I even have an intro email template written if that makes it easier for you.”
Flatter them
Remind customers how great they are, and they’re the reason you are in business.
“I’m so fortunate that most of my business is based on referrals from great clients like you. You’ve probably been involved in lots of conversations about (an important subject related to your deal). Before I let you go, who else do you know that would need to talk with me about that at this time?”
Build on referrals
You can turn one referral into many with this approach.
“I really enjoy working with you so far, and I’m happy Vince connected us. If it weren’t for him, I would’ve never met you. So it only makes sense that I ask if you know anyone else who would benefit from the same kind of work we’ve done together, and you’d feel comfortable introducing us?”
When you can’t get a referral
Sometimes, customers don’t have anyone to refer. Or they’d rather not get involved in referrals. In those cases, you might:
Create a different path
Find a different way for them to recommend you. Some companies prohibit buyers from giving referrals or written testimonials.
If that’s the case, you might ask them in phone or face-to-face conversations about colleagues and /or friends with needs similar to them. Or you might be able to share your customers’ successes in a white paper that they can pass along to colleagues and friends.
Make the email easier
Go with an email. If a personal referral or introduction isn’t possible, “Ask for a very short e-mail introduction – a powerful gesture that leverages third-party authority and social proof. (It) can be as short as a single sentence that enables the sales pro to follow-up and close on an appointment,” says Tracy.
“Do not be afraid to ask for exactly what you want,” Tracy says, even “provide customers with a short script that they can copy and paste into an e-mail introduction so they don’t have to spend any more time than absolutely necessary.” Try this:
“(Prospect Name), I wanted to introduce you to Michael Tracy. We’re having a wonderful experience with his business and you both will benefit by connecting with each other.”
