When Should You Ask for Referrals? (Part 1)

Who doesn’t want to grow their business through referrals? We’d all rather sell to people who have been referred to us. The sale starts with a level of trust and familiarity that just isn’t produced by other methods of lead generation.

So why are sales people so bad at generating referrals on a consistent basis? I would argue that as sales people and marketers, most of us have over-simplified the concept of referral generation.

As I speak with sales organizations about referrals, the conversation quickly heads in one of two directions:

1. Sales people – remember to ask for referrals; or
2. Marketing people – develop a structured rewards program (MCI Friends & Family) to motivate people to refer.

I would certainly agree – you rarely get what you don’t ask for.  So, asking for a referral is better than doing nothing at all.  And people rarely change their behavior – or invest energy to assist a selling organization without incentive. But I’m convinced that this is a gross over-simplification.

I work with a financial advisory firm. I’m a client of theirs. And they are a client of mine. I was enthusiastically referred to them by an angel investor/business owner in Virginia, and after a number of meetings, I became a client. As the relationship developed (post-sale), I found myself referring friends, family, and business associates to this firm.

I hate when people refer me to financial planners.  They harass you endlessly, and you wind up cursing the bastard that coughed up your name. So why suddenly do I find myself referring people to this firm? I’ll offer five reasons:

1. I like what they offer.  And I like the experience of working with them. But that isn’t nearly enough for me to refer to a financial advisory firm.
2. They aren’t desperate. And they don’t grope me for referrals. There is an EXPECTATION that their clients will refer others, and that is made evident from the beginning of the sales process. We never reached that awkward moment well into the relationship when out of the clear blue sky I got the question, “so, do you have any friends that could benefit from my service?” (More on this in a moment…)
3. They have taken away my fear of referring friends to a financial advisory firm. How? By acknowledging that their industry has a bad reputation for harassing prospects and explaining HOW and WHY they manage referrals differently.  In short, some 70% of their business comes by way of referral, and that doesn’t happen by embarrassing referral sources.  They explained exactly what they do to follow up on referrals – and when they stop if they sense the time isn’t right. I believed them.  And they have lived up to their promise.
4. They have made it easy for me to refer to them, and I truly believe that my referrals are given a first-class experience.
5. I GENUINELY FEEL their SINCERE APPPRECIATION for my help. And it makes me want to help them more. And as I have come to find out, there is in fact a science to this.

I will dissect each of the above in detail in future posts, but for now, I’ll focus on #2. This firm EXPECTS clients to refer. And the expectation is subtly introduced in the FIRST CONVERSATION with this firm.

“The vast majority of our business comes to us by referral.” That statement is pregnant with meaning. But most notably, it suggests that the firm has happy clients. It implies that they know how to handle a referral respectfully. And it indicates that they don’t solicit just anyone and everyone to be a client.  I like it.

By the time I became a client, the subject of referrals had been woven into so many of our conversations, that I clearly understood that it was almost a part of the client culture to support this firm with my referrals.  They never really had to ask.

By contrast, how do you feel when after a few months of working together, your financial advisor asks you out of nowhere for a referral? “Tom, I hope you have enjoyed working together. Who else do you know who might benefit from learning about what I do?”

My reaction is to assume business is bad and he/she is scraping for leads. I wonder if I should look for another advisor…. The LAST thing I think about is who to refer. I have been psychologically groped without any of the requisite foreplay. And I’m revolted.

Are your sales people guilty of groping for referrals?