How Salespeople Botch Building Business with Referrals and How to Effectively Do It

By Jeff Thull

Making a "simple" request for referrals is one of the most commonly recommended and frequently neglected strategies for building business. Though a referral conversation is one of the most important conversations a salesperson can have, most pay little attention to it and miss valuable opportunities.

Often, professionals find that their requests for referrals fail to yield good quality results, even from satisfied clients who are willing to give them a lead. Most do not consider the possibility of asking prospects for referrals, even prospects who turn out not to be good candidates for quality business.

Let's take a look at why so many requests for referrals produce so few useful results, and how it is possible to have profitable referral conversations with both clients and prospects.

Where Referrals Go Wrong

For starters, when professionals and salespeople do ask for a referral, they simply ask for a name. "Do you know anyone else who would be interested in our solution?" Or worse, "Do you know anyone else thinking of buying one of these?"

If you put yourself in the position of a client or prospect being asked, it's obvious this is not really such a simple request. To respond properly, the client or prospect must think of another person and his or her business situation, guess the potential level of interest, and predict whether the individual might buy - and especially from this particular professional.

No one wants to lose respect from a peer by sending a salesperson to them who will intrude on their valuable time. The potential risk is that someone will act in a less than professional manner and want have a sound business case for being there in the first place.

Salespeople might not think they have asked for all that analysis, but the truth is, that's exactly what they are asking a client or prospect to do. If people don't think through all these issues thoroughly, they may fail at providing a referral, or the referral will fail to provide results.

Consider the typical responses to the request, which often sound something like, "Not off the top of my head, but if I think of anyone I'll let you know," or "I'm not sure I can give you a name right now, but I'll keep it in mind." At some level, clients realize this is a poorly defined, unrealistic request that carries a high risk of failure. It's not surprising that the response gives us "nothing."

So let's go back to those sales professionals who are so successful, and consider a very different, but exceptional approach. The secret is in knowing when to ask for the referral and what to ask for.

When to Ask for Referrals

In the case of a client, the "when" is logically right after you've delivered your product, service, or solution and your client is experiencing the value they were expecting. At this point, your client should have a clear awareness of the value delivered, and will have a correspondingly high sense of satisfaction.

For a prospect, the "when" is the point in your diagnosis when you realize they aren't experiencing the issues you are able to address, and you've suggested that they may not require your solution.

By using this approach, you are using processes and skills that are very similar to those of a doctor. In our research, we've found that the characteristics of an exceptional sales professional are similar to those of a good physician. Using this analogy, it is easier to understand why even a prospect might respond favorably if your request for a referral follows a thorough and professional diagnosis, even in those cases where the outcome was discovering that your solution wasn't required.

Think about whether you might refer a friend to a doctor who did a great job of diagnosis, and found that you did not need surgery after all, or uncovered an issue that is of great concern and detrimental to your well being.

When you take the time to conduct a careful diagnosis of the business situation, prospects recognize that they are receiving value from the substance and style of your communication. They are far more likely to share names and will be confident that their peers and colleagues will not be subjected to a hard sales pitch. These names will also have a much higher probability of being the high quality leads you need to create a rich pipeline and to expand a profitable portfolio of business.

What to Ask for When Asking for a Referral

The "what" should focus on recognizing symptoms or indicators of issues similar to the ones you have been discussing, or which you have helped your client resolve.

The questions you might ask include: "Have you heard others in the organization talk about experiencing similar symptoms to what you were seeing?" Or, "When you meet with your peers in similar businesses in your industry, does this issue come up...and if it does, does it ever seem to be a pressing concern?"

When you ask the question this way, you are not asking the client to take a risk. Rather, you are asking them for a factual observation that does not require them to qualify and pre-sell the referral. You're simply asking if they know of someone who has the symptoms. When they do give you a referral, it's your job to determine if the symptoms exist and if you can help provide a solution.

The "what" for prospects is a bit different. With our business, a critical issue is the accuracy of a company's sales forecasting. The question then that we could ask a prospect is: "When you've spoken with other division sales managers, what types of comments have you heard regarding the accuracy of their sales forecasting?" This would begin a conversation about their observations regarding their colleagues and likely lead to a quality referral.

Building Your Business Through Quality Referrals

Keeping the pipeline well stocked with new prospects and new opportunities is a critical prerequisite for sales success. A few exceptional sales professionals enjoy this as a reality in large part because they know how to ask for and receive quality referrals.

Many other professionals and salespeople don't know how to ask for and receive quality referrals. For them that means they must spend a substantial amount of time on the phone cold calling prospects in search of new business opportunities. That means spending hours trying to reach people and talking to people who, in most cases, don't want to hear from you.

Now that you know a secret to getting a high percentage of your business from client and prospect referrals, you can quit going through your cold call list and start enjoying talking with people who probably want to do business with you.

Jeff Thull, President and CEO of Prime Resource Group, is a leading-edge strategist and valued advisor for executive teams of major companies worldwide. Thull is also author of best selling books, Mastering the Complex Sale and The Prime Solution. You can email Jeff at support@primeresource.com.

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