When I consult with CEOs and business owners of companies earning $20 million or more, the most common question I get is, “How do we transition to become a referral-based business?”
In the beginning, the company’s and CEO’s efforts are geared toward acquiring a customer base. Now they have clientele who likes them, respects them, and trusts them but doesn’t refer them. How do you transition?
First, it isn’t a transition. It’s a transformation. Running a referral-based business doesn’t mean giving up your sales team. It means adding unpaid sales people to the team — ambassadors. Your clients transform throughout the buying process and become a part of your sales staff, speaking highly of you and referring you willingly. Like Apple. Like Nordstrom’s.
Here are three tactics to assist you in this transformation:
Ask and Ye Shall Repel!
Asking for referrals can be one of the most repelling and repulsive acts a salesperson can do. If you’ve ever had someone ask you for referrals, you know that creepy, awkward feeling. Then there is the guy who brings your LinkedIn Connections list to the meeting… no… just no.
The best time to discuss referrals is when someone asks how they can help you or when they offer to do something for you. Referrals are an answer, not a question. How can you deliver so much value to your clientele that they ask you how they can help you? It’s easier than you think and doesn’t have to cost you a dime.
Don’t Reward. Appreciate!
Referral Reward Programs are the easy solution many consultants suggest. The problems are they can be difficult to manage and track, they are an expense, and they don’t increase the behavior you desire long-term.
You don’t want to monetize a relationship with someone who will passionately and freely champion you and your services. You’ve taken a relationship based on like, respect, and trust and replaced it with a monetary relationship.
People don’t refer you to make a buck or two. They refer you to help a friend, to look good, and to support a business they trust.
Here’s the other side of Referral Reward Programs: What would you think if you found your friend was paid to recommend the company to which you were just referred? Referral sources simply want to be appreciated.
Consider other ways you can express your appreciation without monetizing the relationship.
Focus on the Vital Few
Not everybody will refer you. Some clients in your database are pre-destined and pre-supposed to referring you — others will never, ever refer you no matter what you do.
We have developed an Ambassador Score (or A-Score) system that determines the likelihood of a person referring you and your company. In many cases, a database of 15,000 can be whittled down to a mere 150 people who receive the focus of your most valuable resources — your time, energy, effort, and money. So who are your Top 150 ambassadors?
Don’t train your sales staff to ask for referrals.
Don’t create a Referral Reward Program.
Don’t worry about all your clientele.
Michael J. Maher is the author of the best-selling book (7L): The Seven Levels of Communication; Go from Relationships to Referrals. He’s North America’s Most Referred Realtor, a renowned speaker and master business coach who has worked with hundreds of businesses and helped train thousands of sales executives.