Referrals can be really powerful selling tools when used correctly and as part of a formalized plan. However, there's a right way and a wrong way to ask for referrals. Too often, sales people and business owners commit classic mistakes in asking for them and assume, based on their disappointing results, that referrals might simply not be worth all the effort. Referrals do work. Working with our own clients at Engage Selling, we've seen closing ratios on sales calls tighten dramatically when referrals are incorporated into the sales script...some as much as three-to-one (in other words, obtaining one sale out every three sales calls placed).

Referrals have the potential to connect you to new customers through a network that's built on trust and familiarity. That means there's more on the line than just your own reputation: the person doing the referring has to first be sure they are doing the right thing by recommending you, your products or your services with others.

Given this, let's look at what you can do to avoid the classic mistakes when asking for referrals…

Don't ask too soon

The worst time to ask for a referral is when you're still at the point-of-sale stage in the sales cycle. If the ink isn't even dry on the deal that your customer has signed with you, odds are good that they haven't yet had the opportunity to fully try your product or service and form complete opinion. Success in sales is about building and maintaining relationships. Making the sale is just the start of that relationship. In a sense, it's a relationship that is much like a marriage—a lot of work needs to be done to keep that relationship working well.

Give your customers time. Don't ask for a referral until you've earned it. While it's acceptable to ask after a product has been delivered or installed and the client has told you they are satisfied, I still think there's a better approach. Use the request for referral as a means of adding value to the customer's buying experience. There's a lot to be gained by going the extra mile and being creative, persistent and value-driven in your request.

All business is personal

People refer business to you not for business reasons, but for personal reasons. That is why for a request for a referral from one of your clients can only come from you. The service you provide is professional, but when a customer recommends that service to someone they know, it then becomes a very personal act. It demonstrates a high level of trust that someone has in you...and that's not to be taken lightly. Therefore, it's important that any referral program you develop is based on the idea that you value your customers as people first—not as revenue centers.

Remember to show your thanks

Forgetting to say thank you is a big big that it's cringe-worthy. Think about it for a moment. If a client makes the decision that you've earned that referral you've been hoping for, and you miss the opportunity to thank them for that gesture, you risk shutting off that referral pipeline...maybe even permanently.

When it comes to referrals, there are in fact two instances where a thank you is in order. First, you ought to thank your client when they refer your name to a friend or colleague. Send a card to express your appreciation. An email message is simply not enough. A card is personal and it sits in someone's hand, making it memorable in a way that email simply can never be. The second instance for expressing thanks is when that new referral buys from you. Again, sending a thank-you card is a nice touch. Include a small gift as well, but only if the customer is able to accept it (some organizations, including government, have a no-gift rule). A small token of thanks can be as simple as a gift card for coffee from the local Starbucks, or even a donation to the client's annual golf tournament. The key is to make a gesture that says: "I really appreciate you thinking of me."

Be persistent, but don't overdo it

As I am fond of saying, there is a fine line between persistence...and stalking. When you initiate a referral program, it's important that you be judicious in how often you reach out to your existing customers. Once every 30 days is a good rule of thumb. If you hold off much longer than that (for example, once every business quarter), it's too easy to lose that top-of-mind position in the marketplace. On the other hand, if you try sending tokens of appreciate to a client once a week, you definitely will run the risk of being perceived as stalking.

Be specific and a resource

A component of an effective referral program should include asking your customers if they know someone who could benefit from the products or services you are selling. However, it's important that you be specific. For instance, you could ask: "Are you the only one in your department that uses this service?" If there are others who do, in fact, use your services, then those are the people you want to meet, and your existing customer is ideally positioned to make that happen.

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Nonstop Sales Boom by Colleen Francis Make sure you check out Colleen's latest book, Nonstop Sales Boom for powerful strategies to drive consistent sales growth quarter after quarter, year after year.

Colleen Francis, Sales Expert, is Founder and President of Engage Selling Solutions ( Armed with skills developed from years of experience, Colleen helps clients realize immediate results, achieve lasting success and permanently raise their bottom line.

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