There are three fairly obvious ways to grow your business:
- Find new customers
- Sell more to existing customers
- Acquire another company and its sales volume.
All three are legitimate growth strategies that can work for companies in nearly every industry. Any of the three can be appropriate depending on your company’s current resources, the state of the industry where you compete, and your personal long-term objectives. But no matter where your company is in its development or life cycle, adding quality customers – assuming you have the capacity to serve them well – should always be a priority.
The Case for Chasing Referrals
No one ever said running a business would be easy, but it’s also true that no one ever said you have to do everything the hard way. Picking up new customers through the referral process is generally easier than when you haven’t been talked-up to the prospect.
Referrals can be powerful. In a very real sense, the person doing the referring has “screened” you or “vouched” for you. One estimate states that your chances of acquiring a particular client increase to 60% when you’ve been referred by a peer, versus just 10% when you don’t have an introduction.
Those numbers may or may not be entirely accurate. Every industry, company, and product or service has its own sales cycle, and every sales call or proposal has its own dynamics. But in any case, it’s apparent that being positively referred to a prospect can result in a level of trust that otherwise might take months to achieve, likely shortening the sales cycle.
Besides the credibility that comes with being referred to a potential client, the process also reinforces and solidifies your relationship with the current client who referred you. He has “skin in the game,” at least in a rooting sense. You can ensure this happens by keeping your client in the loop and letting him know how things work out with the potential customer.
Finally, referrals make sense because they help hold down marketing, promotion and sales costs. An aggressive referral acquisition program does not eliminate the need for any of these more conventional business development activities, but s steady stream of referrals can make your company slightly less reliant on them.
Making a Referral Program Work
- Analyze. Take time to analyze your customer base. What percentage of your top-tier customers (the highest 20% in terms of revenue) were referred by another satisfied customer? If that number is high, say 50% or more, congratulations. Keep doing whatever you’re doing. But If it’s low, 10% or less, you’re likely missing significant opportunities.
- Set a goal. If your referral numbers are disappointing, set a realistic goal for new clients over a definite time period. Don’t be vague. What you measure and track tends to get better. (e.g., we will acquire six new accounts via our referral efforts by the end of the third quarter.)
- Ask. Sure. Ask for referrals, but be specific and be creative. Recently a friend on LinkedIn posted, “I need a high-level contact at XYZ Bank. Can anyone help?” That was simple, straight-forward, and possibly even brilliant. He said later that three people contacted him with names and he was able to schedule a meeting with an executive in the right department.
- Give to get, but don’t ask. Are there people in your professional or personal circles who could benefit from an introduction to one of your contacts? Start making those calls and arrange meetings if you can, and don’t ask for anything in return. It might sound a little old-fashioned, but over time the effort you put in will be noticed and rewarded with referrals that can benefit you.
- Incentives. This isn’t always appropriate, but if it’s acceptable in your industry to offer incentives or special deals for customers who send you new clinets, then give it a try.
- Ask outside normal business circles. It’s possible that peers in your network are potentially referring the same people to the same potential targets. It might pay to consider asking someone outside of your usual range of contacts for potential leads. One possibility: Ask trade journalists at publications or web sites that cover your industry for help. By nature writers and editors like to share information. They’re also very good at maintaining lists of contacts, and usually have sources at the upper-levels of the companies they cover.
- Pick and choose. You’ll likely feel more comfortable asking your most satisfied clients for referrals, so start there. Use open-ended questions. After a successful project ask, “Hey Bill, do you know anyone else in the industry this might help?”
- Tell them what to say. It’s worth repeating. Tell them what to say. So obvious, but so few do it. People will be more willing to refer you if they understand how you want them to describe the experience. Be specific and make sure they talk-up your strengths. If your staffing company specializes in healthcare professionals have him say, “Bob Anderson’s staffing company has constantly sent us qualified nurses and med-techs that were able to hit the ground running. We’ve been really pleased. Would it be okay if I had Bob call you?”
- Stay optimistic. Those new accounts won’t appear overnight, but keep the faith and don’t get distracted from the plan. Even if your efforts get just a little better every day, you can make significant progress over time. If you improve your efforts to obtain referrals by just 1% each day, you’ll be 100% better at the process after just 70 days. Run the numbers if you don’t believe it.
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