... And One Last Thing!
By Andy Lopata, Business Networking Strategist
In a meeting with the members of a prospective client’s sales team, they told me confidently that they are ‘referral-aware’. They knew the importance of referrals to their business and their sales team was constantly reminded to ask their clients for recommendations and referrals.
There is, however, a difference between being ‘referral-aware’ and having a referral strategy. A few careful questions later, they realised that perhaps they weren’t as strong on referral-generation as they thought and a lot of potential new business remained untapped.
The truth is that even companies who understand the importance of word of mouth marketing are missing out on a substantial amount of new business. Sales are being left on the shelf simply because people aren’t asking for the connections they need. Current approaches to referral-generation are old fashioned, ill-conceived and unlikely to achieve anywhere near the potential a strong referral strategy could.
Who else do you know...?
Where a referrals strategy is in place, I have discovered that, more often than not it’s one that’s been taught for years by sales experts. In 2008 I gave a talk to over fifty wealth managers from across Europe, the Middle East and Asia at a major investment bank. I asked the audience to put up their hands if they had a strategic approach to generating referrals. From everyone present, just one hand went up.
Before I even asked, I could guess exactly what that person’s strategy would be. I knew that the wealth manager in question would be asking for referrals at the end of sales meetings. He would be asking if his prospect liked the sound of what he was offering, whether he clearly understood the benefits and who he knew who would also benefit from such a service.
I was correct. That’s exactly what he was doing!
This approach to asking for referrals has been taught in sales for many years. As well as its use by sales teams, it’s a core part of the approach used by many multi-level marketing (MLM) companies. The objective of any meeting is to come away with a list of prospects. This goal often seems to be considered more important than the potential client in front of the salesman!
This might be an extreme example, but I would argue that the approach detailed above is very similar to that taught in many sales courses. It produces results, if it didn’t it wouldn’t have lasted as long as it has. But I would argue that those results could be vastly improved with not much more effort through a more focused and cultivated referral strategy.
The wrong timing
Where the existing strategy outlined above falls short is that it’s far too impatient, lazy and poorly timed. Building referral requests into the sales process is misguided. At that stage of the conversation your prospect has barely built enough trust in you and understanding in your product to buy from you for the first time, let alone confidently refer you to others in their network.
Would you walk up to a stranger on the street and ask for a testimonial for your business? Then why ask prospects before they become your customers?
The ‘referral-aware’ prospect I mentioned above felt that his organisation had a strong policy of asking all new clients for referrals. It was only after our meeting that he realised they were only asking clients for referrals once during their relationship – at the beginning, before they knew each other. Before they had established any trust.
They have no strategy in place to ask established clients for referrals, people who have much stronger levels of trust in their delivery and understanding of how they work. In many cases the rewards of using a product or service become more apparent over time. So why are we more likely to ask people yet to experience those rewards for referrals?
Trust and understanding are two of the key foundations of a good referrals strategy. You need to build trust with people before asking them to refer, certainly if you want good quality introductions.
Another reason I take issue with this popular approach to asking for referrals is that it shifts the momentum of the conversation at a key point. It’s often taught that a good salesman will make their pitch about their prospect, not about them. They will establish a need that the prospect has, explain how their offering will help solve that need and explore the benefits of such an action. That’s a positive approach that leaves your potential new client with a good feeling, because the meeting has been focused on him.
With one fell swoop you can destroy that feeling and change the impression you have left by then asking for referrals. Suddenly it’s all about you and, coming at the end of the meeting, that’s the impression that will be left. What’s worse, you can lose all of the goodwill you have built up, because by asking for referrals at such a crucial stage in the conversation it can easily be perceived by the client that all the time it’s been leading to a quid pro quo. First you try to sell them something and now you now want them to do your selling for you.
For the same reasons I believe that you shouldn’t ask for referrals after any client meeting where the brief is to look at their issues and their business. The impact of all of your support can be diminished by then asking for their help in return.
To find out more about how to pick the right networks, implement a successful networking strategy or how to generate more referrals, please visit our website www.lopata.co.uk or contact us at firstname.lastname@example.org / 01992 450488
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