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The fine art of referrals
Actively seek referrals to increase your leads and sales

By Leon Frank

You're sitting in your office, wondering how to increase sales without spending more on advertising, when the phone rings. An excited caller informs you that his company needs a complete computer system just like the one you installed at Staley Travel Consultants - and they need it now.

You rush over ready to make your best sales pitch, but you don't need to pitch anything. Your referral has already done the heavy work and convinced the prospect to go with you. You give them a contract, they sign and boom - you have a sale!
The key to increasing referrals
is to launch positive programs
on both fronts - passive and active.


Are referrals the "Powerball Jackpot" of business? They come along once a presidential term just to make you drool over how easy they are, then make you wait for the next national election before one wanders in again. If you just sit back and wait for the referral phone to ring, there might very well be another fight for the White House before the next referral comes your way. But there are very deliberate steps you can take to increase your referrals, at least to the point where they occur more regularly than every time the TV goes bonkers with campaigning.

Passive vs. active referrals

There are two kinds of referrals: passive and active. Passive referrals happen when someone refers business to you as a favor to a friend or associate. For example, you tell a friend with car trouble about a mechanic who is reliable and reasonable. You're not really thinking of bringing the mechanic more business - you're thinking about helping your friend solve his car problems.

Active referrals, on the other hand, occur when you recruit others to actively help you find new prospects and clients. The key to increasing referrals is to launch positive programs on both fronts.

To increase passive referrals:

  • Develop a referral phrase. This might be something like "Your friends will thank you for sending them to us" or "Do your friends a favor and tell them about us." Print it on post cards and mail them to your clients ... print it on your invoices ... paste it on the side of your vehicles ... answer the phone with it.
  • Make it easy. My marina neighbor Marc asked me months ago where I bought the cleaner we use on our Plexiglas. Six spray cans of the stuff are on the boat, but the name of the store we bought it from is at home on my computer. I've yet to remember to look it up for Marc.

Make it easy for your customers to refer new business your way by making sure your name, phone number, street address, Web address, etc. is printed on everything before it goes out the door.

  • Reward your referrals. I personally detest anything as overt as paying a commission to your clients for making a referral. However, I believe that taking them out to dinner as a way of saying "Thank you" is perfectly acceptable. Not only does it express your gratitude, but it also increases social contact with them, which may open opportunities for more referrals.

To increase active referrals:

  • Open your rolodex (or Outlook(r) or your Palm(tm)). Your clients and business associates are your best source for introductions and leads. But you have to ask them. They aren't thinking about ways to increase your business - they're thinking of ways to increase their own business. Take them to lunch and ask them for the names of their associates who could be your prospects.
  • Determine who your prospects are. You can't expect referrals unless people know who would be a good prospect for you. Write up a profile of the kind of client you serve best. What size are they? Where are they located? What industry are they in? What needs do they have? Then put it on your letterhead and mail it out to current clients and business associates. Ask them to give you the names of their associates who match your prospect profile.

This is vital. Your associates might not know who is shopping for the products that you offer, but they do know who matches your customer profile. You can determine which ones need your services and are actual prospects once they provide you with their names.

  • Ask the right questions. You just sold a shiny new Cadillac, and you want the happy new owner to give you referrals before he jumps in his new ride and cruises away. If you ask, "Who do you know who needs a new Cadillac?" his answer is going to be "No one." However, if you say, "Please give me the names of your five friends who have the oldest cars," he'll likely start writing. The point: Ask questions in a format that matches the way people think. Just get the names and make the calls, and then you determine who the real prospects are. Don't expect your referral source to make that distinction for you.

Train your salespeople

Training your sales force in the art of getting referrals will make everyone's job a lot easier, and ultimately increase your bottom line. An active program of increasing referrals will consistently bring in more prospects with a much lower cost of advertising and promotion.

And Marc, I'm looking up the phone number of that marine supply store right now - I promise!

Leon Frank is president of Arkota Marketing Communications, a company that specializes in providing sales training and marketing programs.

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