Source: Scott Edinger/HBR.org
Nothing builds new business more reliably than a sustained effort in gaining referrals from existing clients. What’s more, as a marketing approach to fill the “top of the funnel,” it is more likely to succeed than other campaigns and carries virtually no incremental costs. The author offers three ways to accelerate revenue through referrals.
There is no better source of leads and revenue than referrals that come from a company’s clients. New clients that come from referrals advance through the sales process faster, have more forgiving negotiations and healthier margins, and tend towards greater loyalty. Why? Because they are already qualified and you begin with the credibility of a trusted peer.
Yet most companies leave securing referrals from existing clients to chance or engage passively, if at all. The companies that successfully harvest this crop do so with intention and a clear strategy to leverage their current client relationships to drive new business. Here is a no-fail approach to accelerating revenue through referrals that I’ve implemented with companies ranging from the Fortune 500 to mid-market businesses, and even other consulting firms.
1. Make referral business a central part of your go-to-market strategy.
The Sales Organization has to execute your strategy. So, in addition to your ideal client profile, competitive advantages, and precision about how your sales experience creates value, your strategy should clarify how you intend to attract new opportunities. Make it clear that proactive pursuit of referrals is a primary driver to increase pipeline growth and accelerate new business. Along with trade shows, advertising campaigns, and content marketing, all of which likely have detailed execution plans, ensure that proactive referrals are included as a priority initiative.
2. Manage the acquisition of referrals as a process.
Many companies have a sales process that helps guide the stages and actions required to advance an opportunity from contact to contract. In order to operationalize referral business, you’ll want to do the same with discreet stages and actions for each stage. A simple process could look like this:
Identification. The first stage is similar to prospecting in the sales process. It is entirely about determining which existing customers could refer you to another potential customer. While it’s easy to say everyone can provide a referral (and they can), it’s important to determine who is most likely to provide you with quality referrals. What are quality referrals? Those that match your ideal client profile and are at a level they can buy from you. Each of your sellers should have a target list of contacts they can begin reaching out to request referrals.
Request. This stage consists of conversations with current clients asking them for an introduction to a new potential client. Let them know you have a favour to ask and set aside a time to talk. This will carve out a moment for your request so that it doesn’t get lost amidst other conversation points. Let them know that your best clients usually come from your best clients. I recommend that you make two promises for anyone a client introduces you to. The first is that the conversation will be valuable and provide insight and expertise that will be useful to the referral, whether or not they do business with you. The second is that there will be zero sales pressure to buy anything at all. This demonstrates your commitment to the importance of relationships that are based on value, especially since you are asking someone to share their professional network with you. Your clients may not immediately know who else they can refer you to so expect a few interactions before there is a bona fide connection is made.
Preparation. Make it easy for your clients to refer you to others by providing them with a sample email to use to make the introduction. Less tends to be more here as the goal here is to ensure your clients have an easy way to make the introduction.
Introduction. Follow up is key in this stage as it may take a number of conversations or reminders before your client makes the introduction. Until you have been introduced, the follow up is with your client and like managing a sales cycle, there is a balance between professional and persistent and being a nudge. I suggest following up 3–4 times, and if no introduction is made, let it go and come back to it 6–9 months later. Referral business is a long game.
Appreciation. Once you’ve connected with the new referral, close out this process with a thank you to your client. It can be a simple handwritten note or something more elaborate, but don’t forget this important task. After all, you want to recognize the trust they’ve put in you and encourage them to do it again. Some clients may make many referrals for you over time and you can continue to go back to them. If you’ve concluded the process properly, you lay the foundation to make the request again in the future.
3. Focus sales talent on execution of the process.
When revenue, net income, and business measures dominate discussions, it’s easy to lose sight of other disciplines that create positive results. To create a sustainable stream of referral opportunities, make each stage of the referral process a priority in your sales organization. The skills of consultative selling are directly transferable to executing the referral process. All that’s needed is leadership attention to keep it front and center. Individual coaching sessions will help to focus your sales team on the process, discuss any challenges sellers are having, and let them know how progress will be measured.
When considering metrics, use the scientific approach posited by Daniel Stufflebeam: measure to improve — not to prove. Too much emphasis on metrics can yield lower quality referrals. If you overdo the drive to achieve a specific number of introductions or a certain level of activity, you’ll probably get it — but it may not have the impact you wish for. Make your metrics a guideline for managing the activity but not an end unto themselves. Use them to coach areas of improvement in using the referral process and as a diagnostic to discover issues your team may be struggling with.
Companies are always looking for approaches to drive the development of new business. Nothing builds new business more reliably than a sustained effort in gaining referrals from existing clients. What’s more, as a marketing approach to fill the “top of the funnel,” it is more likely to succeed than other campaigns and carries virtually no incremental costs. What it does require is a commitment to the strategy of leveraging existing client relationships and developing and managing referral acquisition as a prioritized process.