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What are the advantages of referral-based selling?

In your opinion what are the advantages, if any, of referral-based selling? - by Community Mailbox
It would be dependent upon the strength of the referral. Today I had a referral from another company. He rated the referral a 4 on a scale of 1-5. I called the potential customer and she said I have no idea why he told you to call me.

On the other hand I gave a referral to a contractor for remodel work in a bathroom. I have an extremely strong connection with the client. The contractor did not have to give a quote and has started the job based on my referral. I also have a strong connection with the contractor and know he will treat her as I treat her.

When the referring person makes a strong referral basically all I have to do is show up on time. The referring person has already completed my selling for me. The advantage is obvious.

Using a scale of 1-5 the above is a 5. Numbers 3-4, I must go through all my steps or guidelines and generally receive this sale. I get the chance to have a face to face because of my referral but I must do most of the sale and the customer is interested, ready to move forward, and is in search of someone to trust.

Numbers 1-2 the referring person passed out business cards. The customer has no urgency and is least ready to move forward today. This person is receiving bids from others and most likely will sit on the bid. This customer generally demands bells and whistles and I will ask them to call me back when they are serious.

I am affiliated with a referral based group using word of mouth marketing and within this group the referrals are very strong. The strong referrals are mainly due to the group’s ability to teach its members how to give strong referrals. I can tell the difference between this groups referrals and someone that is not in this groups referrals. - by rich34232
I believe the strength of any referral is directly proportionate to the strength of the relationship with the one giving the referral. I use referrals as often as possible because I believe they have the highest closing percentage of any prospecting strategy...when done right.

There are three rules I live by when it comes to the referral process.

1) Preparation - Let your client know you are going to give them a phenomenal level of personal customer service, and in doing so, you will not be able to spend as much time prospecting. Therefor, you will be asking them for referrals down the road.

2) Timing - While you are preparing the client in rule one, you should mention that you will be asking for the referral only when the time is right, meaning once you have earned the right to ask through your actions and service over time.

3) Inclusion - I always try to get the client included ion the process. This might be as simple as asking if we can call the referred prospect together or asking the client if they will schedule a lunch in which we all attend. This takes the commitment of all those involved to the next level and adds strength and credibility to the referral.

I hope this helps!

-Josh - by joshballek
There are advantages and disadvantages to "referral-based selling."

The advantage is that you can almost always get the referred person to take your prospecting call.

The disadvantage is that you will often get appointments with the referred person, out of their respect for the referrer, even though they have no intention to buy anything from you. Thus, you most often waste a lot of your time and emotional stamina.

When a client suggests that we call someone whom they believe can use our services, we ask them to have that person call us if they really want our type of services. A high percentage of those incoming calls result in a new client for us. - by JacquesWerth
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