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Most Referrals are a Waste of Time

More than a few salespeople have suggested that most referrals are a waste of time. There must be a grain of truth in that statement somewhere. In your opinion, under what circumstances would the suggestion that most referrals are a waste of time ring true? - by Community Mailbox
I would say its true that in most industries most referrals do not lead to new business but they are not a waste of time. You will always have to talk to 10, 20, 100 people before you get to the sale. Second, I would say that anyone who truly believes they are a waste of time has poor follow up skills. - by AndrewDR
More than a few salespeople have suggested that most referrals are a waste of time. There must be a grain of truth in that statement somewhere. In your opinion, under what circumstances would the suggestion that most referrals are a waste of time ring true?
That's a great question. Solicited referrals are weak. One reason is that many of them are merely compliances to requests with not too much thought given to them.

Unsolicited referrals are usually much stronger because they are founded on a perceived need that the person doing the referring is aware of. Also, the referrer often supports the referral with an introduction or preliminary contact. So they are more permission-based. - by Gary A Boye
Referrals a waste of time? You've GOT to be kidding me! I'd rather have a referral than any other type of lead. When someone generously gives you a referral, whether you've solicited it or not, they're telling you that the person they're referring you to, in their opinion, is potentially a good prospect for you.

One technique that I use and teach, to make referrals stronger, is asking the referrer to contact the referral on my behalf before I call.
"Bob, thanks so much for referring me to Steve. I promise I'll treat him with the same courtesy and professionalism that I hope you feel I treated you with and I'll let you know what happens after I meet with Steve. By the way, could I ask a quick favor? Would you mind giving Steve a quick call right now to let him know that you gave me his number and that you'd appreciate it if he accepts my call?" (If the answer is "I'd rather not" then ask if they'll send an email - people are almost always willing to send the email even if they won't call)
I've had appointments with referrals that I know I wouldn't otherwise have gotten if not for the referrer letting the contact know that they feel a meeting with me will be a valuable investment of the referral's time.

Referrals ROCK! - by Jeff Goldberg
More than a few salespeople have suggested that most referrals are a waste of time. There must be a grain of truth in that statement somewhere. In your opinion, under what circumstances would the suggestion that most referrals are a waste of time ring true?
The only time a referral would be a waste of time is if you didn't ask for the referral with patience and respect. Our job as salespeople is to act professionally and at the same time make a friend whether you make a sale or not. In order to do something you need to now what you are doing in the first place. I use a script which I have memorised. It is easy on the ear and gets me referrals and I will share it with you.

Sic.

Could I ask you a favour (use name)?

Who do you know that might be in the market for a great opportunity on a product (or service)
Maybe a friend, a relative or someone in your business or work.
Who would that be? (no answer)
Yes, I know it's a hard question.
Let me ask you an easy one.
Of all the people you do know, who do you think might be a prospect? It doesn't have to be now, maybe sometime in the future?
Who would that be?

I don't always a get a name but I never offend any customers or prospects as it is done with respect.


Regards

John Hewitt
Sales Secrets Revealed
Sydney Australia - by SalesSecretsRevealed
The only time a referral would be a waste of time is if you didn't ask for the referral with patience and respect. Our job as salespeople is to act professionally and at the same time make a friend whether you make a sale or not. In order to do something you need to now what you are doing in the first place. I use a script which I have memorised. It is easy on the ear and gets me referrals and I will share it with you.

Sic.

Could I ask you a favour (use name)?

Who do you know that might be in the market for a great opportunity on a product (or service)
Maybe a friend, a relative or someone in your business or work.
Who would that be? (no answer)
Yes, I know it's a hard question.
Let me ask you an easy one.
Of all the people you do know, who do you think might be a prospect? It doesn't have to be now, maybe sometime in the future?
Who would that be?

I don't always a get a name but I never offend any customers or prospects as it is done with respect.


Regards

John Hewitt
Sales Secrets Revealed
Sydney Australia
Referrals are dominated by the product or service sold. So, it is very natural for one sales rep (you) to generate several referrals while another finds them rare.

After 30 years of cold-call door-to-door sales, I received very few referrals even with asking, and less than 50% resulted in a sale.

Just because you fill the needs of your client does not mean he or she knows anyone else who would benefit from what you are selling.

If your business receives a great deal of referrals be grateful. - by John Voris
To get a closing average of about 50% on referrals is a good ratio and referrals should only be seen as part of your overall prospecting activity, mixed with other prospecting such as observation, cold calls, telephone etc. It is really a matter of attitude toward what you do and how you do it. Ultimately you cannot beat activity and asking for a referral is a prospecting activity. It all comes down to not what you say but how you say it. Without being to ridiculous in the extreme but you could probably make a mute talk if you asked him the right question. Professional sales is not a game for the faint hearted person it take confidence, persistence and belief coupled with accumulated knowledge garnered from being open to learn all the time and all don't know what we don't know. Be open minded and positive and expect surprises everyday and keep putting prospect through the pipeline. Enough said we are all supposed to be professionals and know all this stuff and not sweating on small issues.

If you have not made an acquaintance and shown respect to every person you have presented to no matter what their attitude is you are still learning how to deal with people aside from being a sales professional.

Regards

John Hewitt
Sales Secrets Revealed
Sydney Australia - by SalesSecretsRevealed
The fact is 80% of the clients you close want to give referrals but they don't know how. It is up to us as sales people to help them.
Just saying, "do you know anyone who might benefit from this service" won't generate many referrals. You have to get into your client's world and ask who in that world could benefit. Referral trees are like Gold. I always ask for 5 referrals and normally get at least 3 and close 1 of three in an industry where 12%closing ratio is average. Jeff is right on in his approach to the person giving referrals. Just getting names and phone numbers won't get the job done. The only time I would agree that referrals are a waste of time is when you just get names and numbers. - by triadtraining
The fact is 80% of the clients you close want to give referrals but they don't know how.
Could you please explain how it could be determined that 80% and not 20% or 90% want to give you referrals? How can such statistics be accumulated?

Then if that is true, how could people not know how to give you referrals?

I've been asked:

"could you drop by my sister's house?"

"Bob next door would be interested."

" here, give Terry a call. I think he'll buy something."

It seems straight forward to me. - by John Voris
To get a closing average of about 50% on referrals is a good ratio...

To get 50% closing ratio on referrals was lower than my normal prospect to sale ratio.

I followed-up on referrals out of courtesy to my client and certainly not because I expected a sale.

Again, there are so many factors involved, that any number of seasoned sales people working in different geographic areas, would naturally report different ratios.

Offering tips on getting referrals is always good but the results are often beyond the sales reps control depending on what is being sold etc, etc, etc. - by John Voris
John, this was a statistic given during a Sandler Sales Institute President's club meeting. SSI normally gives the source, but I failed to write it down. In that same meeting it was said that if you just asked for names you would be lucky to get any because the client's emotional level right after closing is very high and interferes with the process of offering referrals. The sales person has to lead this process, which depending on the industry, varries.

I think you are on target in the way you ask. You are leading the process. When you tap in that way you should get at least 1 referral from 80% of your just closed clients.

Hope this answers your question. - by triadtraining
Hard for me to respond since I don't know how you prospect and
what you sell and average time from inital call to closing.

Where our industry average is 12%, I would love to have a 50%
closing ratio on referrals. As a matter of fact, I am pleased to close 1/3rd of the referred prospects I call.

In your case if 50% closing is lower than your base line, I can see how you might think referrals are a waste of time and done only as a courtesy to your client referrer.

Happy Selling - by triadtraining
Yea, thanks.

I don't question references here out of skepticism of the person reporting the statistic; the integrity here is very high. However, intelligent and experienced people are often unknowingly exposed to pseudoscience and pop-psychology. They naturally trust their course leader and have no reason to question the information given.

I am familiar with Sandler and it is a reputable organization. However, training centers have so much competition, they feel forced to initiate the "shock" approach to seminar delivery.

It is impossible to calculate how many clients want to give referrals but didn't even if you ask them.

There are far too many variables unaccounted for and as we all know, people are too busy "looking good" than telling surveyors what they actually feel.

Surveys are contaminated by who is doing the asking, how the questions are asked, who is interpreting the answers, where the sample is taken, the ulterior motive of the target, etc.

"...you would be lucky to get any because the client's emotional level right after closing is very high and interferes with the process of offering referrals."

The above statement is counter intuitive. It is common knowledge that emotions and feelings drive the logic and reasoning that does the buying. If there is any time to get a referral, it is the moment the client has made the decision to buy and is emotionally high. The client is entrenched in the virtual reality created by the sales rep and is most open to compliance.

These statements also avoid falsifiability. When someone says something is true but it cannot be falsified, it is commonly reduced to opinion. If it is stated that water boils at 100 degrees Celsius at sea level, and someone witnessed water boiling at 80% Celsius, then the statement is false. This means the statement can be falsified raising to the level of science. - by John Voris
John,

You misquoted me in your last bold print quote, what I said was;
"if you just asked for names you would be lucky to get any because the client's emotional level right after closing is very high and interferes with the process of offering referrals'

I agree with you the best time to ask is after the close. And I can
verify that when I led the process at this time around 80% gave me not just a referral but several. Prior to the Sandler meeting
I was just asking for names and was lucky to get on 20% of the
time. ;sm - by triadtraining
John,

You misquoted me in your last bold print quote, what I said was;
"if you just asked for names you would be lucky to get any because the client's emotional level right after closing is very high and interferes with the process of offering referrals'

I agree with you the best time to ask is after the close. And I can
verify that when I led the process at this time around 80% gave me not just a referral but several. Prior to the Sandler meeting
I was just asking for names and was lucky to get on 20% of the
time. ;sm

I see what happened.

I assumed that "if you just asked for names" meant as a professional. You certainly wouldn't say just--hey! give me a name! I know you know that.

Every successful sales professional has their way to ease into the question. How and when you ask, takes training and or experience.

So, I can easily see that Sander would help people in framing that question and there would be improvement.

I was focused on:

"...you would be lucky to get any because the client's emotional level right after closing is very high and interferes with the process of offering referrals."

I see we agree.

And

It is impossible to calculate how many clients want to give referrals but didn't even if you ask them.

The reason they gave is troubling. Too many make a course out of pseudo-science.

In the end, I think we're on the same page now ;bg - by John Voris
John

You have hit the nail on the head. Your technique is good stuff for not only the new people (who this forum is intended) but also
reminds or maybe even enlightens some more experienced people.

Your approach helps the just closed client direct his emotions in
a more logical frame of accomplishing what both the client and the sales person really want to do and that is give and receive referrals.

I agree that tracking who gives referrals is about as easy as tracking advertising, however, it is possible to do even though some will perceive the results as dubious...i.e. is it 80%, 77%, 84%. Somewhat like polls where there is an error factor involved. So I agree 80% is probably with statistical error allowance.

I am impressed with lots of your thread comments and look forward to seeing more.

We are on the same page and happy selling to you.

Mike.....Triad Training where Synergy=Attitude+Belief+Performance! - by triadtraining
John

You have hit the nail on the head. Your technique is good stuff for not only the new people (who this forum is intended) but also
reminds or maybe even enlightens some more experienced people.

Your approach helps the just closed client direct his emotions in
a more logical frame of accomplishing what both the client and the sales person really want to do and that is give and receive referrals.

I agree that tracking who gives referrals is about as easy as tracking advertising, however, it is possible to do even though some will perceive the results as dubious...i.e. is it 80%, 77%, 84%. Somewhat like polls where there is an error factor involved. So I agree 80% is probably with statistical error allowance.

I am impressed with lots of your thread comments and look forward to seeing more.

We are on the same page and happy selling to you.

Mike.....Triad Training where Synergy=Attitude+Belief+Performance!
I have not been exploring salespractice as I should lately. Sorry for the delay.

Thanks for your kind comments. - by John Voris
We're cool. I look forward to some more of your insights.sn; ;bg - by triadtraining
We specifically tell our clients that we would appreciate it if a potential new client, whom they referred, calls us.

However, it they insist on giving us a name and number, we will call the referred person to determine whether they are ready, willing and able to buy our type of services. If not, we disqualify them for now and put them into our prospecting database for future calls. - by JacquesWerth
If you want to turn over most of your new staff then insist that they solicit referrals from prospects, most can't and won't.

BTW i've worked in the USA, UK and Australia. It' very different in each country, Americans were the easiest to ask with minimum resistance followed by UK & Australia, the last 2, in my experience don't respond well to being asked and put on the spot. Sure you'll get some names and numbers but usually just so they can get you out of there. - by Tony Dunne
1. Always ask for referrals from your best clients.

2. Use your clients to filter out the bad referrals. Teach your clients how to give you referrals. Tell them your price point, and show them what a good referral is that has a high chance of converting. Offer them incentives for GOOD referrals. A good referral is one that has a specific large pain point, and is ready to take action to fix it. Any other kind of name that is given is just a prospect for long-term nurturing. Get those names and put then on your email list, but don't spend time trying to convert them right now.

Patrick - by JustAskPatrick
It seems that several people here have already countered the "Referrals are a waste of time" question/statement, so I won't go there. What I will state is that referrals are most definitely NOT a waste of time, however, if you feel that your closing ratio is lower with referrals than with your typical prospects, then you must either be working some incredibly great prospects regularly OR you have not learned how to properly work a referral lead to your advantage.

Referrals leads have to be contacted and worked in a different manner than a regular prospect, and each type of sale will differ as to how you should work them. I recommend that you do some extreme due diligence if you ever find yourself in a position whereas you feel as though your referrals are a waste of time. - by Sales Zombie
More than a few salespeople have suggested that most referrals are a waste of time. There must be a grain of truth in that statement somewhere. In your opinion, under what circumstances would the suggestion that most referrals are a waste of time ring true?
A lot of statistics, percentages, and ratio talk on this thread, much of it from sources outside of the member/contributors' own frame of everyday experience (always the best source btw)

I'll answer the original question (above in bold) as it was posed.

Referrals have the greatest chance of being a waste of time if they are SOLICITED and UNEARNED. - by Gary A Boye
Last week I took a call from a man who said that, on the advice of his company's top salesperson he read our book twice. Now, he wanted to know whether he should enroll in our training courses. We talked for about twenty minutes and he enrolled.

I also got an email from one of our graduates with a list of seven salespeople, complete with email addresses and phone numbers, who should take our sales courses. I replied, "Thank you, however I will not contact them, but I will talk to them if they call me." - by JacquesWerth
I will agree with Gary on the unearned portion. You must earn the right to referral based work. I know you can receive referrals without ever working for a customer. I recently had the oddest referral from a fellow who choose another company to complete the task. He told his friend if he had it to do over again he would not make the same mistake. This friend was told no matter what the cost do it. I earned the referral even though I did not earn the right to do the work for the referring party.


I do know I can ask for an earned refer and it could be related to a different industry.
- by rich34232
A great many of the sellers I have worked with have indicated that they findasking for referrals to be a time waster. .Much of the problem has to do withthe way they've been taught to seek referrals. Most have been taught to ask aweak question such as "Do you know of anyone else who might be able to usemy product or service?" or "Who do you know that I could help as I'vehelped you?"

These questions create more problems than they solve..Since usually there'sbeen no preparation for the question, it takes the client by surprise and putsthem on the spot which many if not most resent; it certainly doesn't define forthem who a good referral is; it gives them only 10 or 15 seconds to go throughtheir mental file cabinet to come up with a good referral; gives them no timeto get comfortable with the idea of giving referrals; and doesn't give them anobjective way to determine if the seller has earned the referral.

Is it any wonder a great many clients don't want to give referrals? - by pmccord
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