How important are referrals?

Sanddollar, I took a look at the service you suggested and decided to give it a go. Thanks.

Originally Posted by Newbie I'm pretty new to selling and I hear a lot about "Referrals." Just how important are referrals really? I've checked around the office and everyone gets them but they don't live on them. What's a good target to shoot for in terms of X percentage of business coming from referrals?

Referrals are like a garden Ikeep in touch with every customer until they are either dead,or ask me not to call or cannot be located through holiday mail,birthday cards and six month anniversary calls. I admit I try not to be annoying but they never forget me and I really am helpful if they have a problem with a car. The point is that the longer you keep your name in front of them the more likely they are to call for a replacement sale or referral of a friend. Just like a garden you have to tend your crops.

Originally Posted by Rothgar the Pacifist Referrals are like a garden Ikeep in touch with every customer until they are either dead,or ask me not to call or cannot be located through holiday mail,birthday cards and six month anniversary calls. I admit I try not to be annoying but they never forget me and I really am helpful if they have a problem with a car. The point is that the longer you keep your name in front of them the more likely they are to call for a replacement sale or referral of a friend. Just like a garden you have to tend your crops.

That's the way to do it. "Your salesman for life!"

Referrals are the best source of all of your marketing efforts. Before people will buy from you or your company, you need to build a certain amount of TRUST with that prospect. If they know someone else has bought from you and your company, then the trust factor jumps up considerably.

let me give you an example. How many times have you gone to a store because one of your friends recommneded it? If your friend recommneded it, you TRUST that person's judgement. The same thing applies to any sale, whether it be a B2C sale or a B2B sale, trust is a major factor.

If you can get all of your business from referrals, you will cut down your sales cycle considerably, and you will also stop chasing non-performing leads. So, get as many referrals as you can.

The comments about referrals being the best way to prospect and the lifeblood of a successful sales career are certainly correct. But let me give some statistics about referral generation:

Less than 15% of all salespeople generate enough referrals to significantly impact their business (significantly defined as at least 25% of their business comes directly from referrals).

Almost all of the top producers in relationship based industries generate at least 50% of their business from referrals, and over half of them generate more than 75% of their business from referrals.

Less than 15% of all business is generated by referrals for the remaining 85% of salespeople.

That indicates that the top producers seem to put much more emphasis on referrals than the typical salesperson, even though everyone touts referrals as being important.

In addition, these top earners don't seek referrals in the same manner as the average salesperson.

They let the prospect know up-front that they are referral-based and consistently and gently remind the prospect of that fact (there is a process for this, so it doesn't come across as "in your face" solicitation). Once the prospect has become a client, they get their client's agreement to give referrals, define for the client exactly what a good referral for them is, and lets the client know exactly how they will earn the referrals and if they don't perform, they don't get them.

They let the prospect and client know that referrals are very important to them and they don't ambush the client after the sale as they're walking out the door with the last second request for referrals. They have a very detailed, professional, organized process that creates a large number of high quality referrals from their clients and their prospects.

There is a difference between word of mouth marketing (having a client tell others about you) and generating referrals (getting direct introductions from clients and prospects to other high quality prospects). One is much easier and the client does the work (if the work is done at all), the other requires a good deal of work and is very much a proactive process.

Good distinction, there Paul.
And my target would be 100% of both.. er.. even if that makes 200%! Seriously, though, genuine WOM is so powerful that we sell it - audio testimonials.

Repeat and Referral Business is all you need to be successful in sales...

Here's how I think of it. The most enriching part of my job is the people I get to meet & help. This may sound like a silly question but it is how I help new auto salespeople get the big picture:

Here are the facts: Most people will own about 20-30 cars in their life. Most people know about 250 other people that will own cars.
Sometimes, I don't have the right car for somebody; therefore, "How could I expect them to do business with me this time?"

You will always come out ahead if you focus on a relationship instead of a sale. Never compromise a relationship or your reputation for a single sale.

Most sales people do not follow up long-term (or at all, for that matter) they only focus on "the sale of the day". What do you think happens to the person that bought a car down the street, and never hears from their sales person again VS. getting a card from me every month, even though he hasn't done business with me, YET? Who would get the referral... The answer is easy; Who would you refer?

As a salesperson, do you think you'd do a better job with each customer if you viewed them as one sale or if you viewed them as a new friend and 250 sales throughout your career?

Call me when you want to become a FollowUpMaster. It is the easiest way to insure a successful career.

Tobias, at 303-827-4785.