Are you doing all you can to expand your business and maximize sales growth? The answer may depend on whether or not your business has a mature referral sales program. Referral selling is the ultimate sales strategy:
- Referrals close faster than other lead sources, upping your productivity.
- Referral customers cost less to acquire, cutting down your costs.
- Referral customers have better retention rates, resulting in a 16% higher lifetime value.
- Sales professionals with referral programs can earn 4 to 5 times more.
Referral selling is especially effective when you leverage your greatest business asset — happy customers. Here’s how to turn those happy customers into your biggest driver of referral sales.
Make Referral Selling Part of Your Process
The first step in referral selling is committing to building a referral program. Effective referral sales growth doesn’t happen on its own. It has to become a part of your sales process.
Asking customers for referrals should be a recurring step in your sales process. Follow-ups, yearly reviews, surveys, newsletters — these are all places where you can incorporate a referral sales program.
And yes, starting a referral program takes time and other resources. Be sure you can carve out the time necessary to get the ball rolling. There are good incentives to do so.
Unlike cold-call prospects whose conversion rates are lower, referral prospects convert on average 50% of the time! There’s good reason for this:
- Your customer has already pre-sold the referral on your business.
- Your client’s endorsement earns you instant credibility and trust.
- You get to sell in an environment with little or no competition.
With so many advantages, it’s no wonder referrals are prized so highly. Implementing a proper referral program will give access to these highly qualified leads. All you have to do is leverage your happiest customers.
Identify Your Own Happy Customers
While it’s true referrals can come from anyone you or your team knows, the best referral source is always your own happy customers. A whopping 83% of happy clients are willing to refer products and services, according to one Wharton School of Business survey. Yet only 29% said they went on to refer someone they knew. The gap is down to whether or not you ask for that referral.
Identify which customers are most happy — and therefore which ones you should ask first — with satisfaction surveys. It’s a simple, effective method to quickly learn who is most likely to be a great referral source. Include a simple question such as:
How likely would you be to recommend our services to friends and family?
- Very likely.
- Somewhat Likely.
- Not very likely.
Organize your referral list based on customer responses. The customers most likely to refer you are your hottest referral selling prospects. Start there.
However, don’t immediately dismiss your less enthusiastic customers. With the right relationship nurturing processes in place, you could turn a “not very likely” to refer customer into a brand champion.
Start Asking for Those Referrals
Once you have a sense of who loves your work, start asking for those referrals.
Ask during your next scheduled call. Ask at their yearly coverage review. Ask in email newsletters, customer appreciation cards, and so on. Nearly every customer communication is an opportunity to ask for a referral.
As you move down your referral list, consider offering incentives, such as modest thank you gifts or customer appreciation days, to spur on less enthusiastic customers. Incentives not only reward your customers’ loyalty and keep you top of mind, they can also increase confidence in your abilities.
Set and Track Referral Metrics
Just as you track your sales growth, your closing rate, your marketing effectiveness — it’s crucial to track your success rate with referrals. As with any of your other metrics, too many new goals at once could be counterproductive.
Start simple, with just one or two metrics. You could measure your number of referral introductions or referral sales meetings per week, the number of new customers gained through a referral, or increases in revenue or profit tied to referral sales.
Choose a focus and work to improve that metric in your referral program’s first quarter. In the next, shift to a different focus. Automation programs and CRM tracking of referrals can help you track your progress and stay on track.
Getting the Most from Your Referral Program
A great referral program can lead your business to massive growth. Your everyday customer retention and relationship nurturing steps can be tweaked to incentivize your happiest customers to refer your business. Use regular surveys to identify your most satisfied customers and focus referral sales efforts here. Ask for the referral at all appropriate moments and track the metrics of your referral program to keep improving, growing, and expanding.
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