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Winning Referrals

I just received the following email from Ira, who is a property and casualty insurance agent. He has a very interesting question about referrals and since this is such a big topic among salespeople and business owners, I thought I would share my reply with you:

Warren,

I just found your site via your BusinessWeek interview, and I really enjoy your content.

I wanted to ask you a question regarding referrals. About a year ago, I got into the commercial insurance industry. I provide small to mid-size companies General Liability coverage, commercial vehicle, property insurance, etc. I am very fortunate in that I am quite often able to lower their costs without sacrificing coverage and am able to provide outstanding service to my clients.

My question is: how do I get these guys to understand that I really am trying to build my business with referrals and have them give me some names, intros, etc, without them feeling like they are putting another sales guy onto them? I feel like if I can save someone 40+%, they should be willing to help me out by giving me some guys to contact.

What are your thoughts?

My first thought is that Ira is hurting himself mainly because of his perceptions (sales sterotypes). Ira is not only providing a valuable service to these business owners, but in his own words states, “I am quite often able to lower their costs without sacrificing coverage and am able to provide outstanding service to my clients.”

Anyone who can do that is not selling; they’re helping, which is what successful salespeople do. A salesperson like Ira who saves clients money while delivering quality service is not another sales guy out there bothering people.

Good salespeople who deliver lower costs, asset protection and quality service are the kind of people clients and prospects WANT to see. This makes it Ira’s obligation to get referrals. Rather than “putting another sales guy on them,” don’t you think Ira’s clients would love to refer him to fellow business associates knowing that if he does the same for them, it wil help their businesses?

I think the issue Ira has is quite common. He’s afraid to ask for referrals. He shouldn’t be, especially since he does such good work for his clients. But while Ira states, “they should be willing to help me out by giving me some guys to contact,” the first rule of referrals is: "You have to ASK!" In referrals and in life, if you don’t ask, you don’t get. You cannot sit around and wait for something to happen; you have to MAKE it happen.

Here’s what Ira should do:

  • Make a courtesy call to each one of his clients.
  • Ask each one of these clients for three names. When asking for referrals always ask for a specific amount. Don’t use open ended questions like, “Do you happen to know anyone who might be able to use my service?” That’s the kind of question that usually gets you a big fat NO!
  • When speaking to his clients, Ira needs them to agree with him that they are more than satisfied with everything he’s done for them and then ask them if they know three other business owners, they are friendly with, who they feel could benefit, much like they are, from his services.

People know and hang out with others who are just like them. In Ira’s case, his clients are business owners. I guarantee each one of them knows other business owners.

Referrals are the life-blood of a successful business. A prospect who has been referred by a satisfied client is more likely to buy and more likely to become a long term repeat client.

So remember the three rules of referrals:

  1. ASK!
  2. ASK for a specific number
  3. ASK the kind of questions that can be answered. (Could you give me the names of three business owners you know who might benefit from this service?)

Links to past articles on winning referrals:

2 Responses to “Winning Referrals”

  1. David Moore says:

    Hi Warren,
    I thought I would make a very quick point on this. I hear so many (TOO MANY!) salespeople moaning about 'Where did it go wrong?', 'Why didn't they buy?'
    I always get my salespeople to ask for a referral because 'your customers, and their satisfaction, are your best advertisement' but I also get them to call the customer on a follow up call and find out…'Where did it go RIGHT?'
    I have spoken to my salespeoples customers before now, just as a follow up courtesy call to thank them and when I have gained rapport, I just drop into the conversation something like, 'Mr Smith. I hear a lot of ways our product benefits people, and people tell me that they are glad that they bought it so, specifically, for you, what is it about our product that really appeals to you?'
    Not only can you get referrals from satisfied customers, you can find out what it was that made them buy. By a few more carefully worded questions you can find out if it was price, service or the salesperson and what they said. If you find a trend…work it.
    Best regards

    Your friend
    Dave

  2. Thanks David for another great posting. Yes, satisfied clients are obviously your best referral base and the best time to ask them for referrals is right after they've received your product or service. Many salespeople make the mistake of asking for the referral right after closing the sale: Bad idea. You've just gotten them to give you something (a sale) and now you're going to ask for something else (referrals). Not a good idea. Besides, after closing a sale the one thing you want to do is get out of there. Hanging around can only result in one thing; and it's bad…..real bad.

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