It never ceases to amaze me with sales people, how difficult it is to get them, to ask for referrals.  They all know they should be asking for referrals, but getting them to actually do it, seems to be a major obstacle. 

A field sales person has an average of around 250 customers and then potential prospects. If that sales person was to ask everyone of the 250 existing customers, if they knew anyone they could refer them to, to use their products or services, you probably wouldn’t need to advertise and market them.

Now, out of that 250, there are going to be quite a few customers that aren’t too happy with the service, you have given.  There will though, be a hierarchy of people, ranging from advocates, (these are the people that are likely to sing your praises.) to clients, the people who will continue to buy from you all the time, and may give you referrals, to regulars who will buy on a regular basis, and some of those will give you referrals, to a significant amount of single orders, or who buy every now and then.

Sales people should be contacting those 250 people at least 4 times a year, some of them much more. So in a 3-month period, it’s got to be reasonable to expect that sales person to ask a question, something like this…

“You know Jim you’ve been dealing with us for sometime now, are you happy with everything, are you happy with the way that the company is looking after you? I wonder if you could help me.  Who else do you know, business wise, that could use our products and services?”

“I wonder if you could help me.  Could you do me a big favour, Give them a ring and let them know I’m going to be ringing them, just oil the wheels for me so to speak. You know how hard it is on a cold call.  If I give them a cold call, I probably might not get through, but if you know these people, and are happy for me to contact them to sell our products and services; if you give them a call, they’ll be expecting my call, and I’ll be able to get through much easier.”

So let’s just qualify what a referral is.   Let’s first of all tell you what its not.  A referral is not where somebody suggests you ring a particular company, because they may be able to use your products or services.  That’s just a cold call.  A referral is not, someone allowing you to ‘name drop’ a company.  That is, “give this company a call and use my name.  Tell them that I’ve recommended you.” That is still a cold call.

A referral is when someone that you know, is prepared to ring up someone else on your behalf, and let them know that they feel you’ve got the right kind of products and services for them, and perhaps they should be having a chat to you.

If that person’s receptive, you can then give them a call.  They’ll be expecting your call, and you’ve far more chance of getting an appointment, or even selling them some products or services.

Now if someone does refer you, and lets you know that they’ve already spoken to someone, you follow it up fast. It’s very important you follow it up fast. I’ve given people referrals in the past, and they’ve never followed them up. One of them was for service worth £3,000.00, no products really involved. £3,000.00 worth of service and they never followed it up.  Now do you think I’m likely to give them any more referrals? Definitely not!

Another way that we can generate income is to set up affiliate schemes.  An affiliate scheme is where you have someone working on your behalf, to recommend and/or sell your products for a commission.  Your commission can be any number of permutations.  People are primarily interested in themselves, so what’s the incentive for someone to recommend your products or services, or recommend you to someone?

It may be that they’re in a meeting with people, and they could recommend your services. Recommend you, but you’re not at the front of their mind.  So there needs to be something, to be at the front of their mind. That may be in the form of some kind of commission, or reciprocal service.  So what would it be worth to you to be introduced to someone that, without that introduction, you might never have had any business?  You haven’t had to market these people, and you haven’t had to go out and sell, up until this point in time.  These people are receptive, so you may end up getting an order, and a customer.  What is that worth to you?

How could you compensate or commission someone, for that introduction?  Well one of the ways, is to calculate just how much it costs for you, to get the average new customer. It’s fairly easy to do.  Look at your marketing budget, per year; find out how many new customers you get in the year.   That, in a fairly simple way, is how much it costs to get a new customer. Give out that amount to anyone that gives you an introduction and wins you a new customer.

Example: if it works out that for every new customer you get, in one year, costs you a thousand pounds, then you pay out the thousand pounds.  You tell that person up front, “if you find me a contact and they become a new customer, I will pay you a thousand pounds.”  Now for some people that might seem like a lot of money.  The thing is, it would have cost you that anyway, to market the company.  So the more people you’ve got out there, paying commission to, the more chances you have of gaining more new customers, more quickly.  And remember, it’s a ‘one off’ fee, so it’s not a recurring cost.

Ask yourself this “What’s the average life time value of my customers?”

Glenn Harrison

Author/Coach/Trainer/Motivational Speaker
Certified Acredited Behavioural Analyst

Glenn Harrison is available as a world-wide, international motivational speaker to give an hilarious, listen, laugh and learn, educational speech on Body Language.

We train all over the world; at no additional cost other than economy travel and overnight expenses.