When a lot of business owners think of sales they think of cold calling. And when they think of cold calling, they think of one of their least favourite things to do. Which is probably putting it mildly!
And it’s not just business owners who have this reaction to cold calling. Many salespeople I talk to hate cold calling as well.
I mean, who wants to call up someone you don’t know and try and sell them something?
There are people who love it and use it as a key part of their sales strategy. However, the rest of us have two options – master your fear of cold calling (which we can help with) or use a different sales strategy.
My hands-down favourite strategy and the one I’ve used to create multiple multi-million dollar business is using business referrals to generate sales leads.
In fact, it’s the same strategy my Grandad used when he was a successful real estate agent.
So, what is a business referral, why are they so effective, and how can you start getting them?
In simple terms, a business referral is when someone you know introduces you to someone they know, who may need the product or service you provide.
This is vastly different from cold calling because the person you’re being introduced to already knows who you are and are interested in what you’re selling.
Much easier, right?!
My Grandad didn’t have to go out and prospect for new homes to sell. Instead, people who wanted to sell their home came to him. And they came because they had been referred on by someone whose house my Grandad had sold in the past.
This was so effective that every single one of his leads came via a referral.
It was (literally) the gift that kept on giving.
Business referrals are a form of word of mouth marketing, which still is one of the most effective marketing channels there is.
If a friend suggests a good restaurant to try or movie to watch you’re pretty likely to check them out.
The question is, why?
Well, you know, like and trust your friend and, so, on his recommendation, you’ll try the restaurant or watch the movie.
Business referrals work in the same way. If someone is referred to your business by someone they know, like and trust then they’re highly likely to use your services – particularly if your product or services solve a problem they may have.
It’s been estimated that leads from business referrals have a closure rate in excess of 50% (though, in my experience, it can be as high as 70% plus).
Regardless of the exact figure, it blows your cold calling closure rates out of the water!
And the benefits don’t just stop there.
Why Business Referrals Are So Effective
What is it about business referrals that make them so much more likely to close?
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The biggest reason is trust. Trust is such a critical part of whether someone will buy from you and with cold calling you have to build it with your prospect from scratch.
With business referrals, the trust is already there because the lead trusts the person that referred you to them.
When people came to my Grandad via a referral, he didn’t have to sell them on why they should use him to sell their house. They’d already been sold by person that referred them and trusted my Grandad would do a good job.
Which he did. So much so, he didn’t just sell a house for a family once.
Instead, the same family would get him to buy and sell their homes over many years. When they were ready to move, they would give my grandad a call. A fact that he was extremely proud of.
With his customers being such incredible advocates and sources of referrals, he could focus on delivering a great service to his new customers, which, in turn, would mean they would become advocates as well.
Another benefit of business referrals is your sales process is sped up.
You don’t have to spend time prospecting, calling massive lists of people, and trying to sell your products or services to them, only to get a “no”.
Instead, the person who comes to you via business referral already wants to talk to you. They’re a warm lead who is open to using your products or services to solve their problems.
That makes for a much faster sales process and since they’re so much more likely to close – a vastly more productive way to spend your time.
Essentially, more sales in less time.
How to Generate Business Referrals
While business referrals make it much easier to get quality leads that have a high chance of becoming a customer, it takes time and effort to develop referral sources.
A lot of effort and hard work went into my Grandad’s real estate business.
He took the time to really understand his customers’ problems and then went the extra mile to deliver the solution that suited them. By putting the time into building relationships with them, his customers were more than happy to refer their friends, family and business colleagues on to him when they were looking to sell their house.
This is your best source of business referrals – your clients and customers.
And the way you turn your customer base into a referral source is by delivering a great service, building relationships with them, and asking for referrals (this is something a lot of people forget).
There are many other potential business referral sources. Two I particularly like are strategic partnerships and networking groups.
Strategic partnerships are formed when you build relationships with other, non-competing but complementary businesses who have a similar target market to yours.
Their customers trust them, so if they refer their customers on to your business you already have a warm, interested lead to close.
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A good example is mortgage brokers and insurance brokers working together. When someone buys a house, they need a mortgage, so they go to a mortgage broker. Now, they probably also need life insurance so the mortgage can be paid back to the bank if something should happen to them. The mortgage broker can then refer an insurance broker who they know, like and trust to sort the customer’s life insurance.
Taking it further, the real estate agent could have been the one that referred the person buying the house to the mortgage broker and, since it’s an investment property, could now refer a property manager to look after it.
Take this even further and think about how many people are in your networks and all the different products, services and expertise they offer.
What if you got a whole bunch of them together (whom you know, like and trust) and ask them what referrals they are looking for and then looked through your network to see who you could refer to them?
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In short, you’ve created a networking group where people give and receive referrals.
The good news is you don’t have to go out and create your own networking group. There are heaps them around.
We’re part of BNI and it works extremely well to generate leads for our business, so we don’t have to cold-call.
You don’t have to cold call to get sales leads for your business.
Business referrals are another, potentially superior, sales strategy to utilise. When done well, you can create a source of warm interested leads that have a very high chance of closing.
Your customers are your best source of referrals and you can also build strategic partnerships with other business and attend networking groups.
Based on my own success and the success of my clients, I’d highly recommend adding business referrals to your sales strategy.
If you’d like to have a chat about cold calling and your sales strategy – get in touch.
Sharn Piper – CEO – Attain NZ
027 733 4333, firstname.lastname@example.org
Having successfully led numerous sales teams, built multiple successful businesses I know what it takes to create a sales process that is robust, repeatable and produces consistent results when applied in a consistent way.