Is your referral program helping you grow your business?

Although I’ve been in the business world for many years and always considered myself a pretty good “networker”, it was only recently when I realized how important a referral program is to growing your business.

I was first exposed to a formal referral program in college while working as a Nautilus instructor for the Faunce Corner Health Club, a  Healthtrax Company where membership growth was a top priority. The sales department was responsible for bringing in new members and used the instructors to gather referrals from current members. Nautilus had a very systematic and regimented workout system. There was a lot of interaction between members and instructors so it there were many opportunities to ask members if they knew anyone who would be interested in losing weight, getting stronger or interested in trying out the club. There were roughly 5 instructors and all of us had a quota of 5 referrals per week. I was getting 25 per week and within a month was promoted to sales. The club was thriving, with new members joining daily and we always had people to call on. Looking back at my 21 years in the office equipment industry, I have yet to come across a company or organization with a formal referral program like the Faunce Corner Club. One with a quota, follow up process and reward program.

The Dilemma

So why is it that organizations spend so much time on “cold” calling to get new prospects and miss “warm” opportunities right under their noses. I think it’s because most of us mistake referrals for references. At Connecticut Business Systems we have thousands of references from satisfied customers who wrote letters stating how wonderful we are and we use these references every time we make a contact with a potential client or prospect. But what if we were to get 5 referrals from every satisfied client? In our industry, virtually every business is a prospect. Whether it’s copiers, printers, document management software or consulting, every business or organization either needs or will need our services at some point. References are pats on the back from current customers; referrals are specific individuals or organizations your customers or contacts refer you to. Another reason is that reps are taught selling skills like objection handling and closing, but seldom are taught the art of networking or generating referrals.

During a recent team meeting one of my sales reps complained about a small deal where he made a very small commission. In his words it was a “waste of time”. I asked him who they use for legal advice. Who is their insurance company? Who does their taxes? Who are their best clients? Who are their top competitors? Besides business contacts all clients have people they know that work in other organizations. Friends and family members who work at the same places we’re cold calling. Most contacts have also worked at different places during their career. Do you know where your contact was before joining the current firm? Needless to say the answer to all my questions was “I don’t know”. The commission on that particular deal might have been small, but this customer was a potential gold mine for referrals and future sales.

Every appointment can produce referrals

Another great referral opportunity presented itself during a recent field blitz. A rep and I walk into a architects office. They just bought a copier from a competitor. The equipment was not yet delivered so we tried to persuade the owner to accept a competitive proposal from CBS. He appreciated our efforts and wished we came in 10 days prior, but at this time he was going to remain with the competitor. After a few minutes of conversation, I asked him if he was willing to work with us on building a referral base in southern Connecticut. He agreed and a week later we came back with pizza and exchanged contacts for potential appointments during lunch with his staff. The customer came prepared with a list of 30 personal contacts including addresses and phone numbers and we asked him to give us a list of their top potential clients they are tiring to get into.

The same day another rep and I walked into a small radio station. All they had was a tiny printer with minimal printing demands. After a brief conversation with the receptionist, we found out that her good friend owns a local printing company. The rep called the printer that afternoon, referenced the his friend the receptionist and scheduled an appointment to review options for replacing his two production copiers! It’s so much easier calling on a account when you can reference a person who referred you to them.

How many sales people do you know?

Every territory has sales professionals from other organizations who call on the same clients for their products or services. They have current customers who like them and competitive accounts which they targeted for potential business. I try to work with sales people who can also benefit from our customers. Office furniture companies, phone providers, network and computer organizations are some of the vertical markets where mutual benefit exits. So, why aren’t sales reps working together to exchanging names of current contacts? Actually some of our reps are beginning to get it! One meets every two weeks with a sales person who sells networking technology in the same territory. Two others joined a leads exchange group at their local Chamber of Commerce. We’re also planning to invite some of these reps to speak in front of our team about their current organization and how we can help them with some of their key prospects. This brings me to my final point.

Give before you receive

In order to get referrals you need to give referrals. Your referral program will not be complete if you do not include specific processes for organizing and giving referrals. I organize the business cards I collect manually in card binder. I file them by vertical markets to make recognizing a referral opportunities easier. I recently became a board member of Big Brother Big Sister Foundation. We needed several trucks and clothing bins wrapped with our logo and other specific images. Since I refer to my card binder often, I knew I met a person who owned a sign company and specialized in wrapping cars and outdoor items. He's not participating in the bid process. In the past, I responded to referral opportunities as they came up, today I search out opportunities to refer someone. It’s quite easy actually. On every appointment with our clients or prospects, after we get done with the business at hand, I ask if they are working on other projects where they need a supplier or consultant. Just last Friday we were able to refer a computer company to a prospect who is looking to expand his business and needs computers and a new network. So if you’re not getting referrals, look in the mirror. Have you referred any one today?

For other ideas on building a referral base Click Here.