We hear time and again that referrals are one of the most cost-effective ways to increase sales. Someone who has been referred by a trusted friend or associate is more likely to make a purchasing decision based on that referral. But so often, we simply forget to ask for referrals or we hesitate to ask for fear of being seen as pushy.
If you’ve delivered excellent service to a happy customer, there is no reason not to ask that customer to refer your business. Make it easy: give them business cards and an incentive to give you referrals.
But what about taking a more proactive approach to referrals? We’ve all heard of referral networking clubs. Referral clubs are an effective way to generate regular referrals from fellow club members. But what if you don’t want to join a club to get referrals from the same people, or pay club fees or attend those 7 a.m. breakfast meetings?
Well, you can create your own referral networking system just by taking the following simple steps. Follow my steps and tips to create your own Reciprocal Referral Partnerships (RRP’s) that will help to increase your sales.
Note that I used the word SYSTEM. I believe operating your business with systems is necessary for efficient, organized daily operation. Systems help to keep you focused and to track what’s working and what’s not.
I suggest incorporating an RRP system into your daily sales prospecting activities.
Here are my recommended steps for creating your own RRP:
1. Decide how many contacts you are going to reach out to daily about establishing an RRP.
2. Review all of your contact lists (your CRM, email, phone contacts, social media, etc.) and select people each day to reach out to that you think would make great Reciprocal Referral Partners.
3. Send your contacts a message (I like to use Linkedin messaging to get the ball rolling if that’s where we’re connected) that you would like to have a phone chat to discuss the idea of setting up an RPP. The message could read something like:
Hey Mike – I’m impressed with the work you do in your industry. I believe you and I may be able to help each other out with referrals. Are you open to having a quick phone chat to discuss the idea of setting up a Reciprocal Referral Partnership? If so, send me a reply with a day/time that works for you.
Note: You want to have the conversation on the phone – don’t attempt to do Step 5 with text chatting.
4. Prior to the phone meeting, review your potential partner’s website, social media accounts, etc. so you get more familiar with what they do.
5. During the phone meeting, make sure that each person takes a few minutes to talk about what they do. I suggest asking the following questions at a minimum:
- How long have you been in your industry?
- What are the top 2 benefits you provide your customers?
- Who is your ideal client?
6. Prepare a short script (no more than 2 short paragraphs and your contact information at the bottom) and send it to your new referral partner. You want to do this for 2 main reasons:
- You’ve just made it much easier for them to refer you because all they have to do is copy and paste the script and send it along to their contact.
- You sell your best. Don’t rely on someone else to come up with the best wording to introduce you to a potential customer.
7. Make sure to follow each other on social media so you can stay on top of what’s happening in each other’s businesses. This also keeps you top-of-mind with each other.
8. Keep track of your partners – AND THE REFERRALS YOU SEND – on a spreadsheet or some other document as a reminder of who to refer and who to stay in contact with.
9. Consider offering your referral partners an incentive. For example, I pay referral partners 10% of the pre-tax invoice amount on new business, for any referrals who become clients.
10. Send your referral partners referrals! The referral partnership is only as good as the new business that comes from it – for both parties.
What if the Partnership Becomes One-Sided?
Speaking of point #10, what do you do if the referral partnership is becoming one-sided? I referred what I estimate to be thousands of dollars in new client business to a colleague. I believe my referrals resulted in 3 new clients for his business. I finally found it necessary to stop referring new business his way because I got zero in return.
Personally, if I have sent 3 or more referrals to the same person with no referrals in return, I will let my partner know, in a professional manner, that I am ending the referral relationship. A smart referral partner will realize it’s time to get into action and repay the favour to balance things out. It’s all about karma baby!
A final tip: Although I recommend providing your contact information in the referral script, encourage your partner to send you the contact’s information directly. This allows you to be more proactive about contacting the referral instead of relying on them to contact you.
There’s nothing like word-of-mouth advertising and the built-in trust factor of referrers to grow our business. Test my RRP system and see if it helps you generate more sales in your business.
P.S. RRP’s do double duty to promote your business. Each person you meet with about establishing an RPP will learn more about your business and could end up becoming a new or returning customer.