It costs five times more to activate a new customer, than it does an old customer or asking for referrals. Employees are seven times more likely to make a call to an old customer or a referral than a cold call. People prefer to do business with people they know. There’s no hard or fast reason why, people just do. I could talk here about trust, the underlying psychology of it all, but the truth of the matter is that whatever the assurance is, if it’s spoken by someone who knows you and that you know, you are more than likely going to follow that suggestion.
With every part of a working position that you may find yourself in, and this applies to everyone from waiters to business leaders, you never know how to make it a habit until you are told to do it. So to the main point of this article – asking for referrals.
When doing this becomes a habit, there’s no hardship in doing it. For a majority of people cold calling is a “harbinger of pain and death”. Well, not exactly but pretty close. When you look a little deeper into asking for referrals, you could honestly say that unless you have spoken with the person or have communicated with them in some way, this is simply a cold call involving three people; the person that referred them, who they are and who you are. You will have every bit as much time to spend explaining yourself as you would on a cold call, but nature taking its course means that your ability to say “Jerry with so and so business recommended I call you”, will keep you inside the comfort zone, and most likely to be heard.
So, if I can go on an appointment, present my project, then close, and simply ask “by the way, is there anyone else in a similar position…etc” and get three referrals, that I know are more than 60% more likely to buy than the ten cold calls I’m going on to make over the rest of the week, which should I push for more of? Referrals or cold calls?
As an owner or boss in a company, which should you adopt as a policy for every call your staff makes? Having a best practice like this as a habit with all your staff, asking for referrals, will soon impact your bottom line in both getting new clients, and reducing your overall costs as outlined at the start of this article. Encourage staff to keep charts, or lists, of referrals asked for and gotten. Encourage cross talk between those who do and those who find it difficult. Doing this one simple thing will have surprising (and long term) benefits to your efforts.
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