Referral sales have a higher dollar value and longer lifetimes—yet the majority of sellers aren’t using them nearly enough. In fact, this alone may be what differentiates the hunters who consistently crush their quotas from the rest of the pack: According to one study, nearly half of top-performing salespeople are “constantly” asking for referrals. They’re asking every day, with every person they get in front of. The same study found that struggling salespeople were far more likely to state that they “never” or “rarely” ask for referrals.
Why are referrals so effective? What hidden emotional and psychological factors are at play? And how can you step up your game, asking more often and more persuasively to generate leads and close deals?
Let’s answer these questions and more.
The Data-Based Case for Asking
Trust is an invaluable lubricant in business. It’s what you have to work so hard to build in your relationship with internal advocates and customers. And you have to work for it, because it’s generally lacking in the context of enterprise sales. Only three percent of buyers say they trust sales reps—a slightly higher percentage than the number of people who trust politicians, but still not very good.
Of course, there are a number of ways to seem more trustworthy. For example, avoiding (or simply rephrasing) wrongheaded questions like “Does that make sense?” is a good place to start. But that’s also the beauty of referrals: They do the trust-building for you, fast-tracking relationships through something like a magical transitive property. If A trusts B and C trusts A, therefore C trusts B.
The data bears this out. Referral-based leads convert at a 30 percent higher rate than other prospects. Even better, these opportunities generate 16 percent more lifetime value down the line. So the potential upside of even one good referral is difficult to overstate.
What’s more, an overwhelming 92 percent of buyers say they trust referrals from people they know, according to Nielsen research. And another study concluded that referral marketing is the most effective form of advertising.
But you won’t be the beneficiary of that trust surplus unless you pop the question—and right now, too few salespeople are. According to one much-bruited Dale Carnegie stat, 91 percent of customers say they’d give referrals if asked, but a paltry 11 percent of salespeople ask for them. So if you’re among the 11 percent and struggling to hit your number, this simple course correction is low-hanging fruit.
Emotion and Psychology Behind the Ask
If, for some reason, the data alone hasn’t swayed you to change your approach, perhaps a mild dose of cognitive science will. Specifically, we’re going to be talking about the phenomenon known as the “Ben Franklin effect.”
What is it, exactly?
We’ll spare you the classically fiendish eighteenth-century tale of book-lending between rivals. Here’s how Franklin summarized the concept: “He that has once done you a kindness will be more ready to do you another, than he whom you yourself have obliged.”
In today’s terms, that simply means when you do someone a favor, it actually makes you like them more.
That may sound counterintuitive at first, but the evidence backing this phenomenon is far from anecdotal. Academic studies like this one found that “asking favors can provide opportunities for requesters to build and promote relationships”—but in order for that to work, it needs to be you who’s doing the asking. That’s something we frequently tell those who believe Emissary is primarily a referral service (we’re not) and think they can simply pay us for intros to their top accounts (they can’t). We can help them in a variety of ways, but they need to build trust with their customers in order to generate warm referrals to new prospects.
Once you do build that trust, take this science with you into your next conversation with a customer, and you’ll start seeing more benjamins come bonus time.
Three Steps to More Asks
Ready to initiate conversations with more prospects and close more deals? You should be—after all, as should be clear by now, solid referrals will get you so much more than just a foot in the door. Start with the following three steps and you’ll have an effective referral game in place.
Ask for at least one referral every week.
This is a simple first step to help build your confidence (and your spiel) in asking for referrals. Plus, a once-a-week cadence hardly counts as heavy lifting. Just be strategic about when you ask: If you’ve recently demonstrated value to the customer, it’s probably a good time. Try to naturally work your ask into the conversation, listening for openings as they arise.
Be specific about what you want.
Not every referral looks the same, and the most valuable ones won’t necessarily come in the form of an introductory email. So you need to be clear about what it is you’re looking for. The essential thing is to leverage the trust and goodwill you’ve built in one great relationship to create the seeds of another. And to do that, you need your customer to in some way vouchsafe your credibility, your ability to solve problems and deliver on promises. As long as that’s taken care of, it hardly matters what form the referral takes: in person, over the phone, email—it’s all the same.
Schedule your follow up.
Not everyone is going to have a great referral at the ready, of course. And in a lot of cases, that’s a good thing. Why? Even when customers are clearly enthusiastic about offering referrals, you’ll wind up with much more promising leads if you give them time to reflect on the best match. So you’ll need to follow up. Just be sure to give your customers at least a week to think about the referral and plan your messaging to be as persuasive as possible.
Annualized, you’re looking at 52 new opportunities to hit your number.
Executive Summary on Asking for Referrals
Research shows that many customers are willing and eager to give referrals—but only if they’re asked. And right now far too many salespeople appear to be reluctant to do so, according to the latest data. That means they’re missing out on opportunities to consolidate trust in one relationship, and carry it over to another. We’ve broken down the numbers and cognitive science behind referrals. Here’s why it pays to ask, and how to ensure your next referral leads to a solid revenue-generating opportunity.