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| This is a weekly column transcribed from my Radio Show. The "Top Story" is the major discussion each week in which I address in great depth and detail, aspects of selling that are pertinent to your job everyday. |
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Referral prospecting is to be distinguished or is made distinct from non-referral prospecting. Non-referral prospecting is calling up perfect strangers on the telephone, knocking on doors, the proverbial cold call. That is called non-referral prospecting.
If you've been in sales for any length of time and if you have tracked your own statistics, you would know that if you made an unsolicited, unqualified, non-referred prospecting call, and did that 100 times, on average you would find three people who were interested. Think about that. You call 100 people; 97 people say, "No thank you. I'm not interested. I never heard of you. I buy that from so-and-so. How'd you get my name? Take my name off your list. We don't accept solicitors in this building." Ninety-seven out of a hundred times you're going to hear no. Is it any wonder, should we have any wonderment at all that so many new salespeople that have to start from scratch fall flat on their faces and fail? It shouldn't surprise any of us because that is a very high level of rejection.
There is a much better way to prospect, and that's called referral prospecting. Let me give you some statistics. If you call somebody up on the phone, or if you stop into their office, and after you introduce yourself, you can fill in the blank, "I've been referred to you ____________" and offer then a name of somebody whom they know, you are nine times - that's nine times - more likely to have that person grant you the interview or the appointment. Let me give you another statistic. If you can fill in the blank after you introduce yourself and say, "I've been referred to you by _________________" and fill in a name that they recognize or a company that they recognize, or some company or person they respect, you are five times more likely to develop a business relationship with that person or company.
Now think about those two statistics. You're nine times likelier to find a friendly face or a friendly voice, and you're five times more likely to get the business if we, if you, if I can only fill in the blank: "I've been referred to you by so-and-so." It's a very powerful technique, this concept of referral prospecting.
Let me give you one more statistic. I've done a lot of research into why people buy and why people don't buy, why companies develop loyal, long-term relationships with vendors, and why they sometimes get involved in transactional "whose got the best price" type mentality. What I have found is that 85% of business-to-business clients - people who are buying business services and business products from another business - 85% of that audience is happy enough with the service they're getting that they would refer an additional buying unit or a new division or a new person or someone outside that company to the vendor, to the salesperson who is calling on them. Stated simply, what that's saying is that 85% of your customers are happy enough with what you're doing for them that they would give you a referral, either a referral into their company in a new division, or a referral to someone outside their company, someone they know whom you don't know.
As I mentioned it's the 85-11-68 rule. Let me tell you what 11 means. Eleven is the percent of those customers who have ever been asked the question, "Would you refer me business? Could you help me? Do you know people?" That should alarm any salesperson out there. We're missing a huge opportunity. Eighty-five percent of our customers would be happy enough to refer; only eleven percent is ever asked. There's a 74-person out of 100-person gap there.
Finally, the 68 part of the 85-11-68 rule simply states that 68% of the time that people make a change in vendor relationships it's because there is a perceived indifference. They think we don't care about them. What is one of the best ways you can endear yourself to your customer? Either offer to do them a favor, or ask them to do you a favor. Deepen the relationship so they know they're not being taken for granted, and they know they're not being treated indifferently, and there's no perception at all that you don't care about their business. The 85-11-68 rule demands that we talk to our customers about finding ways to develop referral prospects by telling them how to do it.
I've led seminars all over the country on how to develop a referral network in a sales oriented business. I usually open the seminars by saying, "How many people in the room have an active referral prospecting program in their business?" I've never had more than a third of the hands go up, which tells me that there's a huge misunderstanding that most salespeople have about referral prospecting, and that is only a third of the hands go up. Then I say, "Of the people whose hands are up, how many people have tried referral prospecting and found out that it doesn't work?" And two-thirds of that one-third of those hands stay in the air. And I say, "Let me ask you a question. Has it been like this for you? You're talking to one of your customers, and you say to them - let's say we're talking about business consulting services. You're sitting with one of your customers and you say, 'Do you know anybody else who's looking for business consulting services?' They look at you with either a look of bewilderment or awe or dumbstruckedness on their face. You can look at their eyes glaze over, and then they say, 'Nope, can't think of anybody.'" I ask my audiences, "How many people have had that experience?" And that's when they all raise their hands. I say, "Yes. And then you tell me that referral prospecting doesn't work." What I say to them is "You're right and you're wrong." You're right that when you do referral prospecting that way it doesn't work. But you're wrong because you're not doing it the right way.
Listen, folks. We all have a Rolodex in our mind of all the names and faces of people we have been around with since childhood. If you only look at the adult portion of that - people you know because of whom you work with, go to school with, what type of religion you practice, where you get your hair cut, where you get your car repaired, people you're in social organizations or civic clubs with - you have a mental Rolodex of about 2,000 faces and names.
If I say to you, "John, do you know anybody who is looking for some good sales training services?" Even if you want to help me, that Rolodex is flipping so fast you don't know where to stop. Your eyes glaze over or mentally your mind glazes over, and you say, "Can't think of anybody." That's because we're going about it the wrong way.
The way to go about it is to be incredibly specific. What that means is you know who some of the prospect groups are, whether by industry or geography or even by specific names. Then you say to the person, "Do you have a contact at First Bank, US Bank, First Star Bank, Citibank?" And now they understand you're looking for referrals in the banking business, and you're looking for large, money-center banks.
What I'm going to do now is share with you a very easy-to-follow, four-part program on how you can be more successful at referral prospecting. First you have to position it so that you're talking to either a center of influence, which would be your accountant, your banker, your attorney, or a customer. At the end of a phone-to-phone or a face-to-face meeting, you say, "There's one more thing I want to talk to you about." That's called a transition statement. The first part is to make a transition statement. "There's one more thing I want to talk to you about." They are mentally and emotionally preparing for you to change the subject. Next thing you say is, "I've really enjoyed working with you over the last two years, three years, ten years." And 85% of the time, because of the 85-11-68 rule, what are they going to say back to you? "Hey, Warren, we've enjoyed working with you too."
So now you're emotionally setting the stage for the next part, and the next part is called reason. You might say, "I'm looking to get more business in Kansas City, Missouri." Or you might say, "I'm looking to launch a new product into my territory." Or you might say, "I'm really trying to grow my business this year by 10-12%." Or you might say, "I could pick up the phone and call 100 perfect strangers, and get about 3 people to listen. What I've found is that if I work through referrals, I can increase that by a factor of nine. I can be 9 times more efficient, and therefore have more time to work on my current accounts."
My point here is that the third part of this four-part program is to give them a reason that you're about to do what you're going to do which is step four: ask. Ask for the referral and be specific.
What are the steps? Make a transition; compliment them about the relationship; give them a valid emotional reason why you're about to ask them for the referral; and then ask them and be as specific as you possibly can.
I'll tell you a quick story. I wanted to do business with American Express, which used to be called IDS in Minneapolis years ago. I wanted to do business with them in the worst way because they had 8,000 salespeople and I felt like I had something to say. I went on a campaign. At the end of every phone call and every meeting, I'd say to people, "I want to work with American Express in the worst way." And that was my reason. That was completely selfish, but my clients trusted me, and they knew I wasn't doing anything underhanded. They respected my being up-front. "Whom do you know at American Express? What district managers do you know? What people do you know at the headquarters in Minneapolis?" And I got, "No, no, no. Can't think of anybody. Don't know. No, no, no."
One day I asked a person, "I'm trying to do business with American Express in the worst way. Do you know anybody?" He smiled and said, "I know the Executive VP for the whole company. I have twin daughters that are 3 years old. He has a son that's 3 years old. We meet at this particular bagel place every Sunday morning. I know the guy like a brother." He said, "Why don't you come to this particular bagel restaurant next Sunday? I'll hook you up with him."
Now why was I able to get that referral and then end up doing business with American Express? Was it because I cold-called and tried to find out the right person? No. It's because I followed my own process and I was incredibly specific until I found the right person who could lead me right in the front door. That, folks, is the power of referral prospecting
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– Warren
Wechsler |
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