We need more leads, we need more leads! That’s the rallying cry of many sales reps. Their business development success depends on it. Something’s amiss. Either they’re waiting for leads from their SDRs or relying on leads from marketing’s lead-nurturing attempts.
You would think that asking for referrals would be the #1 sales strategy for every account executive. Their goal is to land a new client and then expand into other areas of the organization. The landing part can be challenging, but the expanding part is not so difficult. By that point, sales reps already have the perfect referral sources: their prospects’ own colleagues.
They get meetings with decision makers, and all their leads are qualified, because they ask for introductions to exactly the people they want to meet. Yet most reps aren’t consistently asking for referrals. It’s not part of their sales process and not even part of the conversation.
A recent business development checklist mentioned a variety of prospecting approaches: outbound phone calls, custom videos, direct mail, social media, advertisements, webinars, podcasts testimonials, and case studies. When I asked the author why she didn’t mention referral selling, she paused for a long time and then said, “I don’t know.”
But I do. Referrals weren’t even on her radar. It’s the most overlooked prospecting strategy, which is odd, because it’s also the most effective.
The Business Case for Referral-Based Business Development
Referrals seem like common sense, but in the digital age, they’re usually an afterthought at best.
Asking for referrals could be your company’s biggest competitive differentiator. Account executives get in with a referral introduction, build strong and lasting relationships, and become privy to exclusive information. They have the inside track, so they:
Get every meeting in one call
Get insights into prospects’ problems, challenges, decision processes, and what’s really going on
Ensure every lead is qualified — no more smoke and mirrors
Reduce the time to close deals, which reduces the cost of sales
Increase the lead-to-close rate by more than 50% (usually more like 70%)
If referrals are so great, what gets in the way?
Why Salespeople Aren’t Asking for Referrals
Salespeople have many misconceptions about referrals, all of which quickly become excuses to keep relying on digital technology for lead generation and business development. After all, digital prospecting is easy, even if the conversion rate is pretty dismal.
So, salespeople tell themselves:
Referrals take too long, and we have goals to meet.
We can’t rely solely on referrals to build a pipeline.
We’ll run out of people to ask for referrals.
Referrals don’t scale, so it doesn’t make sense to start.
We can just research trigger events, drop a name, and get a meeting.
Referrals only work for salespeople who build relationships to close deals. Their sales cycle is already long, and they understand how referrals can help them get into their accounts and create a larger footprint. Research is important, but sending a cold email citing a trigger event puts your sales team in the same league with all the other salespeople doing cold outreach. A referral is only a referral when your team receives an introduction.
The Missing Link in Your Sales Process: A Referral Program
Many sales leaders think their teams are already doing referrals. They believe it’s enough to simply tell their sales teams to start asking for referrals. They don’t make it a requirement or help their teams build the skills to do it right, so more often than not, referrals are hit-or-miss.
Referrals are simple, but not easy. It’s a lot easier to invest in technology, give sales teams tons of lead-generation tools, and assume they’ll figure out the business development “stuff” on their own. If the technology isn’t adopted, then it’s easy to blame the technology. Investing in people takes more guts and more time. People aren’t simple, and the fix isn’t simple, either.
What’s the fix? Invest in your people and teach them how to generate leads. That means:
Committing to referral selling and making it a priority for your team
Building referral skills and ensuring this becomes the way people work
Setting referral metrics and linking your KPIs to new referral behaviors
Implementing with precision by coaching and reinforcing new skills
Referral selling is a major shift in your sales culture, and it doesn’t happen overnight. It takes strong messaging and organization-wide understanding that referral selling is not a program du jour. Everyone has a stake in the success of a referral program, and everyone understands that it’s how your sales team gets in the door with the right people, thrashes the competition, and closes business with their target companies. Nothing is sweeter.
“Referrals seem like common sense, but in the digital age, they’re usually an afterthought at best.”