Networking HQ BLOG with Larry James

Tuesday, March 23, 2010

A Referral Is a Referral, Right? Wrong!

Ivan Misner, Guest Author –

A referral is better than a cold call because you have the name of the prospect and, if you’re fortunate, you can use the name of the referral source to open the door. What more could you hope for? Actually, there’s quite a bit more you can expect from referrals that have been properly developed by their sources.

ivanmisnerYou see, all referrals are not equal. Referrals come in many different grades and they vary in quality according to how much involvement your referral source has invested in preparing the referral for you.

Here are the first three levels of referrals:

1. Name and contact information only. This isn’t much better than having just a name to call. It only indicates that your referral source has done just enough work to provide you with a phone number, address or some other way of contacting the prospect.

2. Literature, biography and company information. When a referral source offers to give a contact your marketing literature or other information about your business, all you can be certain of is that the prospect will see the materials. The prospect’s interest in your product or service will depend solely on the impact of your marketing message.

3. Authorization to use name. Once a referral source has authorized you to use her name, you can feel fairly certain that you’ve established a good level of credibility with her. By allowing you to say that she endorses your product or service, your source has given you valuable leverage with the prospect; however, the problem with this level of referral is that the burden of developing the prospect still rests on you. Once you’ve conveyed that your referral source recommends you and your business, the task of selling really begins.

Think about the referrals you’ve gotten over the past couple of months. Now, think about which referrals fall into each of the three categories above.

The more time and effort your source puts into qualifying, educating and encouraging the prospect before you become involved, the higher the quality and level of that referral. In level 4 through level 6 referrals, the quality of the referral is higher than level 1 through level 3 referrals. Here’s why . . .

4. General testimonial or letter of recommendation. Getting a referral source to say or write nice things about you is a major accomplishment. His willingness to communicate positively about you and your business shows that you’ve built a moderate level of trust with him. Of course, testimonials and letters of recommendation are fairly common in the business world, so their impact on the average person is limited.

5. Letter of introduction and promotion. This is the first level of referral that truly involves a modicum of effort on the part of your referral source. Unlike the letter of recommendation, which requires little more than a written endorsement, the note or letter of introduction implies a more substantive relationship between you and the referral source, and it usually includes background information and a description of your product or service as filtered through the lens of the author. It also implies that the prospect will be hearing from you.

Adding the element of promotion increases the effectiveness of your referral source’s effort on your behalf. Promotion is advocacy–an outright recommendation of your product or service with a description of its features and benefits.

6. Introductory call and promotion. Another level up in terms of effort is the referral source who makes a personal phone call on your behalf. It takes preparation and effort, but a telephone call from your source is more effective than a letter for paving your way to communicate with the prospect. Including a promotion makes it even more favorable.

If you’re given a level 1 referral, you still have to do 95 percent of the work to close (which is not much better than a cold call) so the referral levels listed above are definitely more desirable than level 1, 2 & 3. However, what you really want to get is a level 9 or 10 referral because with those, the person giving you the referral has already done most of the work for you.

One thing we know about referrals is that it’s easier for your referral source to close the deal than it is for you because your source already has a relationship of trust with your prospect. A referral where your referral source has already closed the deal for you before you even contact your prospect is the absolute best kind of referral you can get; it’s considered a level 10 referral.

7. Arranged a meeting. When your referral source arranges a meeting, she moves beyond the role of a promoter to that of a facilitator, taking the responsibility of working out the details of getting you and the prospect together. This is a big-time referral effort.

8. In-person introduction and promotion. At this level, your referral source is making a serious commitment of time and energy in support of your business. By agreeing to serve as an intermediary in a face-to-face introduction, your source becomes an active business agent. This demonstration of deep trust in and approval of your product or service substantially raises the referral’s effectiveness with the prospect. Adding promotion further enhances its power, because your source is then actively engaged in selling your product or service instead of just facilitating a meeting.

9. Assessment of need and interest. In this level, your referral source has done the work of assessing the need a prospect may have for your product or service and has gauged the prospect’s interest in learning more about it. This enables you to focus your selling effort on needs you know the prospect has an intention to fill, and it allows you to select or tailor your products or services to provide specific benefits.

10. Closed deal. At the top level, the sale has been closed before you even contact the prospect, soley on the strength of your referral source’s efforts. Nothing else is required from you except to deliver the product or service and collect payment

netHQ

Copyright © 2010 – Ivan Misner. Reprinted with permission. Called the father of modern networking, Dr. Ivan Misner is the Founder of BNI and the senior partner for the Referral Institute. He has written nine books, including his New York Times best seller, Truth or Delusion? Busting Networking’s Biggest Myths.

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1 Comment »

  1. […] You have not received a referral this week. If you are providing service to others and you do not receive referrals all the time, […]

    Pingback by Five Warning Signs That Your Networking is NOT Working! | Networking HQ BLOG with Larry James — Friday, May 30, 2014 @ 7:39 am | Reply


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