Networking HQ BLOG with Larry James

Thursday, December 8, 2011

The Real Value of a Referral

Filed under: Networking Tip,Referrals/Leads — Larry James @ 9:00 am

Referrals are much easier to close and more profitable than leads from most other sources. From my personal experience, I have a very successful wedding business where I perform “the most ‘romantic’ wedding ceremony you will ever find anywhere.” When someone calls and says that so-and-so said great things about me or that a previous client who is a friend of theirs asked them to call me, the closing rate is about 9 out of 10. The closing rate of random Internet searches for a wedding officiant are usually about 7 out of 10. By some standards that too, may be high, however I like pre-qualified referrals best.

referrals“We all know that word of mouth is the best marketing tool there is. Why? Because when someone tells a friend, family member, neighbor, or colleague how good you are, you’ve already overcome the biggest hurdle to making a sale – trust.” ~ Carolyn Higgins

Let’s face it, people trust and work with people they know and like. However, not all past customers are sources of good referrals. Someone who badgered you into discounting your price, for example, may give referrals to others who are looking for someone with whom they can bargain (another good reason to stick to rarely reduce your price or fee).

The true value of any business can be measured by how often its clients will refer your business to new potential customers. Nothing is more credible than a word-of-mouth referral from a satisfied client.

Referrals from your friends or others in your networking group are made because the referring party wants to help a client, wants to do something for the recipient of the referral, or wants to build a relationship where they will see reciprocity. There are specific benefits to the referrer and to their clients when the process produces results. Usually their concern is the risk to their reputations as the client will look back at them if it does not work out. For that reason the referrals that I give are people I have learned that I can trust to follow through, who are honest, who keep their word, are dependable and who I either have used or would use on my own.

According to networking strategist Andy Lopata, customers who come through referral spend more with a business and produce higher margins than those recruited through any other means. In his book, Lopata suggests that referrals are distinct from and far more valuable than tips, leads and recommendations. And that real referrals are the best form of business information you can receive. There are three elements to real referrals:

1. The person referring you identifies someone who has a problem you may be able to solve
2. They talk to the prospect and establish that they are interested in speaking with you
3. They provide you with the key contact details such that the prospect is expecting your call

To be referred you must demonstrate competence, high ethics, loyalty and credibility in the work you do. Instead of putting the focus on what others can do for you, turn it around and ask, “How can I help the members of my network?” People work with others they know, trust and respect – they must feel comfortable with you and the manner in which you talk about your product or service. It’s all about bringing value to the members of your network BEFORE expecting to receive referrals. Relationship building is important key to the success of your business. You must continue to educate and tell their network what good prospects look like so they can better help you. Making real contact starts with focusing on the other person and building relationships. This means NO SELLING. The best sales strategies focus on opening the door before closing the sale.

gettingtoknowUThe more visible you are a networking events and the more known you become as someone who is not just after the sale, but demonstrates a genuine interest in helping others, the more you will be referred. Until people in your network of support know this about you to complain that you never get referrals is pointless because the building of relationships does not happen on the first meeting, they take time.

What about referrals from people you don’t know – online? You can generate infinite LinkedIn connections and five thousand Facebook “friends,” but are they really friends who you can expect to receive referrals from? My guess is that people connect with you just to increase their list of followers. But who are they? Connecting with someone on Facebook or LinkedIn without talking to them and getting to know them is akin to throwing a business card at someone as you walk past them.

The connections you build in person are much stronger resources for referrals. When you evaluate the time and effort it takes to connect with people online that you may never meet, you may want to attend more networking events where you can make eye-to-eye connections and determine whether they are someone you may want to develop a long-term relationship with. You may not need to reach the masses online. You need to get to know one another — not just in terms of business, but personally. I choose to focus on and pay more attention to those I meet one-on-one. You may not have a direct business connection with someone, but you could very well gain indirect business through that connection.

Stop worrying about “qualifying prospects” and instead, get to know people on a personal basis. That’s how relationships are formed. The people referring business to you have a lot to do with the value of referrals because of the way they talk about you to the person they are referring. That is why the time you devote to building relationships with those who refer you helps to build the real value of a referral.

BONUS Article: “Qualified” Referrals – The Currency of Successful Connections!
Plant Some Networking Seeds!
Sell Yourself. . . NOT Your Services!

I-Love-Referrals
netHQ

Copyright © 2011 – Larry James. Larry James is a Professional Speaker, Author and Coach. He presents networking seminars nationally and “Networking” coaching by telephone or one-on-one. His latest book is, Ten Commitments of Networking: Creative Ways to Maximize Your Personal Connections! Something NEW about Networking is posted on this Networking BLOG every 4th day! Visit Larry’s Networking Website at: “Networking HQ!”

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2 Comments »

  1. […] Article: NEVER Give Referrals to Crazy People in Your Network! The Real Value of a Referral How to Get Referrals 25 Ways to Get […]

    Pingback by A Networking Referral Unraveled « Networking HQ BLOG with Larry James — Wednesday, November 28, 2012 @ 8:38 am | Reply

  2. […] BONUS Articles: NEVER Give Referrals to Crazy People in Your Network! The Real Value of a Referral […]

    Pingback by Building a Positive Referrals Cycle « Networking HQ BLOG with Larry James — Thursday, July 19, 2012 @ 7:07 am | Reply


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