Best sellers overcome fear of asking clients for referrals

Asking a satisfied client for a referral to a potential customer sounds easy. For many salespeople, though, it's one of the toughest tasks.

Anyone who avoids it may miss a vital resource, experts say.

In fact, more than 90 percent of salespeople are poorly positioned to maintain production if the economy slows, according to a survey of 2,500 salespeople in the United States and Canada by Houston-based McCord and Associates.

The company, which consults with small to midsize businesses on increasing productivity, has conducted the survey each of the last four years. The latest results showed a downward trend.

In past years, about 15 percent of salespeople surveyed relied on referrals to generate at least 25 percent of their business, company President Paul McCord said.

In the latest survey, the number dropped below 10 percent.

"It was bad before, but it's horrid now," said McCord, who believes that a reasonably robust economy has lulled many salespeople into complacency. "They're not having to fight for their business as they have in the past."

Although McCord does not forecast a downturn, he said the economy will eventually slow.

For example, salespeople in industries dependent on real estate are feeling ill effects from a cooling housing market in some sections of the country, he said.

"Our message is that companies and salespeople need to position themselves to maintain a pipeline of production in the coming years," he said.

Few companies focus training on the development of referrals, a concept that should extend far beyond simply collecting names and phone numbers, McCord said.

"For me, a referral is an introduction, either a letter, a phone call or lunch," he said. "It's an introduction to someone who has the need for whatever the product or service is and the means to acquire it. If they have the need but don't have the means, then that's not a referral."

McCord said too few people take the time to develop the habits to forge these strong relationships.

"Referral generation is the cheapest way to prospect for clients and the most effective way," he said. "And more than 85 percent of salespeople are atrocious at it."

The first step is often simply doing a good job for a client, then building on that relationship.

Often, however, a salesperson feels uncomfortable asking for a referral, said Bob Scott, sales manager for John M. Jennings & Associates, which offers Dale Carnegie Training in Dallas.

"It's fear of rejection — the same thing that prevents some people from closing sales effectively," said Scott, who said no more than 20 percent of salespeople successfully leverage referrals.

The first step to getting a referral that can lead to another sale is doing a good job for the initial client, Scott said. Then ask if the client knows someone else who could enjoy similar benefits.

Success depends on embedding the practice into the sales process. Make it automatic, Scott said.

There's no better time to ask for a referral than just after a successful transaction closes, although many salespeople excited by the deal may forget, Scott said.

Remember, the customer is usually energized by the sale and may be more open to such a request, Scott said.

"They're feeling good then, too, and you're not going to find a better moment than that," he said.

With a system in place, confidence often represents the final hurdle in creating a habit, Scott said. "If you're confident in what you're doing, it's natural to ask for the referral," he said.

Crafting a relationship with a client that can lead to referrals often hinges on a basic business principal: Do a good job.

"You have to have earned the right to ask for a referral," said Tracey Turner, division director of the Dallas office of the Creative Group. The company specializes in staffing services for creative, advertising, marketing and Web professionals.

Too often, a salesperson makes assumptions about a client's satisfaction.

A customer, for example, might not complain about the price for a specific product or service but will decide to look for a less-expensive option, Turner said.

Such an instance would not only kill the relationship with that customer, but also end any hope of a referral.

Instead, a salesperson should work to build a relationship with a client, understanding the client's needs and goals," Turner said.

"If you don't really care, then you need to find something else to sell," she said.

After forging a relationship, asking for the referral becomes easy, Turner said — although a salesperson must prompt even a repeat customer.

"Someone just doesn't pick up the phone in the middle of the day and call you; you've got to ask for the referral."