Log on to almost any site that has a large and varied library of sales articles or head over to Amazon and scan the books that come up from a keyword search of “referrals” and you’ll find one of the most common—and innocently destructive—confusions in the discussion of prospecting methodologies: discussing word of mouth marketing in the same context as referral marketing.
From sellers to business owners to sales leaders to some of the biggest names in sales training and coaching, word of mouth marketing and referral selling are discussed as though that are just two aspects of the same prospecting methodology. They aren’t. They are very, very different, and understanding the difference is important if you want to maximize your word of mouth and/or referral marketing effectiveness.
Word of Mouth Marketing is PASSIVE. In word of mouth marketing the object is to have someone, usually a client, recommend people they know call you if they have a need for your product or service. Your recommender may or may not give the person they speak to one of your cards or your phone number, but at a minimum they will tell the other person your name and give them a brief idea of why they should speak with you—usually an idea of what you accomplished for them, how great your service was, or how competitive your price.
Other than possibly encouraging them to pass along your information—and maybe giving them a few of your business cards—you have no control. You are relying on other people to create business for you. You have to rely on your client to mention you to those they speak to who might need your products or service. You then have to hope that the person they spoke to about you picks up the phone and gives you a call or to walks into your office. Seldom do you even know that your client spoke to someone about you.
Word of mouth marketing works. It certainly isn’t the most effective prospecting strategy, but it has its place in the prospecting toolkit of many sellers.
Referral Marketing is PROACTIVE. Referral marketing is the exact opposite of word of mouth marketing. Instead of waiting for someone else to generate prospects for you, referral marketing demands that you take control of the process, including doing the referral work for your client.
Traditionally referral marketing has been taught as a semi-proactive process; one where you were taught to ask a weak referral question such as, “Ms. Client, do you know anyone else that I might help?” Or, “Mr. Client, who do you know that might benefit from my products or services?”
When you ask a weak referral question such as one of these, you’re still relying on your client to do your prospecting for you. Although more proactive than word of mouth marketing, you still have little control over the result—you may or may not get a positive response to your question, and even when you get a positive response, it may not be a referral to a quality prospect.
However, if you’ll do the work for your client by doing some detective work to figure out who your client knows that you know you want to be referred to, and then instead of asking a general referral question, asking for the specific introduction to the person you know you want to be referred to that you know your client knows, you’ve taken total control of the referral process. You’re no longer relying on your client to come up with a quality referral for you, nor are you relying on them maybe mentioning you to someone who might need your products or services. Instead, you’re asking for a direct introduction to someone you KNOW you want to be referred to. You know you’re getting a high quality referral.
It isn’t a possible. It isn’t a maybe. It isn’t a might.
It isn’t a maybe they’ll take my phone call. It isn’t a maybe I’ll get to talk to them.
It is a direct introduction to someone you know you want to be referred to. You know it is a good referral. You know it is a quality prospect. You know you’ll get to talk to them.
You’ve taken all the maybe’s out of the equation and have taken total control of the process.
Referral marketing is not only far more effective than word of mouth marketing, it is also a far more predictable prospect generation strategy.
OK, so there’s a difference. What’s the big deal?
It’s a big deal to understand the difference because it means you can substantially increase your business by thoroughly understanding how each strategy works and then employing both in your sales business.
I’ve had a great many sellers and sales leaders tell me that they either currently use referral marketing aggressively or they tried referral marketing and it was a total flop. Yet when I question them about what they’re doing or what they did that didn’t work I discover that they were using word of mouth marketing, not referral marketing.
Lumping word of mouth marketing in with referral marketing is an innocent mistake–but one that is costing sellers business. And although they are very different strategies, by engaging your clients and others in both a proactive and a passive prospect generation strategy, you can quickly and substantially increase your pipeline. It simply takes understanding the difference between the two strategies than then learning how to maximize their utilization.
Good Post,
Referral marketing is a strong tactic to shorten the sales process.
Market leading salespeople do this intuitively as they understand how it expedites the trust building phase of the sales process.
Mark Allen Roberts
Comment by mark allen roberts — December 27, 2010 @ 12:42 pm |
Mark, you’re right that the top sellers understand the value of referrals.
The probem really is that few sellers understand how to maximize the power of referrals. They’ve been taught to ask for referrals with a silly question like “do you know anyone else who might be able to use my products or services,” or, “do you know anyone that I might be able to help like I’ve helped you?”
It isn’t our client’s job to do our prospecting for us.
Simply learning how to make giving high quality referrals easy is the real secret to unlocking the power of referrals.
Comment by Paul McCord — December 27, 2010 @ 12:51 pm |
Great article. One of the problems I have seen is that people are afraid to ask for referrals, and that the language around asking for referrals is often tricky for people to perfect. Businesses need to remember that if they have just done their customer a great service, it is important to ask, “Do you know of anyone that could also benefit from what we just did for you? Is there anyone who you know that would appreciate a call from You, AND from me, offering this excellent benefit to them?” Or something along these lines.
Comment by Davis Advertising — December 28, 2010 @ 9:33 am |
Absolutely, asking is the key to getting referrals. The only thing I disagree with is the question that should be asked.
At the very least asking the question you mention will get the occasional quality referral.
I think a much more direct and easier to answer question should be asked–one where the seller has done their detective homework during the course of the sale and has found out who their client knows that they know they want to be referred to. Then instead of asking a general question such as “who do you know that could benefit from products or services,” ask for THE direct introduction: “Joe, I’ve been trying to connect with Jane Smith because she is just fits our needs profile perfectly but I just haven’t been able to connect with her. It dawned on me that you just might know her. Do you?” If the seller has done their homework well, they know the answer will be ‘yes.’ “Great. Would you be comfortable introducing me to Jane?” If the seller has done a great job for Joe, they will get their direct introduction to a prospect that they know they want to be referred to and that fits their prospect profile. It is just so much easier for a client to only have to say ‘yes’ than to try to come up with quality referrals. They are also more likely to say the easy ‘yes’ than to take the time to really try to figure out who would be a good prospect for the seller.
Comment by Paul McCord — December 28, 2010 @ 10:25 am |