Generating New Business with Referral Prospecting
While many sellers avoid the activity of prospecting like the plague, prospecting is the lifeblood of generating new business. It is an essential activity for successful salespeople.
Prospecting can be challenging. There are problems finding and getting through to the prospect. It takes a significant amount of time and effort to be effective, generate a list and manage the numerous touches necessary to be a successful prospector.
In fact recently I’m seeing that it takes 10-12 points of contact to connect with a prospect. In other words, connect rates are typically 8% - 10%. Then once you get them, converting the “connect” to a meeting is tough.
You only have a limited amount of time to get the prospect’s attention and convert the “connect” into a meeting. And even if a prospect is interested in what you have to say, you may have reached them at a bad time and so the prospect says “not interested” or “I am all set” just to get you off the phone. It is not uncommon for even highly skilled prospectors to convert only 10% of “connects” into meeting. In other words, 90% of the prospects you finally get on the phone will probably say “no.” No wonder salespeople hate prospecting.
How to Increase Prospecting Productivity
It’s simple. Turn your efforts toward referral prospecting. Referral prospecting simply means prospecting through people that you know -- your existing contacts, clients and business partners.
Why? Referral prospecting is the quickest way of filling your pipeline with opportunities. Most research shows that leads close five times faster when they come through referrals. Think about your own experiences: if you get a referral to a real estate agent, a new app or a great CPA, the first call you make will be to the one that someone has referred you to. Likewise, if a salesperson calls you and says they were referred by someone you know, chances are you will at least listen to what that salesperson has to say.
It is human nature to put a greater degree of trust in information that comes from people that we know. This is particularly powerful in a sales environment where a salesperson may be viewed by the prospect as having an inherent conflict of interest (i.e., they want to sell something).
Yet in my experience facilitating 100’s of sales training workshops I am always shocked how few salespeople regularly use referral prospecting.
How to Leverage the Power of Referral Prospecting
- Start with a list of people that may know the people you want to talk with.This can be business associates, strategic partners or clients. Work that list but also get in the habit of regularly asking “Do you know anyone that I could talk with that is interested in…?” The best sellers I know regularly ask for referrals and they say that about 50% of their business comes through referrals. Fifty percent! So ask for referrals and ask often. And while some people will not think of any one, many will have a contact for you to reach out to.
- Another great source of referrals are non-competing business partners that target the same audience but for different services. You will both will know people that are interested in similar products and services that will benefit from this type of introduction. This is reciprocity at its finest. You refer them and they refer you.
- Once you have the name, then what? My preference is to ask the referrer to set up an introduction. This is an elegant way of jumping into a conversation with two people that know each other. If that is not an option or the referrer prefers not be proactive on your behalf, then you initiate the contact, quickly referencing the referrer’s name. Mention what you’ve done for the referrer and that the referrer thought the prospect might benefit from a conversation. At this point, a highly effective tactic is to keep the commitment level low and only ask for 15 minutes of their time to see if there is a fit. From there, your first meeting is scheduled.
- One more important aspect of referral prospecting. Be sure to thank your referrer. What they have just offered you is invaluable – a warm lead for your products and services. Whether the deal comes to fruition or not, be sure to extend your gratitude for sharing their resource with you.
While salespeople will always struggle with prospecting, generating new businesss can significantly increase with referral prospecting.
About Marlaina Capes
Marlaina Capes is a Senior Director of Client Services at the Sales Readiness Group (SRG). She has over 20 years of experience helping organizations improve performance in the areas of sales skills and leadership development. At SRG, Marlaina has worked with industry leading clients including Abbott, AdRoll, Alcon, Catalina Marketing, FactSet, Johnson Financial Group, Maritz, RingCentral, Univision, and Valmont Industries.