Take a moment and look at your cost per lead, cost per acquisition, average sales cycle, and ask yourself if these needs to improve. Most likely it does. However, you may not know where to begin. One of the best ways to lower your costs, shorten your sales cycle, improve your closing rate and therefore improve your bottom line is getting referrals.
Start with Customer Satisfaction
Having satisfied customers can help a business expand in grow in many ways. First, happy customers tend to do increasingly more business with partners they trust and value. Second, they tend to tell other people about those companies, or, in other words, produce referrals for your business.
Let’s take a step back for one moment and understand what a satisfied customer really is. Generally, we know when customers are not happy, as they are expressing their dissatisfaction in some way. However, do satisfied customers always communicate their satisfaction? Or, do you more assume that if they aren’t expressing dissatisfaction, they are satisfied? The age old saying of no news is good news.
This may be true for some clients. But if you aren’t asking them directly, you could have a lot of clients that are not comfortable voicing their dissatisfaction, or do not feel enough of a partnership to express their opinion, or simply not care if you are their provider or if they have to hire another one tomorrow. It is only until you actually ask that will understand how is a really happy and potentially a client that will bring referrals.
Ways to ask your clients if they are satisfied:
1.Schedule a meeting or call, and ask them and have them provide feedback
2.Send a Net Promoter Score survey
3.Ask again or send the survey again in three months and see what has changed
One of the biggest hurdles with prospects is earning their trust. However, when the prospect is referred by someone they trust, you share a part of that trust. Therefore, you stand a better chance of getting over this hurdle. Plus, you may be able to move through the sales process faster. This could also mean a faster close as well.
In fact, a good referral is 15x easier to sell than a cold call. As a leader it is your job to create customers and to gain a larger market share and give you a competitive advantage, focusing on a strategy for developing a pipeline of referrals. A goal would be to reach the point that you or your team never have to make another cold call again and you only sell by referral only.
Again, keeping with statistics, it is 10x easier to sell to an already satisfied customer than to a new customer. Having highly satisfied customers than serve a two-fold function. First, recurring or additional revenue in renewals, upsells or additional sales. Second, it can generate a pipeline of new sales in referrals.
So, not only are these delighted customers sending referrals, they are also very unlikely to move to a competitor. Psychology tells us people move away from pain and move towards pleasure. For those satisfied customers, they are feeling pleasure and do not want to risk feeling pain that may come with a new vendor or product they do not yet trust. And this is true even when they are given a persuasive reason from a competitor, whether that is decreased cost, or a bonus of some sort, they simply do not want to risk it.
How do customers become highly satisfied? Exceptionally customer service. And it starts from the minute the client says “yes” to the sale. Things to delight customers early in the relationship:
- Send a thank you note right after the “yes,” which will help lock in the sale (e.g. signed contract)
- Follow-up call to ask for feedback on their experience with the project, service, product, etc.
- Respond to all inquiries from the client as quickly as possible
- Send a survey at various milestones to encourage an open, honest, and transparent relationship where they can share their feedback
- Make changes based on the feedback to correct any issues
Power of the Review
A study completed by the White House Office of Consumer Affairs found that, on average, each dissatisfied customer will share their bad experience with at least nine other people. However, a similar study by an independent research company concluded that satisfied customers usually only tell five people. Doing the math, that means just one unhappy customer can influence up to 45 others.
And, in today’s world, with different online review sites and social media, unhappy customers can influence potentially thousands. And this also is not limited to customers, but employees as well. With things like Glass Door, employees can write reviews, negative or positive for companies and rate CEOs.
When to Ask for Referrals
Referrals do not drop out of the sky. You must ask for them, for the most part. Building this pipeline of referrals is still going to take time and effort on your part. Here are some key times to ask for referrals:
- Ask for referrals in advance of selling – you may not be the choice for that consumer or business, but that does not mean your product or service is inadequate, and they may know someone that could benefit from it.
- Ask for referrals after the closing – a customer that has chosen you is mostly likely feeling an emotional high, focused on a pain point being solved, and they are more likely to be open to being asked for referrals.
- Ask for referrals from a satisfied customer – once you have serviced the client with excellent customer service, handled their requests and fixed any issues based on the feedback, first ask to ensure they are satisfied, and then ask for referrals.
Follow-up with the Source
Remember when your parents send thank you cards for birthday, holiday or other special occasions like graduation to all of your guests and gift givers? Yep, you need to reuse these skills with your referral source. Whether that is a thank you card, a quick report back or even a gift, you need to have a continued conversation with your source, regardless of the outcome with the referral.
Always Be Referable
Above all, be referable. Ask yourself “Am I the kind of person I would recommend to my family, to my closest friends, to my most esteemed associates?” If yes, great, just keep asking and getting feedback. If not, figure out what is no working, gather feedback and make changes.