What are referral sales and why do you need them

  • Author: Alistair O'Sullivan

What does referral sales really mean?

Referral sales means closing your new and current customers on the concept of introducing you to other companies that are likely to need the solution you’ve built.

Why are referral leads better?

No outbound lead you could ever generate in any other form will ever have the same quality as referral leads. There are two levels of quality:

  1. Your best customers will most likely know others who run very similar businesses, which means they are highly qualified leads for your company.
  2. You are being introduced to them via a friend and have the benefit of trust right at the start of the relationship.

Are referral leads still considered outbound leads?

Yes, they are. They were introduced to you, which is the warmest form of outbound sales you could ever do.

However, it’s still reaching out to someone who didn’t come to you in the first place. If you’re thinking of doing outbound sales, you might as well start at the warmest point possible.

Why are so many salespeople doing referral sales wrong?

Because they’re afraid. It’s scary to ask for more once you close a deal. Salespeople worry that they might jeopardize a deal, or that it’ll turn a positive conversation awkward.

Go where others are afraid to go and you’ll find massive opportunity. Don’t let fear get in the way of winning.

When is the best time to ask for a referral?

Right after somebody made a purchase.

I know that people like to wait until customers have been around for months. That’s fine, but it’s also a waste of time.

Once someone decides to buy, they are likely to be convinced enough to tell others about it. You should take advantage of this moment to grow your business faster.

The way most salespeople try referrals

They ask for a referral, the client says, “Yeah, let me think about it and get back to you later.” The salesperson replies, “Okay, thanks!” rather than pushing a bit further.

The right way to do referral sales

  1. Ask for a referral.
  2. Anticipate the no (or “I’ll think about it.”). Ask one more time right, then and there.
  3. Make sure to give them an email template and make it easy and frictionless to actually make the introduction.
  4. After you’ve closed a referral, make sure that your new customer thanks the person who introduced you, so you’re closing the feedback loop in a positive way (inspiring more referrals from the original referrer).