Small business referrals the right way

Small business ownerWho do you know who might be interested in my product or service?

There’s no more tired a phrase than this in the business world for generating referrals. To my knowledge, it’s never worked effectively. If it ever did, it certainly doesn’t anymore.

When diagnosing the problems small business owners have in referral generation, it comes back to the same question, “How are you asking for referrals?” Invariably, the root cause is technique. The good news is the fix can be easy.

When you ask, “Who do you know?” you actually stack the deck against yourself. Pressure you feel as you ask the question is actually your sales instincts telling you you’re going about it the wrong way. Your instincts are correct, and here is what’s really going on below the surface:

  • Asking such a broad question starts a carousel in the mind of your customer, with names and faces spinning around. Just like looking at a real carousel, it’s hard to focus on a single name or face long enough to decide if that person is a good prospect. Frustrated, your customer will simply answer, “I can’t think of anyone off the top of my head.”
  • Asking “Who do you know?” is, in essence, a request for your customer to do your job for you. You’re asking him to pre-qualify your leads and have first-hand knowledge of the wants and needs of the person he refers. This can be overwhelming. You can actually lose customers this way.
  • Consider the risk you’re asking your customer to take. Asking for a referral in this manner puts the customer in the position of endorsing you, a “salesperson”. No one likes getting sales calls; in fact, the last time I got one, I figured out who “referred” me and asked they never do it again. You may be asking your customer to put a valued friendship or business relationship on the line. No matter how good your product or service is, you aren’t worth that risk!
  • Finally, beware any referral you do get with “Who do you know?” It’s likely they will be of low quality, such as people the customer doesn’t know personally, or worse; people he dislikes and wants to inconvenience. Save yourself the lost time and embarrassment.

What’s the right way to go about it? Interestingly enough, you already have the tools to do it. The same methods that made the sale can be used to get high-quality, low pressure referrals that your customer will gladly give – and they won’t even realize that they’re giving you a referral.

The secret? Walking the customer through the process so the referral becomes their idea – just like when you sold them on buying your product or service.

Here are the steps:

  1. Determine if your customer is satisfied with your product or service. “If an acquaintance of yours asked you about my product, would you recommend it to her?”
  2. Ask the customer about groups, clubs or organizations to which they belong in a low-pressure manner. “Do you belong to any organizations where you interact with other business owners like yourself?” He or she may answer with the name of a chamber of commerce or trade organization.
  3. Focus on the problem. “Does the subject of my product or service ever come up in conversation?” The answer will often include a first-hand account of such a conversation or discussion.
  4. Help the customer focus in a single individual. “The last time it did, with whom were you speaking?” The answer will be a specific person’s name or the names of several people that participated in the discussion.
  5. There it is; you have your referral. “Would you mind if I contacted her and mentioned her name had come up in our conversation?”

You may be saying “but that only gets you one referral!” My answer: I’d rather have one solid referral of this type than 10 “who do you know?” referrals.

Think about it. I have a prospect name, the referrer’s name, an organization that they have in common, and a specific conversation where my product or service was mentioned. And I didn’t pressure my customer or frustrate them in the process.

As a result, I can go back over and over again to ask for more referrals in the same manner. At the same time, I’m learning more about my customer and potentially uncovering new opportunities for my business through the affiliations that she has.

Editor’s note: Consider referring your small business peers to join our growing Business Accelerator community. By doing so now, you'll be eligible to win an Apple Store Gift Card for $450 (roughly the cost of an iPad®). For every referral, you'll receive an entry into our drawing. (See complete contest rules.) For more information about our no-cost Business Accelerator Program, visit our website

by Bill Murray on Fri, Feb 01 2013 7:18 am
Posted in Small Business
Posted by Bill Murray on Fri, Feb 01 2013 7:18 amBill Murray is a consumer promotions administrator for American Family Insurance.


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