Last Updated Feb 21, 2008 8:57 AM EST
Please note that a referral is NOT a "reference." A reference is a former or current customer who will vouch for your integrity when contacted towards the end of the sales cycle. It's something quite different.
According to Joanne Black, author of No More Cold Calling, a personal referral is when person "A" (the Referral Source) connects you with person "B" (the New Contact), in the hope that they ("A" and "B") will both benefit. She calls this "Referral Selling" and believes that it can replace cold calling as a way to locate likely prospects.
The wonderful thing about Referral Selling is that if the New Contacts don't pan out as prospects, they can become Referral Sources, leading you to further New Contacts. If you keep building the chain, you'll end up with a network of contacts and prospects that you can constantly draw upon to generate new sales.
Ms. Black quotes research that well over half of the sales opportunities generated as the result of referrals end in a sale. That's wildly better than traditional lead generation methodologies, like advertising and direct mail. She also points out thatsales generated through referrals tend to be larger than sales resulting from other lead generation methods.
Because the Referral Source is eliminating the key uncertainties that block a sale in the early stages (like "can this person be trusted?"), the sales process builds momentum more quickly, resulting in a faster close, and often with more money in the deal.
Referral selling is the ultimate inside track, and it's not difficult to do. There are some rules for doing it effectively that I'll be explaining later in the week, so stay tuned.
For today, though, let's start with a quick poll. Rank the following sales activities from 1 to 5, with 1 being the activity you enjoy most, and 5 being the activity that you enjoy the least.
Getting Coached by your ManagerAs usual, I've presented them in alphabetical order above to remove any accidental favoritism. Needless to say, if you've got something more to say about any of these activities, please add it to your comment. I'd love to hear from somebody who really enjoys cold calling.
Making Cold Calls
Meeting with Customers
Taking a Sales Training Class
Using Your CRM System