March 15, 2009

Why Customer Referrals Are Essential to Sales Success

One of the most effective and immediate ways to boost the pipeline and ultimately sales is to ask customers for referrals.  Yet it is so often over-looked, with less than 10% of sales people actively using customer referrals to sell.

The ultimate measure of a customer’s satisfaction is his/her willingness to recommend you to others, in particular to friends, colleagues and associates.   In the long term the willingness of customers to recommend your business to others, is:
-  As powerful an indicator of growth potential as win rates, or any other variable.
- A proxy for; customer loyalty, the potential for repeat sales and, more fundamentally, your  competitive advantage.  

- A indication that promises made during the sale, have been met during delivery. 

Referrals tell how the customer really feels about you

Client surveys and client side account reviews can generate a lot of very useful feedback, however the extent to which customers are recommending your business to others is the most telling indicator of the health of a customer relationship.  

Client's often respond to the seller's questions by saying they are satisfied, but does the customer feel comfortable or motivated to tell you what they really think, what exactly does that mean and is being 'satisfied' a sufficient achievement for your business.  

It is only when they are active in recommending your business to others, that you really know that the promises made during the sale, have been met during delivery.  It also also when you know that you are moving from being a mere supplier to partner in the customer's eyes.

Referrals maximise your win rate

Existing and past customers can spread the good word about your business more convincingly than any ads, or brochures.  Indeed, the closure rate from customer referrals is likely to be 2 or 3 times that of your normal sales leads. 
In addition to higher win rates, referrals result in faster sales cycles.  When you are introduced or referred, then you are marked aside from the traditional sales person, you gain a badge of trust and credibility that can move you to the inner circle and ensure you are treated as an expert and problem solver, not a sales person.  

Letters of Referral are the most powerful sales aide
More effective than any glossy marketing brochures are letters of recommendation from customers.  They are more believable, more interesting and more memorable.   They mean that cynical buyers dont have to take your word for it, providing 3rd party validation and peer references, or social proof.
No salesperson should visit cutomers without having a selection of letters from customers saying how they have benefited from the products, or services that were supplied.

Customer Success Stories are the Most Effective Part of your Sales Pitch
Stories are easy to tell, more interesting to listen to and easier to remember.   In selling, stories are the most effective way of communicating a sales message.
The most effective sales presentations replace long lists of features and benefits, with stories of how other companies have benefited from their solutions.  They replace technical information that is only of interest/accessible to a select few, with details of how their solutions have impacted on key business opportunities, challenges and metrics.

So, how to maximise the role of customer referrals?   Well, you should find this checklist useful.

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