The Bottom-Line on Referrals – Turning Your Strategy Into Success

There are two common strategies to growing the bottom-line of a business—customer retention and account penetration. While acknowledging that identifying these strategies is not a new revelation, the constant struggle that remains is executing these strategies. The critical success factor involves getting existing customers to purchase more of your products (penetration), which in turn makes it more difficult and less desirable to move business to a competitor (retention). This mandates that everyone “touching” the customer be focused on identifying additional needs and proactively engaging or referring the customer to that appropriate team or individual. How do you get the people from sales and those who service the customer to work together to achieve the company’s goals and objectives even though sometimes these conflict with individual goals, comfort zones, and/or interests?

Management recognizes barriers exist in executing a referral strategy. They tend to believe there are five significant barriers:

• Lack of product knowledge in order to identify needs for the other team members’ products.
• Lack of trust and comfort in teaming with someone else to serve a customer.
• Lack of trust and comfort in getting involved with a customer for fear of losing control.
• Lack of trust and comfort that the other team member will not behave appropriately.
• Lack of clarity on what end results are expected.

Accepting the fact that these barriers exist, organizations increase product training with the goal to ensure those who encounter a possible referral situation have adequate product knowledge. Management encourages team members to interface and get to know each other through attending luncheons and various team events. Finally, goals (i.e. referrals, additional products, etc.) are set. This guarantees that everyone understand the expectation to deepen the customers’ relationship through the sale of a team member’s products.

The strategy seems simple and easy. However, the lack of results illuminates its difficulty and complexity. When poor results occur, management tends to increase the amount of product training, joint team meetings, and communication on the goals. Incentives also get added to the picture. However, three performance inhibitors remain strongly in place and do not go away with the tactics just outlined. Those with the opportunities to refer continue to:

• Lack necessary product selling knowledge. They are missing critical pieces of knowledge necessary for use when talking to the customer. Knowing the product  and how it works does not equip someone to determine the possible product fit, generate interest, or gain commitment from a customer, making the customer ready and willing to meet a team member.
• Lack understanding of what behaviors need to be executed. Without clarification on how to generate referrals, many are confused on how to surface opportunities for others, qualify the lead, tantalize the customer about the potential value, and productively hand-off or bring in another individual without looking incompetent, clumsy, or “sales-y”.
• Lack desire. Potential referral generators fail to see “what is in it for them” to take the risk, time, and energy to involve others in his/her customer relationship.

Real sustainable results require that five critical success factors be met. If and when these are addressed, behaviors will begin to change and results will occur.

• Know how to and be skilled at proactively engaging team members. The organization was initially correct in their assumptions that team members need to get to know each other before they are willing to generate referrals for each other. What management fails to recognize is most salespeople are not aware that they need to proactively engage a potential referral source and that the salespeople don’t know how to engage a referral source. There is sometimes an “entitlement” and/or “wait and see” who gives what to whom first. All salespeople must understand the expectation to proactively engage referral sources and know how to interest a referral source. A referral source must be approached one-on-one by the individual desiring the referrals and have the following questions answered:
  • What is wanted from the team member?
  • What is in it for the team member to participate?
  • How would a referral be handled?
  • What is a quality referral?
  As simple as this sounds, salespeople need to be trained on how to engage a potential referral source and understand that it is his/her responsibility to do that. They are not necessarily entitled to the cooperation of a team member and should not be waiting for the referrals to come in or only to reciprocate if given one first.
• Know key team member product selling information. Product training must focus on the critical product selling information (identifying possible product fit, generating interest, gaining commitment from a customer, making the customer ready and willing to meet a team member) and drill and practice its application in common sales and service situations in which a referral team member may find himself/herself. Training departments and team members must resist providing too much information and/or focusing on what the product is, why it exists, how it works, and/or how to implement the product.
• Know and be skilled at executing key sales referral activities. Team members need to understand the fundamentals of what to do well in order to generate a referral. Examples of the high impact activities include:
  • Knowing the importance and having the skill to look and listen for clues-to-needs while interacting with a customer.
  • Asking qualifying questions.
  • Positioning the value of the team member and/or their service.
  • Handling objections.
  • Positioning a hand-off and introducing the team.
  These sound obvious but without clarity on what the key activities are and without having opportunities to regularly drill and practice on their execution in common situations, the activities do not get done.
• Coach and manage the referral activities. Focusing on those responsible for generating the referral activity is obvious. What is not obvious is what management needs to do. Most organizations ignore what management needs to do differently to initiate the behavior change to take it to a level of execution that reaches targeted expectations. The most that management typically is asked to do is to communicate the referral goals, attend the training, and/or track results. In reality managers need to gather data on what their people are doing and determine how well they are executing the behaviors. They must then coach and hold their people accountable for the productive execution. This success factor is the most foreign to organizations and yet the most critical. Management must be trained and developed to coach and manage referral activities and be held accountable to making the first three critical success factors a reality. If not, the business objective will never become a reality.