by Dr. Kerry Johnson
During slow economic times, the first casualty is new business. Your first thought is to wait for things to get better before you get active. Yet the sharpest producers use slow periods to build market share outdistancing their competition, preparing for the economy to come back. If you are not making at least 10 referred lead calls every day, you are allowing your competition to gain a share of business that should have been yours.
The definition of a top producer is someone who has the ability to make cold calls, but never has to do it. Nine out of 10 cold calls will end in rejection. Seven out of 10 referral based calls will gain business for you. If you’re still making cold calls to get business, you undoubtedly don’t enjoy it. There is a better way. Learn how to gain and use referrals. University of Connecticut research has shown that only 15% of your clients will offer referrals without you first asking for them.
You’ve probably heard these often-used excuses for not getting referrals: “If my customer really wanted to give me a referral, he would just offer it,” or, “If my work was really outstanding, I would be inundated with word of mouth referrals.” How about this reluctant thought, “When it gets down to the point of asking for a referral, I lose my nerve. I just don’t feel comfortable asking my clients and customers for leads.” The truth is that your clients think you are already successful. As a client once said, “I was shocked when my mortgage broker asked me for a referral. I never realized he wanted or needed them.”
Many producers use effective referral-generating techniques. Some, like Dennis Renter, a Newport Beach, California broker, hands out cards to clients offering free evaluations for their friends. Others give away pens with contact information asking that they client give them to friends. One of my best techniques is simply listening to my client talk about their friends (which they always do) and then at the end of the conversation, ask for phone numbers.
Ron is a mortgage broker who moved from Salt Lake City, Utah to San Jose, California, where he had no clients, no prospects, and no business. His “mind-set philosophy” was, “Give a man a fish and he will eat for a day; teach a man to fish and he will eat for a lifetime.” His attitude dictates, “If I make a sale, I eat for a day; if I get referrals, I will eat for a lifetime.”
Ron’s technique focuses on asking for referrals during the closing process. At the point Ron gains a client, he takes an application from his briefcase and explains that he needs some information. He admitted to me that he usually has enough detail already to fill out the app, but the request sets the stage for gaining referrals. When he’s working with a married couple, he usually asks the husband to answer selective details, and then gives the wife a piece of paper and pen. He asks, “Would you please fill this out listing four or five people you know who might be thinking about moving in the near future, would like to save some money on their next mortgage, and might benefit from my help.” Ron then turns back to the husband and completes the details.
WHO TO REFER?
Ron has often been interrupted by the spouse asking, “Exactly who do I put down?” He replies, “Just four or five people you know socially or professionally with good common sense, are thinking about moving in the near future, would like to save some money on their next mortgage, and might benefit from my help.” Ron usually receives three or four names. His closing average of 85 percent on referrals is probably due to prompting even the most reluctant clients for referrals. He softens his close by explaining how he will deal with the names. For instance, Ron may state, “I want to meet with people like you so that I can share some ideas on how to save money on their next mortgage. I promise I won’t pressure them. I will strive to help them in much the same way as I have helped you.”
FIVE STEPS TO GAINING REFERRALS
Some general rules in asking for referrals are:
1) Tell your clients why you want them. You, like your clients, make within 10-15% of your best friends’ income. You won’t get affluent referrals from poverty stricken clients. But you will get referrals like them. Make sure you asked referrals from those who are like the customers you want to attract.
2) Mention that you will respect their relationship with the referral, as well as the referring client’s financial privacy. If you don’t pressure your current clients, they will rest assured you won’t pressure their friends. If you show respect for your clients’ privacy, they will feel confident that you will respect their friends as well.
3) Ask for at least 250 names. What? Going overboard a little? Every one of your best customers knows at least 250 people on a first name basis. They belong to trade associations, service clubs, golf and tennis clubs. Ask for the directory and whether you can use your client’s name as you prospect. Would you like to have a never ending source of referrals to call, get the directories of the groups they belong to.
4) Learn something about the referral’s personal life. Does she play tennis? Is his hobby interior design? You will be able to develop a high level of trust and rapport by initially saying, “Jan tells me you’re quite a tennis player.” Using personal knowledge like this will also position you as a friend of a friend. Friends don’t reject friends. But they will buy from them.
5) Stop asking for referrals. What? The most sophisticated producers stay in contact with their customers at least once every 2 months. You know you have arrived when they have the referral ready when you call. The second reason is that you often will gain more business by staying in touch. One financial advisor took this advice and started to call his clients even though he knew most had lost money. Just by contacting them all, he raised $600,000 to invest for them and 150 new referrals. You must keep in contact or someone else will.
I once received a referral to a Real Estate company executive in charge of booking speakers for his annual convention. I knew he had a new baby approximately the same age as mine. We talked about how special little girls are. Fifteen minutes later, he booked me for his company’s convention. I may have gained the engagement without mentioning his new baby, but five minutes of personal conversation about a special interest helped develop trust more rapidly than two weeks of face-to-face meetings. Using these five steps will help you get at least eight appointments for every ten referrals.
Ron Howard uses another effective device for gathering referrals. He asks his clients to hand him their personal phone book. Ron then turns the book to “H” and writes in “Ron Howard” and his telephone number. He also turns to “F” for financial services and writes in the name of his company, Investors Financial Services, with his name and phone number. Ron reports the average client will refer another twenty to thirty of his friends and acquaintances using this method. He has even been called from cocktail parties by clients who want him to schedule an appointment with their “good buddy” (they just met).
Often, producers have difficulty conducting a yearly review with existing clients. But think what you could gain by providing that service. You guessed it – five new solid referrals. Ask the question of your clients, “Do you know anybody I should meet?” Then move again into your qualification statement: “I would like the names of any social or professional people you know who can save money, have good common sense, and might wish to invest.”
THE FINAL SCENARIO
As Carl dialed the telephone, he kept thinking about his client. The client told Carl that the referred lead was an avid golfer. Carl was just learning the game. The referral owned his own business, was a homeowner and progressive thinker. Carl made the call. He mentioned his client’s name. The referral answered, “Yes, he told me you would be calling. I’ve been looking forward to talking with you.” Carl smiled.
The following is a script you might find useful in following up with your new referrals. Use this as a foundation, then work your own style into the model. Let it serve simply as a guideline, not to be read, but rather to be conceptually followed.
INTRODUCTION: Hello. Is this Mr. Jones? (Referral name), my name is (your name). I am with (company name). I spent some time with a mutual friend recently (your client’s name). Do you remember him?
RAPPORT GENERATION: He tells me you (personal touch – background, hobby) are a great tennis player. Is that true? (Allow enough time to elicit rapport).
APPOINTMENT PRESENTATION: I’ve had the opportunity to share an interesting idea with (client’s name) that he found very exciting. In fact, he was so interested that I was able to save him $2,000 on his annual mortgage payments. He gave me your name and thought you might be interested.
THE TAKE-AWAY: Of course, I have no way of knowing if it would be of benefit to you, but (clients’ name) did recommend that I call you to set up a time when we could talk and share a few ideas. Did (client’s name) tell you I would be calling?
APPOINTMENT CLOSE: Do you have thirty minutes later this week when we could get together? Or (for appointment close): I’ll be in your neighborhood Wednesday. “How about 3 p.m. or is 4:30 p.m. best for you?”
CALL REFERRALS WITHIN 48 HOURS
Referrals are not like old wine and aged cheese. They do not improve with time. The first person to ask about your referral progress with will be your referring client. If he knows you pursued his lead, you are likely to get more names. If he thinks otherwise, gaining more referrals will be tougher than arm-wrestling a grizzly. Also, remember to copy your first letter of correspondence to the referring client. He might make a phone call on your behalf. It is very important to get your client involved in the process. You will, in fact, gain 15% more business just by virtue of letting your client know that you’ve actually contacted the referred leads he gave you.
Your clients are the best source of new business. All you need to do is ask them for referrals. But more importantly, let them know that you followed up. Your clients want you to become more successful. They want you to make money. If you follow up and let them know it, your clients will give you many more referrals in the months and years to come.