Over the years I’ve been fortunate enough to receive and benefit from some pretty good referrals that turned into some of my easiest sales to some of my largest and best clients.
Recently while I was listening to some marketing CDs by Dan Kennedy (One of the country’s top marketing gurus) I was reminded that most salespeople and professionals know referrals work better for finding and closing their IDEAL customers, but only about 20% ever really focus on getting referrals and only 5% of those implement a written action plan to incorporate referral goals into their marketing strategy and become superstars.
OK, you’re saying to yourself, hey Bill, I get referrals. To that I say, that’s great, but even a blind hog… well you know the saying. Let me ask you a question, when was the last time you looked at your weekly, monthly, sales goals and said, here is how many qualified referrals I’m going to get in order to reach my sales goals? And then had an actual written plan for getting targeted qualified referral introductions.
What did I say? Qualified Referral Introductions! That means someone with influence has pre-introduced you to an Ideal prospect (as defined by you) with the understanding that this prospect would like to meet with you. This person who has referred you, through their trusted relationship with the prospect has changed this meeting from a sales meeting to a service meeting, established your credibility and cleared the the way for you to get down to providing solutions for the prospect. And in my experience, really increased your odds of closing not just a sale, but an ideal sale.
Alright I’ve said a couple of things that need further explaining, Let’s start with client descriptions and where our profits come from. As a rule clients or customers fall into four categories:
Ideal, Bread and Butter, Marginal and Undesirable. Why do we need to define our customers and prospects? Because it’s important to understand that Ideal Customers usually represent 10% of our customer mix, but 50% of our profits. Bread and Butter Customers represent 50-70% of customers and 30% of our profits. Marginally Profitable and Undesirable customers are 20-40% of our customers and only represent 20% or less of our profits.
I once coached a professional who told me that he received all of his business through referrals and was closing a ton of business, but was overwhelmed and couldn’t keep up. We went through an exercise of defining what characteristics each of the four customer categories would have and he was shocked to discover that he had an alarming number of Marginal and Undesirable customers. They created lot’s of issues for him such as high turn over, slow or no pay, lot’s of service demand and as we already discussed low profit margin.
His obvious question was how do I fix this? My recommendation was to better educate those who were referring to him. He had lot’s people willing to refer to him they just didn’t know how! So we developed a referring guideline that he could provide to those who referred him. It had a huge positive impact on his customer mix over the next several months.
Being in the top 20% is a decision, the top 5% a passion!