A typical B2B sales strategy relies on Sales Development Reps (SDRs) making cold calls or cold emails to try to set up an appointment for an Account Executive (AE) to deliver a sales pitch.
In my conversation with my long-time friend Joanne Black, we explore the reasons for the decline in the effectiveness of this strategy and we explore the benefits of a formal sales referral strategy and how to set one up in your company.
The way we build sales funnels is obsolete
Digital marketing has its roots in the early days of the internet, but it really started to take off in the mid-1990s as more and more businesses began to recognize the potential of the internet as a marketing and communication tool. At that time, digital marketing efforts were focused primarily on building websites and email marketing campaigns.
For the first movers, these strategies worked especially in combination with an SDR and AE funnel, where gated content is used to capture prospect contact data. The SDR in turn calls the prospect and sets up a sales call for the AE to pitch.
Over the past three years, there have been a number of seismic shifts in the market.
- B2B buyers want to do 70-90% of their product or solution research before speaking to a specific vendor. If you don’t provide this content, you risk not being included in the potential vendor list.
- Gated content is much less effective as a lead magnet because buyers are less inclined to give up their contact information.
- Buyers are very unlikely to answer a cold call and if they do pick up, they are very unlikely to answer a bunch of scripted questions.
One strategy that avoids these issues altogether is to create a referral program within your company.
An occasional referral is not a referral process
Joanne reflects on her 25 years of referral selling experience, “When I started my company, no company had a referral system with a referral strategy, metrics, skills-building, and accountability for results. Referrals were hit-and-miss. But just telling your salespeople to go get referrals often leaves you wondering why nothing happens”.
Joanne Black insists, “A referral strategy must be part of the culture of an organization. The methodology must be formally created and tracked.”
There are two types of referrals, inbound and outbound, and your strategy should address each one.
- An employee of your customer moves to another company;
- A customer refers you to a vendor, partner, or someone in their network
- A partner or business contact recommends you to someone in their network.
Everyone gets inbound referrals. We have no control over them. Good salespeople don’t sit back and wait. What’s not happening are outbound referrals, where reps are proactively asking for them instead of waiting for them.
This means proactively asking for an introduction. It starts with the sales team but can roll out to other parts of the company, especially to the customer success team, and works really well when CEOs and senior leaders open their networks.
- Ask loyal customers if they can make introductions to companies you are prospecting.
- Ask partners if they can make introductions to companies you are prospecting or that they know would be a fit.
- Ask your network to make introductions to companies you are prospecting.
There are several steps to successful referral selling.
1. Create a strategy with the outcome you expect.
2. Create metrics for the company, for the sales team, and for each individual person. Not just results metrics such as revenue, rather activity metrics are especially important for a referral program.
Results are a lagging indicator, and you can’t manage by results. But you can manage by activities. As Joanne said, “The first activity metric that needs to be tracked is how many people have I asked for a referral this week?”
Set outbound referrals “asks.” Start with one referral request per week and build from there.
3. Referral selling is a skill, it’s a behavior change. Therefore, everything needs to be tied to your team’s KPIs: the number of people they ask, the number of referrals they receive, the number of referral meetings they conduct. And then enter into your CRM as a qualified lead.
Track and measure the results from referral leads vs cold outreach.
In the absence of tracking, no amount of training is going to change the behavior of your AEs. When they start to see that the leads that come from referrals close faster and more often, they will continue asking for referrals.
It starts with a mindset
If the CEO walks into the bullpen asking for cold calls and email tallies every day, that’s what SDRs and AEs will focus on.
What if the CEO instead declared “This would be so much easier if we got referrals. Let’s work on a plan to make referral selling the way we work and create weekly goals.”
Referral selling is a skill and must accompany the referral program. We need to teach our teams how to have the right kinds of conversations in person, on the phone, in email, and especially over LinkedIn.
Most companies start with founder-led sales, including tapping into friends and family networks for referrals. The referral conversation often starts by taking CEOs back to that time. Help your sales teams by re-activating that network.
For your teams, it’s important to understand that the referral mindset needs to be nurtured throughout the sales and project phases.
Why Not Ask for Referrals?
The most common resistance to a referral program is a feeling that asking seems aggressive or desperate. It sounds like a used car salesman. “I’m not that type of salesperson” is a common objection. “After all, if I am really successful, I wouldn’t have to ask.” These are all common complaints that Joanne hears.
What if I ask for a referral and they say no? That would be very devastating.
The answer is simple, you have to qualify a referral candidate just like any other opportunity.
For the employee moving to a new company, was the project that you worked on together considered a success?
Likewise, for additional work within the same company, was the project successful?
For people in your network, it’s more complicated. If it’s a partner, do you have clients in common that are happy with your work? If it’s more of a colleague, do you have mutual connections that can attest to your credentials?
Make sure the referral includes information about the problem that the person is trying to solve. The more specific you can get, the easier it will be to move the deal forward.
A test of whether you have enough information about the opportunity is that you can start a conversation versus launch into selling features and benefits.
An end-to-end referral program
A successful program must include:
- A CEO-led referral culture of collaboration and network sharing;
- Training and skills building to identify referral opportunities at every stage of the customer relationship;
- Learning how to start a conversation and avoid asking questions that are likely to get a no;
- Track activities in order to be able to measure the effectiveness of the program.
Given that the close rate of a referral can be as high as 70%, it is one of the most overlooked, outbound, sales strategies.
This is especially true given the changing buyer patterns and general resistance to cold calling and spam.
About Our Guest
Joanne Black is America’s leading authority on referral selling and the author of two books: No More Cold Calling™: The Breakthrough System That Will Leave Your Competition in the Dust, and Pick Up the Damn Phone!: How People, Not Technology, Seal the Deal. Clients in growth mode recognize the need to shift from sourcing leads through technology to sourcing qualified leads through relationships. Clients work with Joanne to build a referral culture and pivot quickly from transactional selling to referral selling.
She just celebrated her 25th year since founding No More Cold Calling.
Connect with Joanne on Social Media
Alice is nationally known for her expertise in elevating sales to increase valuation for companies with a B2B complex sale that have exceptional growth potential. She’s originally, from the widely known Miller Heiman Group. Spending her time strategizing with CEOs and their leadership teams to build the strategies that find new business and grow existing accounts is her passion. Her clients love her spirit and the way she energizes their sales organization.