How asking for referrals will drive your revenue in 2024
How many people should you ask for referrals to get five new clients? No more than 20.
In my experience, at least half the people you ask for referrals will introduce you to your ideal prospect. Referred prospects convert to clients a minimum 50 percent of the time (most salespeople tell me it’s closer to 70 percent). So the ratio of referral requests to new clients is roughly four to one (4:1). And that’s a conservative estimate.
The referral business case math looks like this:
- Ask 20 people for a referral introduction to your ideal prospect.
- 10 people can’t think of anyone (Unlikely, but I said I’d be conservative.)
- 10 people introduce you to your ideal prospect.
- You schedule 10 referral meetings (because people will always take meetings with salespeople who’ve been referred by people they know and trust).
- 5 referrals aren’t a good fit, or the timing isn’t right, or they don’t have a budget.
- 5 are a perfect fit.
- You book five new clients.
Later on, that number could increase, because any good referral seller will keep in touch with prospects who said no because of timing and budget. Some of them will eventually find budget, or the timing will be right, and voila—you’ll suddenly have another new client or two.
(Image attribution: Perawit Boonchu)
My Referral Business Case
My business is consulting with companies to get ideal referrals and drive revenue. So, my prospects often do find budget, because they understand revenue will increase, and they’ll get unmatched ROI.
Here’s the (conversative) referral ROI math:
- Achieve $500K (USD) in additional sales revenue from referrals
- Average sale is $100K (adjust this number for your business)
- 90-day timeframe to close the sale
This is without taking into account variables such as increase in deal size, increase in close ratio, shortening of the sales process, and introductions to new decision-makers that result in referrals.
That’s the referral business case. Worth it? You decide what results you want in 2024.
How to Get Referrals in 2024
So, what does it take to guarantee referral success?
- Prioritize referrals: Executives don’t leave important buying decisions to chance. That would be dumb. Their bottom lines—and their reputations—are at stake. They want to work with salespeople they know and trust, or who have been referred by people they know and trust. That’s great news because your satisfied customers will happily refer you—if they’re asked. Referrals don’t just happen, at least not at scale. But they do scale. Make referrals your #1 outbound prospecting strategy, and watch the qualified clients pour into your sales funnel.
- Create a referral system: While sales leaders acknowledge that referrals are the #1 way to ensure a pipeline of only qualified leads, most don’t put a system in place to make referrals happen. Asking for referrals is ad-hoc, not part of the sales process, not a sales activity that gets measured, not mandatory. Then they wonder why telling their sales teams to get referrals isn’t working. Because in sales, what gets measured gets accomplished. Everything else is optional.
- Commit to referrals: When you integrate referral selling into your sales process, your team will bring in more qualified leads, foster better long-term relationships with customers, decrease the cost of sales, and generate more revenue. But your sales reps won’t commit unless you do. That means not only putting a referral system in place, but also ensuring reps have the skills and coaching needed to ask every client for referrals.
It’s really a no-brainer. While your competition is still playing around on social media, sending cold emails, and trying to identify decision-makers, your sales team can be in the conference room sealing deals. After all, decision-makers don’t take cold calls or respond to sales pitches from strangers on social media. But they do take meetings with salespeople who’ve been referred.
Challenge the Status Quo with Referral Selling
Challenge and change your sales process: business development, prospecting, pipeline—all of it. Bring Joanne Black into your company, sales conference, or attend a webinar. Contact Joanne.
(Featured image attribution: icetrayimages794410)
(This post was originally published on June 21, 2012 and updated December 7, 2023.)
