Firms invest thousands of dollars every year in creating a compelling brand. Once created, well-designed pieces of collateral hit the streets through different venues: email newsletters, direct mail, blogs, and videos. All are important strategies and tactics for generating qualified opportunities. There is another strategy, however, that can generate opportunities but at a much lesser cost. It’s called a referral strategy, and the upfront investment is the willingness to invest time in people and relationships. In a world gone flat, everyone is bombarded and overloaded with information. It's more important than ever to develop referral partners and strategic alliances in order to push past the clutter and be considered for the next opportunity.
Unfortunately, most salespeople and companies don't execute a referral strategy very well. The intentions are good, but the methodology is poor. Let's take a look at the top three mistakes firms make when building referral partners.
1. No Alignment When looking for potential referral partners, put on your sales hat.
Good partners are like good prospects; they must be qualified or disqualified. One of the key qualifiers for referral partners is how well they align with your company values, goals, and objectives. Ask yourself the following questions when qualifying potential partners:
- How does your potential partner treat their clients? Do they create "raving fans" or are they in business just to collect commissions?
- Who is your potential referral partner's target client? If you need connections in the Fortune 500 world and your potential partner calls on mid-market, there is not going to be a lot of opportunities for exchanging leads.
- Is there a match on the target prospect's psychographics? If your company sells on value and your potential referral partners sells on price, you can be assured the only opportunities generated will be cheap and negotiated.
- Take a look at the relationship your potential partner has with their current clients. Are they treated like a vendor or trusted advisor? If they are treated like a vendor, chances are you are getting introduced into companies where there is not a values match. Companies who treat vendors like vendors generally have a corporate culture where people as a whole are not valued. As a result, relationships are not a value-add in the selling proposition and you are now in the price game.
2. No Match on Partnership Philosophy Think about good friendships and marriages. They are grounded in trust, full of give and take, and a real concern about the other person's welfare. Business partnerships are no different. The problem with most salespeople in building relationships is that they operate in efficiency mode and don’t take the time to get to know their potential referral partner's business. Go beyond the basics such as size, demographics, and problems solved for clients.
- Why are you in business? (And don't settle for the money reason.)
- What's the number one reason clients do business with you over your competitor?
- What have you done or changed at your firm to add more value for your clients? Good referral partnerships are based on generosity and reciprocity. When a good referral partner walks into a networking event, they look for two opportunities: one for themselves and one for their partners. Good partners are willing to do the work in building relationships. Instead of shooting off an email that says, "Call Joe and use my name," a good partner will pick up the phone, call Joe, deliver your "30-second commercial" and qualify or disqualify the opportunity for you. It takes time, and it’s the willingness to invest time that separates the salesperson that has a lot of contacts from the salesperson who has relationships. Here's a rule: processes and systems are efficient. People are not.
3. No Follow-up An introduction to a referral partner’s best client or colleague is a gift wrapped with a nice bow. Research shows the increase in close ratios for referrals is double that of a cold call or leads generated by marketing. Don't be a stranger after receiving an introduction. Ask your referral partner how they'd like you to stay in touch regarding the account. Some partners like to be included on all emails, some prefer a monthly progress report, and others want just a final recap. Keep track of success stories and share with your partner. It is important for them to know about the wins you are achieving for their contact. Qualify your partners and be a good partner. It’s a great marketing strategy.