building your referral business

Mortgage and Lending with Academy Mortgage NMLS#329710

Growing your business is tough work. The sales function is a time consuming task with a constant need to fill your "sales funnel" with fresh, qualified prospects on a regular basis. Finding the best qualified leads from your business does not come from a cold contact situation but from building a strong referral business. This week's feature looks at 7 tactics to drive the referral side of your small business.

Referral Benefits

The business of referrals makes sense for most companies for the following reasons:

  • Referral business reduces your sales expenses and sales cycle. With less time calling cold prospects, your small business can focus on customers and their circle of influence.
  • Referrals can build your level of satisfied customers.The cycle self-perpetuates with more satisfied customers referring others to your company.
  • Referrals increase your sales revenue. According to world-renowned sales trainer, Tom Hopkins, in "Sales Prospecting for Dummies"; your closing ratio for non-qualified leads is 10 percent versus a 60 percent close ratio with referred leads.
  • If the prospect of building the referral end of your business is so enticing, why do so few businesses do it? Because they use the wrong approach in building referrals and have limited success. To ensure your business is on track to building referrals, follow these 7 tips:

    7 Sure-Fire Ways to Build Your Referral Business

    1. Set A Target: In business, measure the results to improve performance. Set a clear goal with a time line. Example, 10% increase in referral business over the next 10 weeks.

    2. Timing: Conventional sales wisdom claims the best time to ask for the referral is immediately after the close. This tactic is far too aggressive. Give your clients time to experience your service or product before asking for a referral. Ask for the referral at close only if your client is already delighted with your business.

    3. Top 20: Not all customers are referral candidates. Find the top 20% that are ecstatic about your business and ask them for referrals. Make sure their network is the type of client you want.

    4. Give and You'll Receive: Give your clients extra service and follow-up support before asking for referrals. When you give willingly to your customers, they will return the favor.

    5. Type of Customer: Inform your referring clients of the type of customers you can help. Provide a clear picture of the customer demographics for your small business.

    6. Rewards Program: Provide special rewards to your referring customers on a regular basis. If a customer provides you with 5 sales, offer them something special, e.g. discounts.

    7. Thank-You: Lisa A. Maini, President of my Marketing Manager, recommends businesses need to establish trust to build referrals. Lisa says, "Create a basic thank you letter that can be personalized and sent to each referral you receive. Treat your referral sources with the utmost of care and you will not only build a foundation of trust but keep hot prospects coming to your door."

    These tips are simple but when executed on a regular basis they can drive your referral business and build sales revenue. Start today and watch your referrals grow.

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    Dave Sulvetta
    Dave Sulvetta, ReMax Connection, Gloucester County Realtor - Sewell, NJ
    Thanks for the tips. I like and use number 6.
    Jul 10, 2007 02:31 PM #1
    Randy Prothero
    eXp Realty - Mililani, HI
    Hawaii REALTOR, (808) 384-5645
    Excellent tips!  I am a big fan of building your referral base as the primary focus for growth.
    Jul 10, 2007 02:36 PM #2
    Don Carter
    All Star Mortgage, LLC - Haverhill, MA
    Good tips.  One point I disagree with is waiting until after the completion of business to ask for referrals.  In actuality, your best chance for getting referrals is during the transaction, as that is the time your client's reticular activator is most active.  If they're buying a house, they're totally focused on all things real estate, and are much more likely to notice friends and family who may be in need of your service. 
    Jul 10, 2007 03:04 PM #3
    Provadus Home Loans
    Provadus Home Loans - Marietta, GA
    Technology bringing you home.
    Great tips!!! Number 4 is my personal favorite.  That all are excellent and can make a difference in your success. Thanks you!  
    Jul 10, 2007 03:40 PM #4
    Steven Shewell
    Primary Residential Mortgage, Inc. - Ephrata, PA
    The Mortgage Maverick
    This is a really good post.  Excellent advice and ideas that can help anyone increase their business.
    Jul 11, 2007 12:16 AM #5
    Jody Orns
    Coral Shores Realty - Fort Lauderdale, FL
    I agree,, thanks for the post!
    Aug 07, 2007 12:06 AM #6
    Charles Stallions Real Estate Services
    Charles Stallions Real Estate Services Inc - Gulf Breeze, FL
    Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.

    Thanks for sharing these wonderful ideas and I need to put them all to better use for sure

    Sep 08, 2013 11:15 AM #7
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