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Summary: Customer referrals and reference customers are some of your best selling tools, but be careful how you use them.

Do you use customer referrals and reference customers to help your sales? How often?

When one of your existing customers provides you with a company name and contact as a potential customer it is known as a customer referral. A customer referral is one of the least used, yet best, prospecting tools in your selling arsenal. For some reason many salespeople ignore getting referrals or have poor follow-up when they get one. Here are some things to keep in mind when soliciting and using referrals:

1. Ask your best customers for a fixed number of referrals and provide them with specifics. “Mr. Customer, as you know, I am always working on building my business with good quality accounts like yours. I’m looking for new companies that manufacture hydraulic products with sales over $300M. Do you think you could provide me with three names?” People respond to specific requests better than vagaries.

2. Ask permission to use the referring customer’s name and see if they will contact the referral before you contact them.

3. Always follow-up with your referring customers to thank them and let them know what happened.

Reference customers are selected current customers that prospective customers can contact in order to check you out before doing business with you. Reference customers can also be name-dropped. “Mr. Prospect, as I get more familiar with your business I see that your needs are similar to the Mega Giant Company that is a customer of mine here in Kansas.” Here are some things to remember when using reference customers:

1. Never ever put a prospect in touch with a reference customer unless you are very sure that the reference customer is currently happy with you. Too often sales organizations don’t take the temperature of their reference customers before sending prospects their way - with disastrous results.

2. Don’t overuse your reference customers and burn them out.

3. If you are going to name-drop a reference customer in order to gain credibility with a prospect, be sure that the reference customer doesn’t consider their vendor sources confidential.

4. Don’t use a reference customer that is a direct competitor of a prospect for obvious reasons.

Customer referrals typically produce prospects that have fewer objections and have a shorter sales cycle. They are absolutely one of the quickest ways to build your business. If you follow-up properly with referring customers you’ll find that over time they’ll provide you a steady stream of referrals, without even asking. Reference customers can be a great tool to lessen the FUD (Fear, Uncertainty and Doubt) of potential customers that might do business with you someday.

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Tags: Prospecting

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