Referrals: Common sense versus common practice

Every salesperson you meet will tell you referrals are the best way to generate new business, yet few run a 100 percent referral-based business. This conundrum has always puzzled me, so when I started my company more than 14 years ago, I polled salespeople across industries, asking, “Why are referrals so great?” Referred clients are presold, these salespeople told me, because someone they know and trust has vouched for you.

Common sense, not common practice

So I asked the next logical question, “Do you have a strategy to build your business through referrals, such as goals, a plan and a system for tracking and measuring results?” Silence. Turns out referral-based sales may be common sense but not common practice. I eventually discovered two primary reasons companies aren’t using their most powerful sales tool:

1. It feels uncomfortable. Asking for a referral feels like asking for help, and for many of us, asking for help isn’t easy. We worry it will imply our business is struggling. And asking an already busy person to do something might be intruding on a relationship. Unlike other business-development strategies, asking for referrals is personal.