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How to Win at the Referral Game

Originally published on business.financialpost.com

One theme I like to explore when doing presentations for entrepreneurs concerns “getting more money from every sale.” People’s eyes light up when they hear the topic; they hope there is a magic formula for creating money from thin air.

And indeed, there are three easy ways to make more money from every sale:

  1. Raise your prices.
  2. Sell more accessories with every sale (“Would you like fries with that?”).
  3. Ask for referrals.

At that point, people’s interest usually flags. They’ve heard those tactics before; they expected something new and surefire. Which is sad, because most of them haven’t exhausted any of the above techniques.

Referrals, for example, is an age-old game. What could be easier than asking satisfied customers to refer their friends to your business? But there are many ways to do this and most of them are wrong. A salesperson might just ask her clients to pass her name along. Others offer forms for customers to write down names of friends who might need their services, making them feel like they’re snitching on their closest confidantes. Neither system is likely to produce results.

As a young financial planner in Toronto, Dan Bodanis once asked a client for referrals so often that the client rebelled and said, “All you care about is referrals. Referrals, referrals, referrals!” The feedback convinced him to devote every idle moment to studying the secrets of successful referrals.

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Originally published on business.financialpost.com

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