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Too Few Sales Organizations Engage in Referral-based Selling

July 02, 2015
By Tracey E. Schelmetic - Telemarketing Software Contributor

Have you ever spoken to a sales manager at another company and heard him or her declare, “We don’t bother with lead generation.” You may have been shocked…after all, this sales manager works for a successful organization. You may be spending a lot of money on lead generation for very little effort and wondering what that company is doing that you aren’t. Lead generation, done improperly, can expend a lot of effort, time and money only to produce very marginal results. For companies that don’t have shortcuts, amazingly well organized processes and experienced inside sales personnel, lead generation often costs more than it yields.

According to a recent article by Emma Vas writing for Business2Community, successful sales organizations – she focuses on telecom sales -- understand the value of cultivating the referrals process.

“Your team needs to be able to successfully turn leads into lifetime customers and customers into a valuable mine of referrals – without wasting time on lead generation,” wrote Vas. “Every telecom sales team tacitly understands that referral selling is by far the most effective lead generation and customer retention strategy. Not only are referrals ‘hot’ leads, but they also come with a built-in testimonial for your prospect.”

Vas noted that some of the benefits of referral-based selling include the ability to bypass the “gatekeeper” salespeople must face with traditional lead generation, which leads to easier access to the actual decision maker. Referred prospects are already familiar with your ability to deliver results, and you’ve already built some trust and history with this person. All in all, you will wind up with more qualified leads to work with – which requires fewer leads overall – and you’ll face less competition in closing the sale. Despite all these benefits, many sales organizations don’t have a solid program for cultivating and maintaining referrals. Sales organizations should be building a written referral-selling strategy, establishing periodic referral goals, training on referral-selling skills and tracking the success of incoming business referrals, wrote Vas.

“Remember, referrals most often come from satisfied, retained customers,” she wrote. “If your customer retention strategy still needs work, you must establish a solid retention strategy before asking current customers for referrals. Once your current customers are content, train your sales team on the perfect timing and approach to ask for a referral.”

Spending more time cultivating and contacting referrals and less time chasing cold leads can ensure that sales teams are spending their time engaged in optimal selling activities. 

Edited by Rory J. Thompson

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