The Green Sheet Online Edition
February 28, 2011 • Issue 11:02:02
Referrals: Do you play the numbers game?
How do you find new prospects for your services - through cold calling, leads, referrals or prospects who contact you? Each involves a numbers game. For example, 20 cold calls may bring you five appointments and ultimately one contract. Leads may yield better percentages, depending on their source.
Prospects that contact you are rare, but their closing rate is usually better. Good referrals have a much better closing rate. Everyone wants referrals. What is the trick to greatly increasing the number of high-quality referrals you receive?
Increasing your referrals
Tim R. Green knows how. He runs the Referral Institute of Michigan (part of BNI founder Ivan Misner's Referral Institute program) and is the author of Set 4 Life: Four Amazingly Simple Steps to Personal, Financial & Referral Marketing Success.
Most merchant level salespeople (MLSs) and other service-oriented people believe they can get referrals simply by providing great service for a fair cost. Green told me this method is actually one of the least effective sources of referrals because clients already expect great service.
I asked Green if people can really predict the number of referrals they will receive. He replied, "Yes, if they take a proactive stance to referral marketing - not a reactive stance. We call this [reactive referral stance] the 'good luck' referral: first of all, good luck if you receive a referral this week, good luck if the person referred to you will talk to you and good luck if you close the referral."
Instead, the Referral Institute teaches you how to take a proactive stance to referrals and not simply rely on good luck. Key to the proactive stance is identifying four referral partners who will provide you with referrals on a continuous basis. The Referral Institute teaches this using its "VCP Process."
Cultivating high-quality referral sources
What is the VCP Process? Green explained, "A referral marketing plan involves relationships of many different kinds. Among the most important are those with your referral partners, with prospects these referral partners bring you and with customers you recruit from the prospects." Green pointed out that the relationships require nurturing through three phases: visibility, credibility and profitability - an approach called the VCP Process.
Green went on to say that the VCP Process "describes the process of creating growth and strengthening of business, professional and personal relationships; it is useful for assessing the status of a relationship and where it fits in the process of getting referrals. It can be used to nurture the growth of an effective and rewarding relationship with a prospective friend, client, co-worker, vendor, colleague or family member.
"Understanding the VCP Process helps eliminate any frustration we might have around the referral process. Have you ever had someone point the finger at another or at a group and say, 'They aren't passing me referrals?' Well, when we point the finger at others, three more are actually pointing back at us. You see, the fact that others are not passing us referrals has nothing to do with them."
Green emphasized the need to take personal responsibility for "moving the relationship from V to C and then from C to P." According to Green, the strategic objectives in the visibility phase are to get your potential referral partners to:
- Show (know that) you are a friendly and considerate person
- Show (know that) you like, respect and value them
- Show (know that) you are a valuable resource for information, support and contacts
- Become interested in learning more about you
- Remember you
In the credibility phase, the goals are to get your potential referral partners to:
- Establish a networking connection with you
- Believe that you are trustworthy
- Believe that you are a knowledgeable individual in your field
And in the profitability phase, you should strive to get your potential referral partners to:
- Seek you out for your products and services
- Believe your products and services are valuable and reasonably priced
- Promote you and your business
- Provide you with referrals
What are the levels of referrals? Green refers to "10 different shades of referrals." The higher the shade, the easier it is to close the referral. Here's how he describes them:
- Shade 1: I give a name and/or contact information only.
- Shade 2: I give out literature, a business card or company information.
- Shade 3: I authorize the use of my name.
- Shade 4: I send a letter of recommendation with a testimonial.
- Shade 5: I send a letter of introduction, and then call.
- Shade 6: I qualify a prospect's specific need or interest and arrange permission for the referral partner to call the prospect.
- Shade 7: I qualify a prospect's specific need or interest and arrange a meeting between the referral partner and the prospect.
- Shade 8: I qualify a prospect's specific need or interest and arrange a face-to-face introduction of the referral partner to the prospect.
- Shade 9: I describe products and services in person so well that I can tell my referral partner what the prospect is looking for within his or her product or service area.
- Shade 10: I bring my referral partner a closed deal.
Where to concentrate your efforts
Is it important to drive your relationships all the way through the VCP Process? Have you wasted or invested your time if all of your relationships stop at V or C? It only counts when you drive your relationships completely through the model, Green said.
What type of referral should you give or receive with the VCP Process? "We recommend that you receive and pass only shade [level] seven referrals or higher," Green said. "Any shade below shade seven will make it very difficult to actually talk with the person referred to you."
Which source of referrals is the best for salespeople? "The absolute best referral partner you work with is one of your contact spheres," Green noted. A contact sphere is an individual or business that has the same target market you have but is not your competitor, Green pointed out.
For the MLS, this can include accountants, web developers, phone system suppliers, bookkeepers, office supply representatives and many others. Green recommended that you begin with just four partners in the VCP Process and get to know them well.
His seminars on the VCP Process drive home the fact that both partners must see the profitability of new referrals or the relationship won't last.
Bill Pirtle is the President of MPCT Publishing Co. and author of Navigating Through the Risks of Credit Card Processing. He is also a merchant level salesperson for Clearent LLC, Electronic Payments Inc. and Electronic Merchant Systems Inc. Bill's website is www.creditcardprocessingbook.com, and his email address is email@example.com. He welcomes all connections on Facebook and LinkedIn.
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