Mind the Gap. The Referral Gap.

by: Christel Wintels, Executive Director and Franchse Owner, BNI Golden Horseshoe

Business by referral.  Those three simple words are music to a businessperson’s ears. Business by referral means that someone talked to someone else about you, and your business, and that someone else contacted you. What a great way to generate new clients. It’s cost effective, easy and your credibility is established before the potential new client even contacts you.

Most people in business are well aware that it’s much better to do business with people who trust you (the basis of a referral). A referred business prospect is generally easier to close, has far fewer complaints, is more loyal, remains a client longer and is more trusting. One of the best things about referrals is that they bring in customers with a positive attitude. Referred business tends to be easier to close because skeptics are usually screened out automatically by the person giving the referral.

A BNI survey polled 2,350 businesspeople in the Canada, the United States, Puerto Rico and the United Kingdom, asking participants to rate the effectiveness of various means of generating referrals, as well as what percentage of their business was generated by referral.

The survey showed:

§  80% of respondents felt that networking groups were the most effective method of  generating referrals

§  72% felt asking orally was effective

§  34% felt asking in writing was effective

Although the survey indicated that networking groups paid off handsomely in terms of referred business, only 45% of respondents actually use what they consider a formalized referral system. 

Further analysis of the survey showed that while most respondents recognize the value of referrals, they get less than half their new business through referrals. About five out of six would prefer to get much more. There is a significant gap between the amount of business being brought in by referral and the amount that businesspeople think should be brought in.  It’s the referral gap.  Mind the gap.

One of the reasons for a referral gap may be that few businesspeople have a marketing plan in place to specifically generate referrals. Creating a referral generation plan for your business means that, over time, you will build a solid network of referral partners who will provide a sustainable source of referrals for your business. Businesses who achieve that are truly by referral.

There are many ways to build a referral network. No matter what type of business you have, whether you’re a business owner or a sales professional, having a thriving network is an asset of unlimited value.

When it comes to building business, experienced business professionals agree that referrals are the best.

Posted in: Sales and Marketing