The Importance of Referrals in Sales
Do you know existing customers can bring in new ones to your business? You can now forget about cold calls backfiring on you!
Referrals are an effortless way of turning new leads into loyal customers. When your current customers are happy, they talk about your product to their friends, family, and social circles. These, in turn, desire to do business with you after getting positive reviews about your company.
Read on to find out how your business will benefit from referral sales.
What are Referrals in Sales?
A sales referral occurs when a current client endorses your business to a new customer. Usually, the existing customer avails the name and contact details of a prospect and leaves the sales representative to follow up on the lead.
Current customers are not the only source of referrals. You can also get them from former customers, vendors, and business associates.
The Importance of Referral Sales
Below are some of the reasons why referrals are essential in boosting sales for your business.
Human beings are less trusting of people they don’t know. It would be daunting to convince a buyer to make large purchases during the initial stages of your relationship.
However, you spend less time and energy closing a sale if a person trusted by the buyer has endorsed you. Referrals enable first-time customers to trust you and buy in large scale. This translates into more profits for your business.
Referrals Lead to More Referrals
Referred customers are more open to recommending more business to you if they enjoyed your interaction. After all, they discovered your business through a friend or acquaintance.
They trust you enough not to make them look bad in front of prospects. In a way, referrals are indirect salespeople. In the long-term, they translate to a larger network or referrals and increased sales.
There are Minimal Objections
Prospects rarely contest the quoted prices after being referred. If anything, they are willing to part with a little more because someone they trust recommended a particular service.
A prospect is ready for business right from the moment they establish contact with you. Since you have a relationship built on trust, the referral spends less time on background checks and negotiations.
Referral Sales are Cheap
The usual sales process requires you to undertake digital marketing and use incentives and sales pitches to attract new customers. This increases the cost of acquiring new clients.
Referrals already have a good report about your business. You don’t need to do much to convince them. All you need is to send an occasional thank-you gift.
Customers Love Acknowledgment
Clients love it when you hold them in high regard. Requesting them for a referral lead implies you and your business associates value their opinion.
Also, it shows you value their opinion enough to ask them to recommend people you should work with. This ego boost is guaranteed to earn you more referrals in the future.
There’s Increased Loyalty Among Referred Clients
Customers acquired through referrals are more likely to stick to a brand than those who come through other channels. Research on a German bank revealed the likelihood of referred clients staying with the bank was 18 percent higher than other customers.
Ready to Get More Referral Customers?
It’s time your business developed a sales referral program. Start with your current customers and watch your referral sales grow.