Michael Carpenter

Sr. Loan Officer
Bellevue, Washington

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The Fine Art of Asking for Referrals

Basic skills for the small buisnes owner

Written Oct 23, 2009, read 3927 times since then.

Don't you just love it when out of the blue you get a business referral from a long-ago happy client? Who wouldn't be thrilled to have a potential chunk of business just fall in their lap? But the reality is, few people ever make the effort to proactively go out and drum up referrals by asking their customers that burning question: "Who do you know that I could help?"

Attracting clients through referrals is THE MOST POWERFUL WAY you can build a business—and let's face it, it's a lot more fun than the pain of cold calling to develop leads.

Client Referrals — The Easy Way to Capture Customers.

In the ten years I've been in the mortgage business, I've cultivated the vast majority of my business through referrals. Instead of continually pounding the pavement looking for clients, I leverage the work of happy clients to help my business grow.

In every business, there are countless reasons to adopt a referral marketing approach. Referrals are considered the most cost effective method for "advertising" services and products. It's far less expensive in terms of time and money to target referrals than to continually prospect for new clients from scratch. And believe me, the payoff will far exceed your investment. According to world-renowned sales trainer Tom Hopkins, the closing ratio is six times greater with referrals than using other methods to generate leads.

Put Your Best Clients to Work.

The concept of referral marketing is pretty basic: You attract people the way people want to meet you—through a client, trusted friend or business associate. There's no direct selling involved. Instead, one of your satisfied clients "sells" the products and services for you by sharing their previous great experience.

You've heard the sales cliché that people like to do business with people they know, like and trust? When a client refers you, by association you become an extension of their trusted network. Suddenly you've joined their circle of influence and the sale almost becomes a foregone conclusion.

The truth is most happy clients would be happy to give you referrals, if they only knew you were looking for them.

Oddly enough, most people never assume you're looking for business unless you tell them. You've probably had the unfortunate experience of a former client or associate making a referral to a competitor. In one of those I-could-a-had-a-V-8 moments, they cover their mouth and gasp, "Oh my gosh, I didn't even think of you!" You fell off their radar, because you weren't asking for referrals.

Afraid to Make the Ask?

I've heard all the excuses why people won't ask for referrals. Top of the list is they feel weird asking someone they know to help them get business. The dirty little secret is that while most people are in business to sell, they HATE thinking of themselves as sales people. The problem is they're going about it the wrong way.

The key to my success is that I think of asking for referrals as simply an extension of the good service that I'm providing to clients over the a long-term. Just because the deal is done doesn't mean the relationship is over—in fact, it's just the beginning.

The Art of Being Subtle.

In the mortgage business, I've seen my share of people strong arming clients at closing into coughing up names of referrals. That approach only creates angry and resentful clients, which is counterproductive to any marketing effort (studies show a satisfied customer tells three friends, but an angry one gripes to 11—or thousands if they're hooked into several social media outlets.)

My approach is far more subtle and tactful, because I've never believed that the bullwhip gets you anywhere in business. Here are my surefire tips for successfully getting referrals:

Target your happiest clients. Not every customer is the ideal candidate to ask. Your referral rate will be much higher when you ask those who are ecstatic with your service.
Consider the timing. If a client is delighted with my service, I ask for the referral at closing. For your clients that might be too soon, as they need time to experience your great service. But don't wait long; the experience should still feel fresh in their minds.
Ask consistently. Ask for referrals at every touch point throughout the business relationship, building referrals into your ongoing marketing programs, and making the referrals automatic.
Treat clients well. Your clients are a valuable asset to your business, so show them your respect. Expect a predictable percentage of client referrals, but never make assumptions or demands.
Always say thank you. Whether you get the business or not, acknowledge the referral immediately with a thank you note or phone call, and again when you get the business. That will ensure a steady stream of referrals over the long-term.

Referring the Referral Source

Great referrals don't always come directly from friends and associates. Some people are in business or social networks that make them natural referral sources, so keep your eyes and ears peeled for these connectors you meet when you're out on your daily travels. Depending on your line of business, great referral sources might be bankers, executive coaches, graphic designers or even soccer moms (and dads!). In my business a great referral source would obviously be a real estate agent, but you might not think about HR directors (because they're in touch with people who are always relocating), tax professionals (they know when clients need extra cash and want to refinance), and even wedding professionals and photographers (who's looking to buy that first home more than newlyweds!)

No matter what referral building approach you take, understand that unlike other channels for attracting business, including advertising, direct mail and cold calling, referral marketing is not a "campaign"—it's a way of doing business. So get out there and start leveraging the goodwill you've already developed with clients.

Learn more about the author, Michael Carpenter.

Posted by Nick Palumbo, Seattle, Washington | Oct 25, 2009

Yes I agree ! Great article , there is nothing better than business falling into your lap . This technique is paying me back tremendously . Thank you for the tips and I am now successfully getting more referrals .
Posted by Mark Storey, Columbus, Ohio | Oct 26, 2009

Great advice, Michael. I believe it's also effective to extend the same strategy to other referral partners you develop. These are people from your network who are probably contact sphere members (folks who market to the same people as you without being competition) and who you have probably already collaborated with on projects and as referrals. When you teach each other about the benefits of your businesses, what good referrals and clients look like, then working with and for each other becomes more natural. It becomes a new way of being for your businesses. Besides exchanging referrals, there are lots of ways to promote and sponsor each other, too.

Mark Storey
Posted by Alexandra Filutowski, Seattle, Washington | Oct 26, 2009

Thanks for the great article. It reaffirms some business strategy I've used, but highlighted some new techniques as well. Thanks, again.
Posted by Lisa Giesler, Missouri City, Texas | Oct 26, 2009

Terrific article, Michael. Its important to remember that even though your hoping a client refers you, your client may not even be thinking about it. You gave some great tips on subtly asking for referals! - Lisa Giesler www.atimeandplaceforeverything.org
Posted by Paul McFadden, Bellevue, Washington | Oct 26, 2009

Michael: Thank you! It's always nice to see someone in the business who gets it. Keep up the good work!
Posted by Julie McCullough Hale, Seattle, Washington | Oct 29, 2009

Well said! Thank you.
Posted by Shaun Lawrence, Irvine, California | Oct 29, 2009

Very good info. I have trouble just asking but have heard many talk of how letting them know works. Thanks. Shaun Lawrence, Lawrence & Assoc, CPA Orange County
Posted by Tom Ramsberger, Scottsdale, Arizona | Oct 29, 2009

Thanks for your thoughts, it reminded me how important maintaining positive relationships with former and current clients.
Posted by Tim Hamilton, Lexington, Kentucky | Oct 30, 2009

Good read!
Posted by Kevin Donnigan, Rio Rancho, New Mexico | Oct 30, 2009

Great article! I also like to give a 10% finders fee to the person who referred me. Incentive to bring more business my way!
Posted by Luke Brown, Los Angeles, California | Oct 30, 2009

Not bad, but the trite, standard and completely unoriginal question, "Who do you know that I could help?" is simply not going to work.

Tom Hopkins, who you quoted in your article, broke down the question. He said if you ask that question, the person you ask will think of everybody, which causes too much interference. Consequently, they don't give a referral.

Hopkins said to ask them about small groups of people they know: members of their church, a sports team, parents group, hobbies, etc. Then they are thinking of a smaller and finite number of people, making it much easier for them to give you a referral.

After getting a referral, promise them you'll contact the referred person. When you contact them, mention, "I promised John I'd give you a call." This does 2 things: it relaxes them because they like and trust John; it establishes you as trustworthy since you did what you promised.

That's how to get a referral AND make the sale when following up.
Posted by Michael Carpenter, Bellevue, Washington | Oct 30, 2009

Luke, Thanks for the great contribution. I will certainly use this tip!
Posted by Aiste Kabbara, Vilnius Lithuania | Oct 31, 2009

SUPERB (!) the article & surely all the comments: thanks Michael, also Luke (recently we realised we muff up referrals w/careless actions therafter; so ensuring tact, respect & impeccable FU is absolutely crucial...great point!)

Many many thanks
Posted by Kristin ten Broeck, Portland, Oregon | Nov 04, 2009

Thank you very much for taking the time to write this. Being a documentary filmmaker who usually chooses her own subjects, I'm going to have to think about how I should go about asking for referrals. The general sentiments of this article spurred up an inspiration in me to do so, thanks!
Posted by Nancy Lynch Anderson, Los Alamos, New Mexico | Nov 18, 2009

Great article! Let the customer know you work on commission. That you want to be sure they are happy with your product or service so they will refer you to others.