Episode #353: Joey Coleman

As a sales leader, you want to prepare for every step of the process. Because negotiation is so far down the sales funnel, it would be a shame to be unprepared and lose a deal because you weren’t prepared. Preparation allows you to think strategically. It also makes you look professional. Someone’s business was important enough for you to take the time to prepare. So how do you prepare strategically? And what does it take to have a successful negotiation? Learn more from Kristie Jones in this episode of Sales Reinvented! 

Outline of This Episode

• [1:10] What are referrals? How do they help in sales? 
• [1:45] Common mistakes for salespeople to avoid 
• [3:07] How to leverage social media and online tools
• [4:16] Advice for salespeople exploring referral-based sales
• [6:23] How to measure the success of a referral program 
• [11:16] How Joey approaches asking for referrals
• [14:31] A best practice most organizations miss
• [16:17] The role of technology in referral selling 
• [17:42] Top three referral selling dos and don’ts
• [21:43] When a referral conversation goes terribly wrong

Common mistakes for salespeople to avoid

Salespeople tend to ask for referrals too early in a customer relationship. You can’t ask for referrals on the heels of the first sale. How does Joey avoid that? Never ask someone you’re doing business with for a referral until they’ve accomplished their goal for doing business with you. Once they achieve their goal, that’s when you start the referral conversation.

Joey says to think of referral-based selling as a framework for life. When you approach every sale with the desire to create a raving fan—and a referral source—it changes how you show up in your interactions with your customers. Every interaction is a way to build an advocate. It’s not transactional. Ultimately, a referral is asking someone to put their hard-earned reputation on the line for you. You need to earn the right to ask.

How to leverage social media and online tools

Joey has a friend in real estate who signs off his messages and communication with “P.S. I always have time for your referrals.” At his wedding, his bride actually said, “P.S. We always have time for your referrals.” The audience roared.

Joey recommends highlighting the customers you currently have. Highlight the relationships they have. It shows existing customers and prospects what the experience is like doing business with you. It shows them how you treat the people that you value. That leads other people to say “I want that experience.” 

How Joey approaches asking for referrals

When a salesperson comes across as pushy, it means they’re asking for the referral too early in the relationship. If you’ve been friends with someone for 20 years and they ask you for a favor, you’ll do it immediately. But if you met someone 10 minutes ago and they ask you for a favor, the odds of you doing it are far lower. It feels presumptuous. 

You need to be strategic and thoughtful with timing. When things feel rote, it feels insincere. It can’t be just checking a box. You need to know what matters to your customers. What makes them tick? What conversations do they have? What organizations are they involved with? The more you know about the people you’re serving, the better positioned you are to create triggering conversations. 

Joey likes to create scenarios so that when the person you’re talking to comes across that scenario, they know to think of you. Remind them what you do, what you look for, and the value you deliver. It’s about creating little memories in their minds. Listen to find out how Joey does this. 

When a referral conversation goes terribly wrong

Joey did business with a company that had a wonderful relationship with many of their clients. As part of a sales initiative, they trained their salespeople—for 30 minutes—on how to ask customers for referrals. 

Eager to live up to the training and take advantage of the new compensation, the salespeople blasted their entire customer base with requests for referrals. Unfortunately, the different departments didn’t coordinate. Some of their customers received 5+ inquiries for referrals. 

This program not only didn’t lead to new referrals but it led to existing and valued customers reducing their business with them or leaving entirely. Referrals are valuable. That’s why the referral process needs to be treated with respect. 

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Learn More About Joey Coleman

Are there any books, podcasts, or classes on Referral Selling that you recommend? Bob Burg is a gem of a human and an expert at referrals. His book Endless Referrals is a must read on the topic. John Jantsch’s book The Referral Engine is also a fantastic resource for anyone that wants to make referrals a bigger part of their business. In addition to being great writers and amazing experts, I will happily refer any reader to any of Bob or John’s books because I know they provide value and deliver results.

In the field of ‘Referral Selling’ – Who do you most admire and why? As previously mentioned, not only are Bob Burg and John Jantsch experts on referral selling, but they practice what they preach. Both have built their businesses, followers, and reputation by consistently delivering remarkable experiences and great value over decades. I find people that have achieved sustained excellence to be more admirable than those that have experienced success here and there but vacillate in their commitment and dedication to their subject matter or craft.

How can salespeople track and measure the success of their referral program? An effective referral program is built on tracking and measuring. Salespeople should keep careful records of who they ask for referrals, when they ask, and what the response is. They should also track how referrals are acknowledged and rewarded. Finally, they should track the ongoing relationship with the referred individual and make sure to keep the referrer updated about the relationship as it progresses.

What are some common reasons why customers may not provide referrals, and how can salespeople overcome these obstacles? Most customers are hesitant to provide referrals for three reasons:

They Haven’t “Accomplished” Yet – customers who haven’t experienced a positive outcome from their relationship with you aren’t usually willing to to risk the loss in social capital that comes with referring someone in their network who might not get results either.

They Don’t Know What You’re Looking For – most salespeople make generic asks (“do you know anyone that would benefit from our products/services?) and then are surprised that customers don’t comb their entire contact list looking for potential referrals! If a customer doesn’t specifically know the specific type of referral you seek, they won’t identify a specific person in their network to connect you with in a referral capacity. 

The Benefit of Making a Referral Doesn’t Outweigh the Cost – in most referral scenarios, the incentive for making a referral doesn’t match the cost of a referral going bad. Most companies lack any type of incentive for referrers and usually don’t even thank the referring individual, let alone reward them or keep them in the loop about the status of their referral. If someone is going to put their reputation on the line with a referral, you need to acknowledge them, compensate them, and keep them informed as the relationship with the new referral develops.  

What is the difference between a referral, an introduction and a lead? A lead is a prospective customer that has exhibited some behavior (downloading a PDF, clicking a link, participating in a free trial, etc.) indicating that they might be a good fit as a customer and might be ready to explore some of your paid/formal offerings.

An introduction is a personal connection between someone that “knows you” and someone that they think should know you.  

A referral is a personal introduction from an advocate for you/your brand to someone they feel is a pre-framed, pre-qualified prospect. They almost always have recommended that their friend/colleague explore a formal business relationship with you prior to making the connection.

How do you determine which customers to target for referrals, and what are some effective strategies for reaching out to them? You shouldn’t ask for a referral from a customer until that individual has accomplished their goal/achieved their desired outcome from using your product or service. After a customer has accomplished their goal, they will be more receptive to putting their social capital on the line by referring you to someone in their network. The best way to get referrals is to make a warm, real-time, personal ask. A blanket email asking for referrals rarely produces results. A personal ask during a phone call or while meeting in person is a much more effective strategy and shows the potential referrer that you understand the significance of the referral request.

What are some potential risks or downsides to relying heavily on referrals for new business, and how can sales teams mitigate these risks? When your entire business is based on referrals, you need to be building strong relationships with new customers as eventually your long-term customers will start to run out of people in their network to refer. Sales teams should work closely with operational teams/customer service teams to make sure the entire customer journey is so remarkable that every customer becomes a referral source. In addition, an effective referral program makes sure that referring customers are acknowledged and rewarded for their referrals, while also being kept “in the loop” about the status of the referred relationships going forward. If someone makes a referral, they want to know how it’s going and whether the referral was a good fit for both parties. Make sure to keep them updated.

Finally, what advice would you give to salespeople who are looking to launch a referral program or improve their referral generation skills? Value the Investment – substantively acknowledge and reward people for investing their social capital in a referral for you. Making a referral requires the referring party to put their reputation on the line with someone that has probably been in their network longer than you have. Don’t be cavalier in your ask, flippant in your cultivation of the new relationship, or insubstantial in your acknowledgment or rewarding of the referring party.

Don’t Ask Too Early – make sure to wait until the customer has accomplished their desired goals/outcomes using your product or service before you ask them to make a referral.

Ask Specifically – don’t ask for a referral to “anyone they know that might benefit from our products or services.” Generic asks get generic responses. Instead, be very specific. “Do you know any chiropractors that are trying to work less who might be open to exploring a software solution that, on average, will gain them 2-3 hours of “found time” per week?” The more detailed your ask, the more it allows the person to think of specific people that they could connect you to in a referral capacity.