To get referrals that turn into new customers you've got ask the right way at the right time.
Hundreds of "how to" sales books (and the sales trainers who write them) advise sellers to always ask for a referral after you close a sale, like so:
"Thank you for buying! Do you know anyone else who can use our product?"
Unfortunately, this type of request almost never results in a useful referral because it's asking for the wrong thing, in the wrong way, and at the wrong time. Here's a better way:
1. Pre-position the referral.
Asking for a referral when you've just made the sale is asking too much. The new customer has just risked "career points" by buying from you and has no idea whether you can deliver as promised. Why would that he or she risk further "career points" by referring you to a colleague?
Rather than asking for a referral at the point of sale, say something like: "I think you'll be delighted with our product. If that's the case, will you be willing to share your experience with somebody else who might be interested in this product?"
If the answer is yes, say: "Great! Until then, would you be willing to think about who you know who might be interested?" If the answer is "yes," you've pre-positioned that customer to give you a referral.
2. Ask for an introduction.
After enough time has passed so that the customer knows you can deliver as promised, re-contact the customer and confirm that the customer is delighted. If so, remind the customer of his or her commitment to you.
Don't settle for contact information because then you'll just be making another cold call. Ask the existing customer to send an email to the colleague (and if possible a call as well), personally recommending that the colleague speak with you.
The personal introduction is crucial because that's how the existing customer "endorses" you. It tells the potential customer that you can be trusted, which overcomes the barriers of suspicion and unfamiliarity that gum up sales efforts in their early stages.
3. Keep your source informed.
Since your existing customer has spent "career points" recommending you, the existing customer will naturally want to know what resulted from the referral. You start by thanking the existing customer, before you do anything else.
Then, as you develop the relationship with the new potential customers, keep your existing customer "in the loop." Let the existing customer know when you've contacted the new potential customer and whether (and when) that customer buys.
Finally, if the new potential customer DOES buy from you, show your appreciate your existing customer for his or her contribution to your success. Send a hand-written thank-you note or even a small, thoughtful gift.
GEOFFREY JAMES writes "Sales Source on Inc.com," the world's most-read sales-oriented blog. His new book, Business Without the Bullsh*t, will be published in early 2014. To get weekly blog updates, sign up for his free "Insider" newsletter. @Sales_Source