You may have heard the cold call statistic that it could take as many as 100 phone calls to get one meeting. That statistic has been around since cold calling was in its heyday. But at a one percent return on your time investment, are those odds really working in your favor? After all, wouldn't it be better to have odds that would actually give you the probability of converting that prospect into an actual customer?
Over more than 30 years working with businesses, I have tracked what I like to call Return on Referral. Where are you spending most of your time when it comes to referral opportunities?
1. Lead Referral = 5 % odds: A lead referral is when someone mentions to you that a business or person may need your services or products. When a lead has been given along with a little insight to the potential need, you can approach the prospect with a little more confidence than a cold call offers. Another example of a lead referral is when you identify a prospect and then ask around for more information about them from others who may know them before contacting them directly. Either way, I equate this type of referral to being a rumor or hearsay. While there may be a valid need, you are still approaching the prospect from a pursuit mentality.
2. Connected Referral = 10% to 15% odds: A connected referral is when someone refers a prospect to you and also encourages you to use his or her name for added credibility on your behalf. Being able to make that connection when contacting the prospect increases your odds, but not as much as you might think. It is still more of a lead than a referral with the burden of proof of your worthiness to the prospect entirely on your shoulders.
3. Contacted Referral = 25% to 35% odds: A contacted referral is when the person referring you makes a formal introduction of you to the prospect. This is done either via email touting your merits and copying you to make a direct connection or making a personal phone call on your behalf to provide insight about you and your offerings to the prospect before you follow up or they call you directly. This tips the referral away from being a lead and into being leverage you can use. Depending on how you follow up and connect with the prospect, you should be in a more prepared position to effectively identify ways you can meet his or her specific needs.
4. Referral Meetings = 65% to 75% odds: Referral meetings are powerful because they are orchestrated with an existing customer in mind who you want to connect to another referral source offering a product or service your customer needs. The referral source then invites his or her existing customer to join you for the same purpose. Critical to this being successful is that you each have identified two customers who are also ideal to meet one another. Making that customer connection is critical because you want these two people to hit it off so they will each share glowing experiences about you and your referring partner's abilities and offerings. Your customers are giving live testimony to each other, while the four of you enjoy connecting on many levels.
5. Multiple Referrals = 85% to 95% odds: You know you have all your marketing pistons firing when you have prospects reaching out to you because they have been referred to your business by numerous people. You are not only receiving referrals from customers, but a wide network of influence that spans a broad range of ways you and your company are engaged in the marketplace virtually and physically. When you reach the point of multiple referrals being given to prospects, converting them to customers should almost feel too good to be true. Best of all, it is giving you a competitive advantage, leaving competitors wondering how they can achieve that level of preference.
The ideal scenario is that you are spending less and less time converting a prospect into a customer, and more time serving, and therefore, keeping customers. The higher your Return on Referral, the more time you can spend making more money and more customers happy. And that is the best return of them all.
Sherré DeMao is author of the nationally acclaimed books, 50 Marketing Secrets of Growth Companies in Down Economic Times, www.50marketingsecrets.com, and Me, Myself & Inc., www.memyselfandinc.com, Her column seeks to help business owners build and grow sustainable enterprises and businesses with economic value and preference in the marketplace.