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Most referral systems work but people won’t work them!  The reason is because asking for a referral, in most cases, throws the relationship out of balance.

Let’s say you sit down with a prospect.  You ask your questions.  Your Client has a breakthrough in their thinking.  They ask you how you might be able to help them.  You describe what you do and why it works. That is, you offer what’s called a “performance promise.”  They ask you, “How much does it cost?”  You tell them.  They think the price is fair and they accept your promise.  Your relationship is in balance.

A week later you and your new Client meet again.  You deliver everything you have promised to deliver.  They pay you as they have promised.  Your relationship is still in balance.

However, as soon as you begin to say something like the following questions you throw the relationship out of balance.

“John, there’s one more thing, who do you know who you could refer me to?”

Or, “Who do you know who might be interested in what I do?”

Or, “Who do you know who is open minded, and always looking for ways to increase their effectiveness who I might talk to about what I do?”

Or, “There are two ways I can spend my time.  I can either spend it marketing.  Or, I can spend it doing the best job possible taking care of you.  Where would you rather have me spend my time?”

These kinds of questions are commonly used to begin the referral request process.  But, any question like these invoke the “Law of Reciprocity,” also known as the “Law of Trust.”  The Law of Reciprocity states that if I give something to you I have a right to expect equal or greater value in return…at a time of my choosing.  This is especially true if I’m giving you this value in response to your request.

The noted anthropologist, Louis Leakey has said that the Law of Reciprocity is the basis of all society. It’s in every culture in the world.  It’s the basis behind the Asian concept of “face.”  And, it’s prehistoric.  Ten thousand years ago if you and I grabbed our spears in the morning to go kill the wooly mammoth, we had to know that we would have shelter and a tribe to come back to.  If our respective mates stayed with the tribe to keep the children and elders alive, and to provide shelter, they had to know they were going to have food to eat.  The members of the tribe who were best at working together tended to have the best chance of survival. Reciprocity is not only societal, it’s genetic.

We instinctively understand this, which is why most sales people have a problem asking for referrals.  We KNOW we’re asking for help that is all about us.  And, as much as we might tell people it’s in my client’s best interest for them to give me referrals, underneath the surface we still have to contend with the Law of Reciprocity.

So, how do we deal with this tendency to shy away from asking for help from our friends, family, and clients?  Here’s how!  First, we’ll discuss the value of the right kind of relationship.  Next, we’ll change our desired outcome.  Then, we’ll cover the only referral system that always works.

Let’s begin with the right kind of relationship.  I ask each of my coaching clients to tell me their most candid answer to the following question.  “How do you feel if someone who you barely know asks you for a BIG favor that only someone who is part of your innermost circle should ask you?”  Their most common answer is that they feel “put upon!”  I then ask, “How would you feel if someone who IS part of your inner circle needed help, knew you could easily help them, but did NOT ask you for help?”  The most common answer is that their feelings would be hurt and they would wonder if there is something wrong with the relationship.

Think about it!  On one hand you feel upset if someone DOES ask you for help and on the other hand you feel upset if someone DOESN’T ask you for help.  What makes this most interesting is that it COULD be the same request!  The point is, whether someone wants to help us or not isn’t determined by the request…it’s determined by the relationship.

Here’s how this applies to referrals.  If the relationship is so close that the Client or friend feels like they are part of your inner circle…they would most likely feel hurt if you did not ask them for assistance.  What we want to do is to make sure that the Client or friend recognizes just how important they are to us.

Here’s how we do this.  First of all let’s change the desired outcome from trying to get as many new prospect names as we can to strengthening our community.  By community I mean those people who know you and know of you.  What ever we do we want our community of Clients, prospects, friends, acquaintances, and family to be stronger as a result of our request.  Which brings up the third step for building your Client base.

I’ve heard it said that a referral without an introduction isn’t much better than a cold call.  I believe that!  The most successful conversations I’ve had with prospects have been with those people who I was introduced to.  The more intimate the introduction, the more trust and acceptance I had with the prospect.  I don’t think you are just looking for a bunch of names to call.  I think you’re probably looking for people just like the most ideal clients you have.

So, let’s prepare you for this kind of conversation.  Who is your most ideal, favorite client?  The one who not only buys multiple products and services, but who is also the kind of person you like, admire, and respect?  What do you like about this person?  What kind of person are they?  What do you respect about them?  Please note that I didn’t ask you what they have done for you.  This conversation is all about them.  It’s helpful to write down your answers to these questions.  Are you looking for another Client just like this one?  Most of my Coaching Clients tell me that this is exactly the kind of client they’re looking for.

If that is so then let’s just tell the truth.  Why not just tell your most ideal clients, “I’m looking for another you!”  They’ll probably want to know what you mean.  So, you can continue, “I realize there isn’t anybody who is exactly like you but I also realize there ARE people who are similar.  Who do you know…” (at this point you’ll want to describe your Client’s best characteristics, strengths, and traits.)  It might go like this.  “Who do you know who is open minded and progressive?  The kind of person who is deeply involved with their family and their community?  Someone who has the initiative and drive to get things done but still has time to make the people around them know how important they are.  The kind of person who not only has a great sense of humor but also makes you feel like you’re trusted and respected when you’re with them?  Who do you know who’s like you?”

If you actually did answer my questions, told the truth, and were sincere in your message then you just strengthened your community whether your Client gives you the name of someone or not.  This is a “no lose” situation.

Several years ago I was giving the “keynote” speech for a Regional Conference for one of our larger Financial Services Companies.  An Advisor in the front row asked me, “Doug, how is this different from just asking for referrals?  Doesn’t the Law of Reciprocity still apply?”  My answer is, “Yes, it does apply and it applies in a very unique way.  If the message that you’re sending is so strong that the person understands that you regard them as being part of your inner circle…then their response is similar to taking care of family.”  It will be interpreted as truly being about themselves and their community.  They won’t see themselves as being “outside” of your group but more as an integral part of the community, or tribe if you wish.  As part of the tribe it’s in everyone’s interest for everyone to do well.  The tendency is that they WANT to help!

They’re either going to give you the names of people or they’re not.  If they do then write the name down and ask if anyone else comes to mind.  Generally, it’s better to first have them give you all of the names that come to mind.

Once they have given you the names then you can ask your Client if it’s ok to ask a few questions about each person.

Here are the questions!

What caused (the person’s name) to come to mind?

What do you like about them?

What else do you like about them?

What do you most respect about them?

You’ll want to write down their answers.

There are a number of ways to proceed from this point.  My favorite way is to simply ask if my Client would be willing to introduce us.  This introduction can take place in so many ways.  We could meet for breakfast, lunch, or dinner.  We could meet for a cup of coffee.  We could meet for golf, tennis, racquetball, biking, or a run, depending on your preference and physical condition.  We could meet in my Client’s office, or in the prospect’s office, or I suppose, in my office.  We could meet at my Client’s house for dinner or a barbeque.  I’ve even been introduced with a conference call.

This is not a “blind date”.  I fully expect my Client to tell their friend that one of the purposes of all of us getting together is to for the two of us to meet.

Minimally, I ask my Clients if they will call the prospect and suggest that we at least have a conversation.  If the Client doesn’t want to even make that suggestion…then why would I call?

Let’s use a telephone conversation as an example of the initial conversation.  Let’s say that my Client’s name is Joseph Smith who has referred me to Felix Jones.

When you call the referral the conversation goes like this, “Felix, this is Doug Carter.  Joseph Smith suggested I give you a call and I promised I would.  I’ve really been looking forward to talking with you because Joseph told me what he thinks of you.  He said that you’re (describe what your client likes about the referral) an open-minded person who is always interested in finding new ways to become more involved with your family and your community.  He said that when he’s with you he always feels respected, trusted, and like you’re a part of his family.  Am I talking to the right Felix Jones?”

Normally…they’ll laugh!  Then they’ll either “down play” the compliment or they’ll make a small joke about it.

Most referral programs suggest that you want to spend as little time as possible setting an appointment with the prospect and then get off the phone.  I think they’re crazy.  This isn’t a numbers game.  This is about relationships.  There is even an algebraic formula that indicates what I mean.  If A equals B, and B equals C, then it follows that C will equal A.  Here’s how this applies.  If you have a great relationship with your Client, and they have a great relationship with their referral, then it follows that your prospect will have a great relationship with you.  It doesn’t always happen but the odds are great that this could be the outcome.  So the original emphasis should be on establishing your relationship with the prospect.

In real life my tendency is to ask them, “So, how do you know (your client) Joseph?”  They’ll usually tell you a short version of their story.  It’s also appropriate for you to mention how you met your client. You’ll want to end your story with a positive comment about your client…”He’s really a great person to be around!”

“Has (your client’s name) ever talked to you about the very special way we handle his finances?”  They’re either going to say yes or no.  If they say yes, ask them what they’ve heard then proceed with the rest of this conversation.  If they say no then proceed with the rest of the conversation.  “Let me make this easy for us.  I don’t know enough about your unique situation to know whether the very special way we help them with their finances would work for you or not.  But I figure it would only take a few minutes to find out.  What do you think?”

You should expect your prospect to ask you what it takes for both of you to determine if there’s a match.  And from this point forward all you need to do is to “walk them through” whatever process you use to help someone determine if there is the right kind of match.  As an example, if you’re a follower of Bill Bachrach’s Values-Based Financial Planning then this would be the right time to use “The Values Conversation tm”.  If you’re a believer in my “Ethical Persuasion, How to let your prospect sell themselves”, then this is the right time to use “The Stairstep Questions tm”.

In summary, most referral programs aren’t used because they throw your relationship with your Client out of balance.  You can move beyond that by changing your intention from just getting names to strengthening your community.  If the relationship works then the details don’t get in the way.  By telling someone that “I’m looking for another you…” and then describing those positive strengths, traits, and characteristics that you like and respect you move your relationship to a deeper, more intimate level.  An introduction is more powerful than a referral.  By describing what your client likes, admires, and respects about the prospect enhances all three relationships and helps to provide a solid foundation upon which to build your new relationship with the prospect.

© 2004, Carter Institute, Inc.  all rights reserved.

One Response to “The Only Referral System that Always Works”

  1. Brent Welch

    Doug, you have been extremely instrumental in my life. This introduction conversation is an example of why you are so helpful and successful with people like me. You have helped me overcome my regrets, compound my belief and connect with other people just as they are. Now, I just show up. I am not primarily looking for what to say, not trying to act a certain way. Instead I am being who I am. I want to get to know new friends that I have been introduced to. I sincerely want to be with others and help them. As you have said, “we are not human doings, we are human beings”. I believe that when you share your competence with those who can use it most, you grow exponentially. Thank you for helping me to share my competence with those who can use it most. Now I have stopped doubting and thank God, I believe!


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