Sales Referrals are Fuel for Growing Businesses

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“Sales is the lifeblood of any organization”, said every human being with even a shred of business knowledge. This point cannot possibly be understated, especially as it relates to a growing business. But the age-old question is how to grow sales quickly when you have a small sales force and limited budget.

Grinding Out Sales

As a founder and operator of multiple businesses, I often struggled with this concept. In my first endeavor, I pounded the pavement and white-knuckled the sales effort to get us above $1 million, but at the end of the day, I still needed to operate and I couldn’t rely on myself to get to the next million. Unfortunately, I was a young kid at the time and was naïve enough to think I could. Instead of hiring someone to help (subtext for “instead of spending the money”), I kept pushing and pushing. Sure, we grew and eventually sold the business, but who knows what we could have accomplished if we invested in sales.

With my next business, EmployeeScreenIQ, I was determined not to repeat my mistakes. The good news is that my business partner was operating the business on his own for a few years before I got started full time. And guess what? He did the same thing I did. Sold by day, operated by nights and weekends. However, he caught on much quicker than I did and began investing in sales and marketing because the market we were in, employment background screening, was white hot by 2002 when I got involved on a full-time basis.

We began hiring sales people and investing in marketing. I won’t tell you that our sales team was setting the world on fire, but we trained them well enough, that they could respond to inbound inquiries and were able to close small to mid-sized deals with enough success to justify the expense. However, what we found is that in spite of our best efforts, my partner and I were responsible for bringing in the lion share of the revenue. We also recognized that our larger competitors were hiring sales people as fast as they could get them in the door.

If you own or work for a small business and are responsible for generating sales for your organization, this story probably sounds familiar.

Thankfully, the market remained hot for some time and we kept growing, however, we were determined to find different ways to develop new business. We had a great product and we needed to find people that could help us gain traction.

Finding a New Way to Drive Revenue

My partner and I started networking everywhere we could. We reached out to executives, friends and family who could refer us into new accounts and found success there. But what really changed everything is when we started to develop sales referral relationships with successful companies that were selling their products and services into the same accounts we were trying to get into.

The first referral partner we took on was an up and coming Applicant Tracking System. Their technology helped HR departments and recruiters manage their hiring process from soliciting and evaluating resumes, to scheduling interviews, communicating with candidates and much more. Well, that was great for us, because their buyer was the same person responsible for buying background checks. Even better, we were able to integrate the process for ordering a background check through their platform.

It was like inheriting a whole new salesforce. Between their sales and customer success team, we had over 50 new people referring accounts to us. They had the ear of the client and the client trusted them when they vouched for us. Our close rate was nearly 80% compared to non-referred leads which hovered around 30%. And, the average sales cycle was a fraction of the time compared to non-referred leads.

Together, within the first year, we drove over $1 million through that relationship. And over the years, we generated many millions more. That’s all the proof I needed to know that we could replicate the model I just described without having to hire hundreds of sales people across the country. So, that’s exactly what we did. And in the process, we drove millions of dollars of sales until we successfully exited the business in 2015.

Some relationships worked better than others, but over time we learned a few things about finding the right partners and setting them up for success to stack the odds in our favor.

Identify the Right Sales Partner

• Find Someone You Trust - I know. It’s hard to entrust your brand to someone that you barely know. Will they say the right thing? Will they say the wrong thing? You want someone that will represent your brand with the same integrity, passion and presence as you would expect from your own employees.
• Offer Fair and Reasonable Compensation- Do you pay for a referral or close? Is it a lump sum or percentage of the deal? How long is the other party compensated for? You want to motivate the folks that will be generating referrals on your behalf, so that it is worth their time, effort and energy. At the same time, you don’t want to artificially inflate the price to the customer to accommodate the “acquisition cost” or reduce your margin to the point where the new business isn’t profitable.
• Establish Rules of Engagement- This is important because you want to be well coordinated. Do you want this person to simply make a recommendation and send an email to connect you with the prospect? Do you want them to participate in an initial call or meeting? Do you want them to establish the basics that would make them a qualified lead? Are there some accounts you don’t want them to work on because they’re already a client or prospect?

As long as everyone is on the same page here, it looks like you’re ready to put a deal together. That’s great, but the deal itself won’t make the cash register ring. In order to make a referral partnership successful you need to commit to proper training, communication and coordination.

Set Your Referrers (and Yourself) Up for Success

• Define Ideal Target Audience- You know where your best customers come from and their common characteristics. Sharing this information will make both your referral partner and you more successful. For instance, at my organization we want to engage with the head of HR at organizations with 500 or more employees that were in highly regulated industries such as healthcare or financial services.
• Develop an Elevator Speech- Help your referral position you appropriately. Develop and elevator speech (if you haven’t already) which piques the curiosity of your prospects and lets them know what you do and why you are different.
• Define the Meaning of a Qualified Lead- Everyone has a different definition of what a lead is, but it is important that you set the expectation of a quality lead so as not to waste your time or the referring party. “I met this woman that owns a business at a party the other night. You should call her.” That is not a qualified lead, but let’s look at an alternative. “I met this woman at a party the other night that owns an advertising agency. She has 200 employees and has been looking for a background screening provider. She asked me to connect you.”
• Develop Basic List of Questions to Establish a Qualified Lead- Create a short list of questions you can ask to qualify a lead and qualifications they must have. For instance, if Jim from accounting works for a five-person company and only hires a new employee every three years, that’s probably not going to be worth your time.
• Establish the Information You Need- At a minimum, you’ll want the prospect’s name, the company they work for, their email address and phone number and job title. It would also be helpful to know if the person is currently in the market for your services. Are they the decision maker? Etc.

Patience Not Needed

Unlike hiring, training and investing in a new sales representative, it doesn’t cost a great deal of money to get started and it won’t take long to know if your efforts are paying off. While it will take you some time to optimize this program, you can start realizing results immediately. And the great thing is that you are only paying out commissions and referral fees when your partner completes the task you have charged them with, whether that is driving more qualified leads and, or closing new business.

SalesGig Makes It Easy

By now, you’re probably chomping at the bit to get started and that’s where SalesGig comes in. They have a network of professional connectors across the country that are already selling into your target market. Just set up your free account, choose which professionals you want to work with and you’ve got a national sales force—without the overhead. Plus you’ll have all of the tools you need to track referrals and pay your connectors when they’ve successfully completed a task.

So, what’s stopping you? Let’s get out there and start driving revenue!

In my next post, we’ll analyze the best ways to train your outside sales force and how to keep them engaged.

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SalesGig creates seamless lead generation with limitless opportunities by connecting companies with referral partners.  Sign up today and get connected.

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