Referrals: A Business ToolYou are doing everything right. You placed advertising in key trade publications. Your literature is up to date. Your web site is optimized. Your sales force is trained and eager. But you may have overlooked a proven, powerful tool for acquiring new business - referrals.
Being a great supplier with superior products and services is not always enough to get a foot in the door at some prospective customers, let alone enough to get orders. At some prospects, (e.g., some automotive "transplants"), interpersonal relationships carry great weight when suppliers are selected. Cultivating those interpersonal relationships can take years. This is where referrals can help open doors. But getting those referrals and capitalizing on them requires a well thought out and well executed plan.
The most obvious place to look for referrals is within your existing customer base. If you have been doing a great job for them, they may not refer you to their competitors, but they should be more than happy to refer you to key contacts at their customers, or acquaintances at other non-competing companies.
Before you contact any referral, conduct some basic investigation about what competitive products or services they are currently using. Make sure that you can offer a tangible, measurable improvement. Be prepared to succinctly and persuasively state your benefit(s) to the potential customer. A referral may get you in the door, but your answer to the prospect's question: "Why should I change vendors?" is what will keep you there.
If you consider vendors as just a source for materials, components or other services, you could be missing a huge opportunity. Your vendors call on a wide range of companies. Because they do, they often can alert you to potential new customers who are dissatisfied with their current supplier, are expanding their operations or are developing new products. If you have developed a good relationship with your vendors, it is in their best interests to help you grow.
In certain situations, especially when a vendor has an established relationship with an "impenetrable" company such as some automotive transplants, you should consider offering that vendor the opportunity to become a manufacturer's rep. Obviously, this is a complex decision. But arriving at a mutually beneficial arrangement can take far less time and money than trying to develop a relationship on your own.
Often, the best way to get a referral is to give one. This strategy requires careful planning. Before you offer referrals in exchange for referrals, pre-qualify possible sources based on both the quality of the products and/or services they offer and their corporate culture. If a source is really good, and your referral helps them get business, everyone wins. Your relationship with both companies is strengthened. And both of them then become possible sources of high quality referrals.
The power of a referral lies in the relationship of trust that is built over time between two people representing two companies. That trust could be as simple as a history of on-time deliveries, including meeting those inevitable emergencies. Or it could be a complex relationship where the supplier's core competency is a vital part of the customer's business. Regardless of the complexity of the relationship, giving or receiving a referral is validation of trust - a powerful statement that your company, or the one you are recommending, offers high quality, predictable performance. And in today's highly competitive business environment, this can open a lot of doors.
Finally, are your employees an untapped resource? Every one of your employees is a potential door opener - if you ask them. While it sounds like a long shot, in reality every employee is a member of a wide relationship web of family and friends. To make use of this resource you need to make a specific request. Start by targeting key potential customers you can't seem to penetrate. Then ask your employees for help. The chances are excellent that you'll be pleasantly surprised at the results.