How many times have you been told in business or by your superiors to get out and network? 

The suggestion is, the more people you meet, the higher your chances of pulling in new customers and growing your business. But this rarely works in reality. 

There’s no shortage of business networking events and meet-and-greet groups, but all that seems to happen is an attendee takes your business card and teases you with a promise to refer you to somebody in their network that might need what you do.

Apart from a dodgy sales email months later, did you ever hear from that person again? Probably not. 

And if you meet, the conversation often becomes one-sided, and you spend the next hour listening to how good the person you invited for coffee is (according to them, of course). 

These situations are all too familiar and it’s no wonder that referral partnerships (or strategic alliances) have an up to 70% chance of failing. There are many reasons why referrals don’t blossom, and some common ones include:  

1. Not dealing with the right referral partner, to begin with.
2. You didn’t see the signs that the person you’re dealing with was ‘all talk, no action.’
3. No clear agenda was set to guide your referral relationship from the outset.

That’s why you need to have a proven system to separate the ‘wheat from the chaff’ and start by creating a value-driven referral partnership.

What is a referral partnership (or strategic alliance)?

A referral partnership or strategic alliance is when two (or more) businesses or individuals enter into an arrangement to mutually benefit each other by referring potential customers to the other when a need has been identified within somebody’s network. 

The reasons for developing a referral partnership vary and can include the opportunity to enter into an emerging market, increase the value of a product or service, gain an edge over competitors, or simply build a consistent funnel of new leads flowing into a business. 

As an example, an accounting firm might look to bookkeepers and financial planners to form referral partnerships. Macquarie’s 2015/16 AFS Benchmarking Report states, “44% of accounting and financial services practices believe increasing referral partner activity is an effective strategy to improve profitability.”

How to develop the skills to build strategic referral partnerships

With a decent percentage of accounting and financial services believing referral partnerships are important, why is there such a high failure rate? 

Chances are, it’s the process (or lack of it) leading into and during the referral building stage that’s contributing to up to 70% of wasted opportunities. 

As Facebook founder and CEO once said, nothing influences people more than a recommendation from a trusted friend (or referral). That’s why turning your referrals into intentional relationships is paramount to your success in business. 

So, before you being just randomly sipping lattes with a new referral ‘prospect’ each week, make sure you have a process in place first: 

1. Review and assess each referral prospect 

If time is money, you’re wasting on including people within your referral partnerships if they don’t have a strong network they can refer you to. To find out, you need to ask them: 

• What industries do most of their network come from? 

If you’re an Accountant and most of their network are Accountants, it’s going to have limited results. 

• Are the people within their network predominantly decision-makers in the business they work for/with? 

It would help if you got in front of the right people who were prepared to take action.

• How many businesses do your referral prospect refer work to? 

While there are no right or wrong answers here, you at least need to know and make a judgment if their answer will work in your favour. Referring to lots of other businesses might indicate your referral prospect is either good at what they do or untargeted in firing off referrals. 

2. Concisely understand your referral prospect 

As mentioned earlier, referral partnerships can become lopsided if it’s not “give and take.” Nobody wants to deal with somebody who abuses the arrangement without reciprocating. 

If they’re making 60% of the effort and you’re only putting in 40% (or vise versa), the partnership is doomed to fail. 

That’s why you need to understand your referral prospect first to build a relationship that benefits both parties. 

The best way to do this is to pepper them with questions politely: 

• Who are they, and what drew them to their business/career? 
• What product or service do they offer? 
• What problem does it solve? 
• How can they prove it? 
• Who are they looking to connect with? 
• Have they had referral relationships that didn’t work. If so, why didn’t they work?

While these three steps take the fun out of meeting for a piccolo and almond croissant, it will be the difference between a consistent and successful referral partnership or one that fails to deliver results.  

But a referral partnership is only as good as your ability to convert referrals into customers. 

3. Explain what you can offer (and point out your unique selling point) 

How many times have you run into somebody in business that does the same thing as somebody else? Chances are, your potential referral partner will think the same. 

Early on, they don’t know why you’re different (and probably don’t care) unless you educate them. Don’t just fall back on the “I’m professional and passionate about what I do” line and hope for the best. 

Business success sometimes comes down to being memorable, so make sure your referral prospect leaves with a compelling reason to remember you and a willingness to refer you on. 

Don’t be egotistical about your successes, but make sure your value and point of difference is understood. 

Implementing a sales framework to turn leads into customers 

If you have a solution to market demand and you’re an honest person to deal with, your referral partners will refer leads to you. 

But the breakdown is often caused by an inability to ‘sell’ your solution to a lead who, while being referred by someone they trust, still isn’t completely convinced of you just yet.  

If your initial meeting lacks structure or you can’t convert, word will circulate back to your referral partner, and they will be less likely to funnel you leads – they don’t want to burn their network after all. 

That’s why having a proven and easy to follow sales framework in place is vital to ensure leads drop into your sales pipe (not off the face of the earth). 

What is a sales process? 

A sales process is simply a system of repeatable steps that guide a lead into a potential buyer and then a loyal customer. 

Research by the Sales Management Association concluded that 90% of all companies that use a formal, guided sales process were ranked as the highest performing and also enable sales teams (or individuals) to be top performers. 

7 key elements to a sales framework

Generally, six steps need to be followed when executing a sales framework to drive growth: 

1. Identifying prospects 

When working with a referral partner, referrals should just come through without much effort on your behalf. But that doesn’t mean you can chalk-up the win. 

Now more than ever, potential leads are doing their due diligence on you (whether they have been referred or not), and will be judging you against others who offer a similar solution. 

It would help if you investigated who they are and know how you can benefit them and use it when in conversation. Throwing in casual comments directly relevant to their situation shows you’re already invested in their journey. 

2. Prequalify your prospect and book in your meeting

There’s no point conducting a lead or sales meeting with somebody who is simply window shopping of fishing for information. 

That’s why you need to pre-qualify your prospects and assess whether they are an ideal customer at the beginning before locking in a meeting with them. 

While business is much more than just making money, as a business owner or sales manager, there’s nothing more annoying or counterproductive than investing your time, energy and resources into people who will never buy from you anyway.

Be excited by genuine leads and respectfully decline those that are not. 

3. Start your appointment by establishing rapport, setting an agenda and positioning the sale

Just like an athlete before a race, you need to be calm and focused heading into a sales meeting. Take at least 10 minutes beforehand to ground your emotional state and boost your energy so you can confidently work towards a successful outcome. 

In the meeting, make sure you build rapport by asking your potential customer warm questions and create a friendly environment (but not too casual) so your prospect feels at ease. 

Find some common ground and use it to your advantage:

• Do you know what football team they support? 
• Do they have kids? 
• Have they just come back from a holiday? 

Aside from asking questions (and genuinely taking an interest), you can also connect through body language and tonality too. 

A good sales meeting requires more than just polite questions, it needs an agenda to guide the sales meeting. By setting an agenda and adhering to it, all parties know what to expect and it allows your prospect to feel comfortable talking about their motivations for being in the meeting and will give you a clear indication of what they want to achieve. 

Finally, you need to position the sale to identify if your business is pre-sold (i.e. your prospect is ready to buy right now) or not pre-sold (i.e. they still need more convincing). This will flag how much credibility you need to build to influence the sale by reducing buyer resistance. 

4. Listen and diagnose their pain points 

Nobody wants to be spoken over or be sold to. That’s why when it comes to a sales framework, one of the best practices is to listen to what your potential customer is telling you. 

If you allow them to talk, they will mention what pain point/s they’re currently experiencing that you have a solution for. Ask lots of open ended questions here to understand what their current situation is and what their desired state they want to achieve looks like. What is getting in their way?

5. Present your value/solution  

Once you know your potential customer’s problem, you can subtly introduce the value you can add to their circumstance by explaining your solution. 

Don’t just go for the hard sell here. Make sure you use (i.e., refer to) what you’ve learnt from your potential customer until this point when presenting your solution. You want to take your prospect on a journey that engages their thinking and feeling.

Focus on things like: 

• Using visuals to get your message across and engage them in the process
• Examples from working with other customers on a similar problem 
• How your solution will benefit your potential customer (i.e., will save them 15 hours per week or $20,000 per year).
•  Outline your service offering and how you work with clients

6. Clarify your offer 

Now it’s time to discuss the next steps in your customer engagement process and how it works. 

It’s important to be transparent around your pricing and payment terms. It’s also a good idea to be ready to handle objections confidently on things like: 

• Costs
• The implementation of your solution 
• Delivery timelines
• Increases to your prospects workload (if any)  

The better equipped you are to counteract objections, the higher the chance of a successful sale. 

7. Gain commitments  

Now that you’ve handled any objections like a boss, you need to close out the sale (i.e., sign the agreements, pay the fee to proceed etc.) and inform your new customer what to expect from you moving forward (there are a number of techniques to ensure gaining a seamless commitment and we’ll explain them in a future blog). 

As a customer, there’s nothing worse than parting with your money only to have the company/business you gave it to go missing in action. Make sure your new customer is stepped through the next stages of the solution you will provide for them. 

With the emergence of digital marketing and people spending more time online, the importance of having solid referral partners can get overlooked in business.   

But that’s doing a disservice to your operation – people still trust people, and a referral from somebody you respect speaks volumes. 

The challenge is finding the right referral partners who can help organically grow your business (and allow you to help grow theirs). 

Over the last 20 years, we’ve been developing and implementing referral partnerships and sales frameworks that are proven to work. 

So, if you want to learn how referral partnerships can deliver consistent and profitable customers and grow your company, please get in touch.