Too many New Zealand businesses are losing a golden opportunity to attract more customers – and all because of a Kiwi cultural quirk. The opportunity in question is referrals, a powerful tool for companies seeking more business.

Research shows up to 70% of people looking for a new provider of goods or services will ask friends or colleagues to recommend someone. Such recommendations carry a lot of weight; so much so, some of the sales work is already done.

One US study of small businesses, for example, showed referrals were the second-best source of revenue, cited by 44% of respondents (No.1 was repeat business from existing customers).

However, New Zealand businesses have fallen well behind overseas companies who actively seek referrals as a key source of leads. ͞Whenever a customer thanks you, or pays a compliment, it’s an appropriate time to ask if they know anyone else who would benefit from what you do. But this sales approach is something Kiwis don’t do well compared with salespeople in the United States, for example, who, even if they don’t get a contract, will often still ask, because it’s drummed into them.

Kiwis typically find that uncomfortable. I think it’s a cultural thing; they think it’s a bit pushy and feel like it’s almost an imposition on the customer when, in fact, it might be the total opposite. ͞By that, I mean that the concept of reciprocity can come into play. If I’ve helped you out, most people would like the chance to repay the favour. So we could actually be making things better, not worse, for our customer by asking for a referral.

Customers who might have a good word to say about how a business treated them should be valued as an influential source of referrals. Such people will often respond positively to a follow-up inquiry, if approached in the right way.

Some questions could be:

  • Is there anyone else you think might be interested in what we offer?
  • Would you mind if I mentioned your name when I’m talking to others about our services?
  • Would you be happy to pass on my name to friends or colleagues that mention a need for what we do?

Referrals imply trustworthiness and credibility, because they are from clients or people who have direct experience with your work. A great way to receive more referrals is to provide more yourself. If you refer people to colleagues, customers and suppliers where you’ve had good experiences, there’s a good chance they’ll do the same to you when the opportunity arises (reciprocity again).

Business networking gatherings can provide a great opportunity to do this, but again, Kiwi reserve or shyness often kicks in. A lot of people find it very uncomfortable if they don’t know anyone and they don’t like to come into a group and say “Hi, I’m so-and-so and I’m from… But if you can break past that and engage in conversation where you show genuine interest in their business (i.e. you get them talking), you often hear about challenges they’re facing and you might be able to suggest someone who could help them with those challenges. It’s almost like being a business matchmaker.

Then they’ll often ask about you and your business and will be more inclined to refer you to someone who needs your services.

If the contact results in getting a name of a prospective customer, then the follow-up is on a different level than a cold call. ͞The referral takes it from a cold call to a warm call. It’s still not a hot prospect for a sale but it’s a warm lead and it’s taken far less money, time and energy to reach that stage than most cold calls.

The selling power of referrals and the desire to reciprocate is why businesses put up customer testimonials on their websites or in advertisements. For example, we received an email from the National Sales Manager of Masport, who had a salesperson undertake a recent training programme. He wrote “I have noticed a change in his behaviour already. When we did our pre-course task, he picked a soft target and sold the customer 3 items off a specials list to a value of approximately $1,100. On the Tuesday after the workshop, he took me to 3 of his toughest customers and sold 5 items to the value of $20,000 straight off the pricelist, with no hesitation and a lot of confidence. You can put that in your SUCCESS stories file if you like. It is certainly in mine!”

This is someone who has no vested interest, who is unbiased and credible, saying that their business results have improved as a direct result of what we have done for them. This is gold and the client offered this without even being asked, because they were helped – and the testimonial only cost a bit of their time.

People make business far more complicated than it needs to be. Selling is actually about helping people. So referrals are a great way to be able to do that.