Target for Referral Riches
Sometimes when you change your traditional way of thinking, you’ll end up with astounding results.
May 30, 2013
Everybody loves referrals. Whenever I talk about the practice, in conversation or to an audience, almost everyone agrees that referrals bring with them a nearly 100 percent conversion rate, normally at full price or commission.
So, they’re popular, to be sure. But most believe that referrals just happen when they happen and that they’re out of the receiver’s control.
Or, is it possible to target for referrals?
Well, I’ve known one particular top-performing real estate professional for over 10 years now who conclusively proves yes. Back in 2001, he told me his total referrals for the year were 250, which is amazing in itself. But then, he informed me his target for the next year was 300. That really got my interest. He achieved that goal, and over the next few years I watched him go from 300 to 400, and then to more than 500 referrals a year.
So yes, it can be done. Instead of thinking that it is rather nice when a referral comes along, we can actually set a target for referrals each year.
So, let’s get started. The first step is to look back at your previously acquired listings and sales over the past year or two and to determine what percentage of them have been repeat or referral business.
Plot this number on a graph on your office wall. Next, calculate the percentage increase that you’ll need to take your referral business from where it is now to your goal. The top 10 percent of salespeople achieve around 65 percent repeat and referral business, so let’s use that as a benchmark. Think carefully as to whether, in this instance, your goal is a one-year target or perhaps an 18-month to 2-year target. Don’t set your target too high.
Now, put a system in place that will allow you to have a meaningful dialog with every client every 6 months. Ask if you can assist them in any way and offer them a helpful suggestion or information of some kind. Then, ask them if there is anyone they can refer and document that this has happened. Just the mere fact of doing this will generate business, purely by asking the right question at the right time.
Make it easy for former clients. When you just ask for “a referral,” people can be overwhelmed. They know so many people that it’s hard for them to get their heads around the question. So when you ask — either verbally or in writing — for a referral, break the request into bite-sized chunks:
- Business colleagues and contacts
- Social, sporting, and school contacts
By breaking it into these smaller groups, it’s much easier for them to put faces with names and you’ll find your response factor increases dramatically.
Now, ask yourself how often you could get a referral from each of your current clients. Would one per year be feasible? Don’t forget: You are now going to be in regular, meaningful contact with them. If that sounds right, you have just set a target of one referral per client per year.
Simple, isn’t it? If you have 300 clients, your referral target is 300, and with nearly 100 percent conversion, we know what that will do for your business. But let’s face it: If you achieve just a fraction of that target, you will be more than happy.
On a personal note: Less than two hours after I wrapped up this article, my wife and I received a delivery — it was a beautiful big flower arrangement and a lovely bottle of wine. It was a thank-you gift for a referral we had given to a local real estate agent who had previously sold an investment unit for us. My wife’s immediate reaction —“I’ll do referrals every month if I get flowers and wine!” And that, of course, is what it is all about.
But setting up a system for rewarding your clients — first for the actual referral and then when business is completed — is perhaps a topic for another time. In the meantime, good luck!