4 Eye-opening Referral Stats You Need to Know
Hey, everyone. I’m going to be talking about basically OPN and why you must be leveraging OPN in your sales business. Now, what’s OPN? OPN is Other People’s Networks. This is fundamentally about referrals but referrals come in two different types. One is from customers and the other is from third parties who have a large customer base similar to the type of people that you want to be doing business with as an example, people like accountants, real estate agents, lawyers. I’m not sure what your field is—maybe you sell plumbing and so in your life it would be builders. The bottom line is you need to have deliberate strategies around leveraging other people’s networks.
Now, why is this so important? Well, there’s a couple of reasons that are very, very clear from the data.
1. Influitive have got some great data around this and they’re saying that 84% of B2B transactions are actually preceded by a referral. Think that one through—that’s absolutely massive and it means a lot of the marketing goals out there are potentially being wasted and people should be spending more time and more money on leveraging these referral sources.
2. Now we know from the Northwest Insurance study that a referred lead is approximately four times more likely to turn into business 12 months from the referral compared to a cold marketing lead.
3. We also know that you’re 18% more likely to retain a customer that’s been referred. 18% might not sound like a lot but—
4. When you’ve got Bain & Company saying that 5% improvement in retention can generate up to 95% improvement in profits, then I’d rather have a bunch of referred clients that I’m trying to retain than cold called or lead generated clients I’m trying to retain.
The statistics are telling us this matters. But, it also matters because fundamentally from a wear and tear perspective as a salesperson, there’s a lot less wear and tear on you when you’re getting referred leads than when you’re having to chase them on your own or when you’re relying on cold marketing leads.
The 9P process which is what I go through in my How to Motivate Third Party Referrals program is all about putting some process and some science around the way that you’re attracting, generating, and creating referrals from these third parties. Now I see this mistake made so often. People go about and see an accountant or a lawyer or a real estate agent or somebody else that could be referring them leads and they’re so hellbent on talking about what they do and what they sell and what they want that the meeting generally isn’t experienced by the third party as a really valuable meeting.
Here’s a little tip for you: before you start talking about what you sell and how to position what you sell, spend some time asking them how are they generating marketing leads, how are they generating referrals, how would they like you to position them to other people out there in markets? You see that one of the Ps is basically Positioning and it’s very important that you help them position you, but I would suggest from a relationship perspective the first place you start is how would they like you to position them.
It’s a really simple tip but the whole 9P process is around about 70 different strategies you can employ and deploy in these engagements with third party referrers to make it significantly more likely that they’re going to be referring you. Here’s the bottom line. If you don’t have at least one strong third party relationship that’s sending you a consistent source of referred leads in your target market, you’re working way harder than you should be. If you don’t have a process for engaging them, onboarding them and then motivating them on an ongoing basis, there’s a very high probability that even if you do have these relationships in place, you’re not maximizing them.
The 9P process is a really powerful stuff and it’s all contained in my Motivating Third Party Referrals program so please make sure you check it out. But, please just whatever you do commit to OPN—Other People’s Networks is a critical part of your sales success.