A Strategy for Referrals Pays Big Dividends

June 1, 2008

By David J. Lill, Ph.D. and Jennifer K. Lill

Location, location, location - three critical words in real estate! But there are three other words that perhaps are even more important: referrals, referrals, referrals. There is no more valuable source for clients than that of asking for referrals -- the real estate agent's lifeblood. The use of referrals is one of the most powerful but underutilized prospecting techniques. Agents are told countless times in continuous education classes and training to employ this effective tool. But when it comes right down to it, they often neglect this essential step in the selling process.


So what exactly is a referral? A referral is a name given to you by a customer, friend or someone else who feels good about you and the services you offer. Referrals generally provide qualified prospects that have a need for your services, the authority to make the purchasing decision, and the ability to pay or obtain financing. The factor that makes this prospecting method so valuable is its leverage. Until the proper time to use that leverage arrives, a referral is just a lead like any other. When you have qualified a referred lead by securing all the information needed to show that this person fits the pattern of prospects you call upon, you are ready to use this valuable leverage. Those who provide referrals should be willing either to make an initial contact for you or at least allow you to use their names. Referrals work because people are naturally fearful or skeptical of strangers; especially those who seem too pushy. People trust you to help them buy a home or sell their home more readily if someone they know and respect has sent you to see them. Referrals come from everywhere! Referrals can come to you through a customer, friend, or even a prospect that did not buy (they were "just looking") but felt good about you and the services you provided them.

Gain More Referred Leads

Many agents have fewer referrals because they don't ask, or perhaps because they don't know how to ask. The fear of rejection is probably the main reason people avoid asking for referrals. One way to overcome the fear of rejection is to make asking for referrals an integral part of the sales process with your clients. When you believe in the services you provide to both buyers and sellers, you should feel that you are doing your clients and prospects a favor. So rather than feel apologetic about asking for referrals, remind yourself that you are simply offering your customers the opportunity to do their friends and colleagues the favor of introducing them to you. Why don't agents get more referrals? There are two reasons why people do not immediately give you referrals. The first is that they may find it difficult to think of names to give you. Basically, they just do not want to exert the mental effort to decide who might be interested in your services. Help clients focus on the qualities you would like to find in a prospect.

"I'd rather be a master prospector than be a wizard of speech and have no one to tell my story to."

Some general questions are: "Do you have any friends or co-workers who are relocating to or from the area?", "Have any of your neighbors recently gotten married?", "Have any of your clients or colleagues had a recent addition to the family?", and "You mentioned your brothers and sisters. Where do they live?" Design other questions applicable to specific clients given what you know about their unique situations. The second reason why people do not give you names is that they consider themselves "conscientious objectors" - they claim they just do not give referrals. So ask for their help in this way. Soften them up by saying, "I am trying to build my business and I would value and appreciate your help." Then go on to ask for a referral from another point of view that makes the client feel comfortable about giving you names.

What to Ask

The principal thing you ask for in a referral is for them to make it easy for you to contact a new prospect. The variable in each situation is how much contact should be made. What to ask for depends upon your client's need for control of the situation. ▪ Some customers want to handle the communications themselves. ▪ Others want minimal involvement. They prefer you initiate the contact for them. ▪ Still others may have very specific instructions on what they want you to do or say with their referrals. The best way to find out how much control your client wishes to have is to simply ask by using an alternate of choice question: "Would you prefer that I call Mr. Evans, or would you want to personally call and talk to him on my behalf?" Here is a sample statement that can be used to make your client feel comfortable about giving you names: "I'm not asking you to recommend me or my services, I am merely asking you to give me an introduction to some people you know. I will talk with them, as I have with you, in a professional manner and give them the opportunity to learn about me, my company and the services we offer." How do agents recognize referrals? Much of the time, clients will reveal leads in their everyday conversation with you as you are out showing properties or even while you're waiting at a closing. Watch for trigger comments like, "My sister and her husband are moving here next month." Or it might be a client who says, "Our son's entire company is relocating to the area." In both cases, it is easy to recognize the potential for obtaining qualified prospects. How can you be more effective in gaining referrals? You may want to design a form to record important information provided to you by your referrals. These can be formally printed cards or just a form you fill out from verbal reporting. When you can't get the referral source to contact the prospect directly for you, ask the person to sign a simple introduction card or even the back of your own business card. Remember that without the referral source's open support, you really have just a name, not really a referral.

A Practical Example

Here's a great way to ask for referrals that really takes the pressure off the asking process. "If you feel that I did a great job, please don't keep me a secret," says Linda Carter of Pride Homes Realty in Nashville, Tennessee. She likes this statement because it is informal, low-pressure, and it even gets a smile most of the time. Linda also likes to use this phrase: "The best thank you is referring someone you know." This is good to use after a successful close when clients are their most grateful. She just helped them buy their dream home, or perhaps sold their home just in time for them to make their big move to a new job. Not only would they not mind giving Linda referrals, they are actually happy to do so.

"The single most important ingredient in the formula for success is knowing how to deal with people."

At times, however, even after several attempts, a customer may still not be responsive in providing referrals. You've done a good job and they are pleased with the results. But when you ask for referrals, they seem to hesitate. These types of customers are rare, but they do exist. The best way to handle them is with a response like this: "I completely understand. I am just pleased we were able to find you exactly what you were looking for--and we even trimmed the closing costs! Well, I am always looking for other great people to help, so just keep me in mind!" Give them some of your business cards, but don't be pushy. If you truly did a good job, your name will come into their minds the next time a friend mentions they are looking to buy or sell. You want to be graciously tenacious without being obnoxious.

When to Ask

Ultimately, the best way to get referrals is to do a phenomenal job for your clients. If you work hard for them, they won't hesitate to speak your praises to others. Make asking for referrals a part of the sales cycle. The best time to ask for referrals is usually right after the close. A satisfied client -- one for whom the process has run as smoothly as possible and is pleased with the end result -- is likely to feel good about giving you names. Sometimes, however, the new home-owner wants to live there for a time before giving referrals. This is good. Overly aggressive agents go after referrals at the wrong time. They start asking for them before the ink on the contract is dry. You can't ask for referrals; you must earn them. The best referrals come from satisfaction, not a signature. One last piece of advice! Remember the Golden Rule. If you have established a good relationship with your client and you feel that his line of business could benefit other people you know, then tell the appropriate people within your own customer base and your personal friends. This type of value-added thoughtfulness will make you stand out even further and enhance your client's loyalty to you.

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About the Authors:

David J. Lill, PhD

David has a combined 30 years of professional sales, sales training and teaching experience. Dr. Lill is a business consultant specializing in sales, advertising and communications skills development. He is the co-author, publisher and marketer of Selling: The Profession, now in its 5th edition. His relationship selling model is being successfully used by companies throughout the country in a wide variety of industries including real estate, hospitality, telecommunications, banking, insurance, chemical and automotive.

Jennifer K. Lill

Jennifer comes from a background of sales, authorship and entrepreneurship. She has co-authored three books with Dr. Lill. In addition, she was president and co-founder of the Tom Black Center for Selling Inc., located in Nashville. The company was formed as a conduit for national sales training and publisher of business training products. Jennifer is also a free-lance author (ghost writer) and business consultant. One of her projects ended up on the New York Times best-seller list and she is currently working on two more book projects