How to Crack the Referral Code

How to Crack the Referral Code

Seemingly every sales person and insurance agent knows the importance of referrals for their business. However, when you ask the majority of people in sales and insurance, they openly admit they don’t receive as many referrals as they should or hope to receive. Is it that hard to ask for a referral? Why don’t people give more referrals? Is there a secret to receiving more referrals? I can’t say it is a secret, but there is a definite art to breaking the referral code. Let’s take a look at how to crack the referral code.

In order to crack the referral code, we need to consider human behavior. We are really not that complicated when you break us down to the lowest common denominator. The most basic human instinct is survival. We humans have to know that we are going to be alright. It is hard wired into our DNA that we survive. Understanding that fact is important to crack the referral code. Most sales people and insurance agents focus on their primal need of survival by asking for referrals. The client, prospect, or person giving the referral is focused on their survival as well, by thinking “what’s in it for me”. So when the sales person asks the referral question “who else do you know that may need my help”, they seem to get amnesia. Just can’t think of anyone to tell you. The reason is simply. Giving a referral benefits you, the sales person. There is no benefit to the client to give you anyone. Now some clever sales people may have a reward system in place like a gift card, discounted services or even a little kick back on commissions. But in most states depending on the industry, such as insurance, that is not a legal act. There is no value to give a sales person a referral in most cases.

The way to crack the code is to stop asking for referrals. WHAT? Yes, stop asking your client or prospect for referrals. Try playing to their primitive need by asking how you may further help them. The best way is by having a network of other business people to refer them to your clients and prospects by adding value to your network and adding value to your client by helping them with our issues. For example, you sell them a life insurance policy and notice they need some minor home repairs. Instead of self-focusing and asking for referrals, you tell them about a great affordable handyman you are connected to that can make those repairs quickly and affordably. Now you have helped them by adding value, you helped your friend, the handyman, pick up some new business as well. Now you have two people sort of indebted to you, that feel obligated to send you a referral and you never had to ask. Instead, “they ask how can I repay you”, the sales person? There is an organization built off of this premise named BNI and the concept is “Givers Gain”. If I help you grow your business or help you find a solution to your need, you will want to return that favor.

You must build a networking system with other business people you know, like and trust. You need those connections to be an added value to your clients and future prospects. The important thing to remember when networking this way is to have a credible network. You give a piece of your own reputation away with every referral you give. You must work at your network to be sure that credibility is always intact. Now that you know how to crack the referral code, get busy building your network.

“Referrals aren’t given easily. If you don’t take the time to establish credibility, you’re not going to get the referral. People have to get to know you. They have to feel comfortable with who you are and what you do.”—Dr. Ivan Misner

 Image by Stuart Miles at www.freedigitalphotos.net


Tim Wilhoit is owner/principal of Your Friend 4 Life Insurance Agency in Nashville, TN. He is a family man, father of 3, entrepreneur, insurance agent, life insurance broker, salesman, sales trainer, recruiter, public speaker, blogger and team leader with over 28 years of experience in sales and marketing in the insurance and beverage industries.

11 Responses to How to Crack the Referral Code

  • Tim,
    Please do me a favor.
    email me this article to me. I’d like to share this with some agents here in town.
    Good article.
    my address is on linkedin.

  • Great article! Thank you for posting.

  • If someone wants to crack the referral code, have them read my book, The Mindset of Networking. It is the proven process for formal and disciplined networking. It’s all about the successful tactics and strategies that made me and the members of Southeast Business Forums successful. It’s not rocket science but in many cases, plain old common sense

  • Stewart, the older I get the more I realize “common sense” just isn’t that common anymore. Thank you for sharing.

  • I agree. Thanks.

  • Well written Tim and it does work. Becoming the resource center is rewarding in many ways.

  • Edward, I could not agree more. Thank you for your kind words.

  • Thanks for the post. You have a lot of knowledge and I look forward to learning as much as I can from you.

  • Thank you for the kind words Rebecca. I look forward to it.

  • Great article Tim! I especially like the part that said “Stop asking for referrals” That statement was shocking and very profound. As I continued reading, it made complete sense where you were taking this. I am most definitely going to share this piece with my agents.

  • Cathy, thank you for your kind words and I am grateful for you sharing my article. I hope it helps!

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