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Sales Psychology: Why referrals are all you’ll ever need

I’m approaching selling from a different angle today, but before we begin make sure you get in on my crazy-cool contest. You could win a whole month of one-on-one with me, two hours with James Chartrand of Men with Pens and a free copy of my fear-smashing ebook, Demystify your Fear.

In other words, absolutely everything you need for your sales to blast to the next level. Get contest details here.

No matter what kind of business you own, if referrals aren’t already a big part of your sales strategy then you’re missing out.

When most people hear about affiliates, recommendations and referrals, their first thought is referrals as source of new customers. This is a big part of it, for sure. When people start talking about your business and send their friends and family to buy your product, you know you’ve made it big.

However, referrals go way beyond basic sales. The power of referrals affects your business in more ways than you can imagine.

I use an RSS reader to keep track of the blogs that I like to keep up with. The more I hang out online, the more I discover. These days, the little counter of “unread posts” numbers in the hundreds. Unfortunately, I’ve forced to hit the “mark all as read” button to resent the counter pretty regularly.

However, while I’m busy ignoring the blogs I know and love, I’m still reading a bunch of stuff, every day.


I’m a sucker for links on twitter

When someone I know and trust tweets the occasional link, coupled with a few compelling words, I almost always click. I ignore my RSS reader and all the blogs I personally selected as “favorites”, instead choosing to go read the recommendations of others.

Stop and think about that for a second. The power of referrals has literally ensnared my attention and my reading habits.

Think about the last few movies you went out of your way to see at the cinema. If you’re like most people, you would have done so not because of the trailer or posters you saw. You wouldn’t even see it because of a review. You saw it because one of your buddies uttered these golden words “you have to see this movie”.

When someone tells you “you have to”… then you’ve got no choice

You trust the people you know. You value their opinions. That is the power of referrals. It’s not just about referring people into business deals. Here is how the power of referrals is affecting your business:

  • Referrals make people check out your website/blog posts
  • Referrals land you with the best staff you’ll ever find
  • Referrals score you partnerships and joint ventures with folks who matter
  • Referrals hook you up with coverage in the media
  • Referrals are the reason we follow you on twitter
  • Referrals have been helping ideas go “viral” since before it was a buzzword

Word-of-mouth isn’t just a marketing strategy, it’s the backbone of all sales. No matter what your goals are as an entrepreneur, your business lives (and dies) by the power of referrals. Build a business that spouts out referrals like it’s going out of style and you’ll be made.

I built a private therapy practice and a corporate business psychology consultancy with nothing but the power of referrals. The first client the practice ever worked with was a friend of a friend. When he loved my work, he sent a few people my way. Things spiraled out from there and soon enough, I was booked solid.

During that time, I learned that there are three golden rules for getting boat loads of referrals.

You’ll spot salespeople violating these rules and making big mistakes in every industry. At best, it means they’ll be ignored and forgotten – at worst, they come across as total assholes. Follow these rules and you’ll fast track your referrals and sell up a storm!

Don’t be desperate – Golden Rule Principal #1

Most salespeople think they act like pros when it comes to networking. They believe they don’t come across as desperate and needy. Yet time and time again, they make the mistake of only networking when they need something.

They only get in touch when they’re after a favor, want a testimonial or need a new client. A needy salesperson can be smelled a mile away.

When you network, connect and make friends just for the fun of it, you’re building crucial relationships before you need to leverage them. You come across as a giving person, with an abundance of time, expertise (and coffee) to give to friends, colleagues and customers.

Stay in touch and build connections in advance. Network without an expectation to “get something” – do it because it’s fun. It is fun… and rewarding.

Follow this golden rule and when the time comes that you need something, you’ll find an abundance of people waiting to help. Get to know them, now.

Don’t be a jerk – Golden Rule Principal #2

Even if you don’t think you’re a big shot or that your recommendations matter, they really do. They matter hugely.

We’ve all got the power to refer and we all have people who take our opinions and advice seriously. Most of us get caught up in our own goals and forgot what our referrals mean to others.

When you connect a friend with something they need or simply love, everyone wins and they appreciate you for it.

If you’re looking to do something significant with your business and you want referrals, you need to get karma on your side. Have a look around the people you know and see who you can help.

Who could you connect?

Is there anyone you know who would be just right for a certain product, service or job opportunity?

Even emailing a friend a poignant, relevant article from your favorite blog is hugely useful. They’ll appreciate you for it.

I referred a friend for a job at a client’s company. Years later, that friend got promoted, got a budget and hired me to consult on a lucrative project. You never know who might be important one day, so play it safe and help out everyone you can. Learn to enjoy the process too – even if my friend had never paid me back directly, I would still be just as happy they got a great job.

It doesn’t matter if you believe in karma, “doing unto others” or nothing at all. When you give referrals, good stuff happens.

Hook up as many people as you can with ideas, opportunities and things they want, need or love and do it without expectations. It’ll pay dividends in more ways than you can imagine.

Sell something worth talking about – Golden Rule Principal #3


People far smarter than me have great ideas about how to building remarkable products. I’ve included this last golden rule because failing to follow it will completely negate the effects of rules one and two.

I think it’s important, as we progress through this Sales Psychology series, that we keep things in perspective. At the end of the day, it isn’t clever referral tactics that matter…

If you want people to refer their friends to buy your stuff, go do something so unbelievably cool that people can’t help but talk about it.

Follow the three golden rules and you’ll win big sales.  Referrals are all you’ll ever need.

What do you think? Any great ideas for eliciting quality referrals from people? Speak up in the comments.


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  1. It’s so funny, I have a pretty decent readership on my blog and few thousand Twitter followers – but very few of them are my actual clients. Since I do social media consulting, they pretty much know most of what I can teach them. But because I respond to EVERY comment and @ reply, email them links and generally make friends with them, 100% of my referrals comes from Twitter followers are blog readers. It’s pretty amazing! So what you say about making friends now is incredibly important. Your headline is also true – referrals ARE all you’ll ever need.

    I’ve found that a good way to get referrals is to simply ask. Sometimes we don’t think to recommend someone unless a friend or colleague has asked specifically. A few months ago I got an email from Laura Roeder – another SM consultant. She just emailed her list and said, “If you know of any places that are looking for a speaker, send them my way. I can talk to them about topics x, y and z.” It’s funny because I never would have thought to refer her as a speaker. Sometimes you just need to put it out there!

    Dave Navarro talks about this a lot – how if you want people to retweet something or email it tot their friends, just ask them!

    As usual Peter, this was a kick ass post. Keep it up!

    1. Hey Marian, great observations. I think the same *may* be true of my blog readers – so far, the people who have purchased my online services are not active commenters, that I know.

      Some customers I know have come from guest posts I’ve had around the place. Is that the virtual equivalent of a referral perhaps?

      Hehe, now you’ve got me thinking!

      1. It’s an interesting thing. I’ve found that 99% of all my customers (from all my sites) have never commented on anything. I never even knew they existed until they made a purchase.

        I’ve definitely found this to be true with consulting, which fascinates me. There are outspoken fans and then there are customers (whom you hopefully will turn into outspoken fans) – you need both.

    2. I agree Marian that it’s important to ask for referrals.

      Is it worth it to give customers something that can remind them to make the referral and give the prospect enough info to find you (business cards & SWAG for example)?

  2. I just had a mini-epiphany about this not long ago; that most online businesses have more word of mouth customers than anything else. And when I say most, I mean the one man shops and so on.

    What this made me realize is that building up your thing takes a few years. The good thing is that I like to surprise people and give more than they expect. It’s a lot of fun.

    One good thing I’ve done recently is give away a bunch of consulting packages. I got new readers, people loved it, and I learned a lot from what people need.

  3. “Don’t be desperate” because that’s one emotion that comes across loud and clear on the internet whether you intend it to or not!

    This all works in reverse too – mess these three rules up and you’ll be referred alright… and it won’t be good.

    So, if referrals are all you’ll ever need, why do we need to do all the other marketing stuff?

    1. Hehehe, DAMN I just knew someone was going to call me out on the headline.

      My answer is simple: Refferals create momentum, marketing creates acceleration. It all depends on how fast you want to go. 😉

  4. Peter – I found your blog having listened to the interview on Blogcastfm.

    John Jantsch has a great book “The Referral Engine” with practical tips on how to get your customers to do your best marketing for you. He talks about 6 “realities” that can be used in planning a business marketing system to use the human desire to share and receive “tips”:

    1. People make referrals because they need to. We are wired this way. Builds social capital.
    2. Referral is a big risk- loaning trust to your organisation. More important with doctor or lawyer than with restaurant. Reduce risk through consistency.
    3. Nobody talks about boring businesses. Will they talk about it at a party or over lunch? What is unique?
    4. Consistency builds trust. Steps: Know a person -> Like the person -> Trust the person.
    5. Marketing is a system. Digital interactivity is at the center of marketing. Not alone, but not to be avoided. The marketing concept of the customer funnel is broken and needs replacement.

    This is an interesting theme – that goes to a broader concept around passionate authenticity – I will take some time and put a fuller post together on my blog that gives you the thought out response that your fine post deserves 😉

  5. A referral worked for me.

    Doc Sulu recommended one of your articles, I read it, downloaded Seek and Destroy, bought Demystifying Your Fears, and I’ve been following your blog ever since.

    That wouldn’t have happened without consistently good, entertaining information.

    Thanks a bunch 🙂

      1. It was also through a referral, sort of, that I came to know about you.

        For me it was a guest post that you did on Jonathan Field’s blog when he was off to Bali. That way, a guest post can also be seen as a referral from the principal writer (no mixing up principle and principal, see) to his/her readers about the guest blogger- this writer is good and I trust him/her to deliver great content.

        Which reminds me, Jon Morrow over at Guestblogging has some pretty cool tips on guest blogging. You guys should totally check him out (and bang, there goes a referral. I am getting your point Peter)

  6. I have read three of your posts and you consistently write “principal” instead of “principle.” I find this sloppiness among a lot of marketing gurus. Could you please make an effort to put a little more care into your writing? It might help you pull in more readers.

  7. Joe Girard the Guinness World Record holder as “The greatest salesman” built his entire car sales career on referrals. As you mentioned it really comes down to helping people. Doing unto others is how way we should live our lives on a daily basis. Good post Peter!

    Even if you do write “principal”, we still enjoy it.

    1. As the principal writer here, I believe in the principle of good spelling for sure!


      But see, I can’t correct it now – it’ll destroy the contextual meaning of our glorious comment section!!

  8. One way I have gotten referrals is by sending follow up emails with a reference to something that was said in a conversation with someone. Usually I will also mention that I am trying to talk to more people, and often the person I just got off the phone with is happy to give me an introduction to someone new.

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  10. I posted an article on my blog a few weeks ago on “Why Word Of Mouth Isn’t Enough“… and yet I believe we’re in solid agreement, in spite of your seemingly contradictory comment that “Referrals are all you’ll ever need”. Some people like to use statements like that to justify failing to do all the OTHER things you need to do in your marketing. It takes synergy among your marketing initiatives to reassure the people who have been referred that they got a GOOD referral.

    I’m very comfortable tweeting links to this site, for example, because you are intelligent and responsive, your writing is excellent, your ideas are helpful, and the site is so professionally and attractively presented that anyone clicking through is going to be immediately reassured that I haven’t steered them wrong. That’s the type of marketing synergy I spoke of in my article – no one strategy stands entirely alone.

    1. Karilee, you make a really good point. If I’m totally honest with myself, I’m very aware that I can be highly idealistic about different psychology/sales philosophies. The truth is that you’re spot on – every thing else is important too.

      Writing sensational headlines is a big part of marketing too! 😛

  11. My husband and I have been following this series of posts with great interest. He is a Condo Property Manager/Engineer and I am an artist. All your articles so far have been extremely relevant and useful to us. This one struck me as perhaps the best one yet because it applies to how we are trying to sell ourselves and our products despite the vast difference between the two. We both create stuff, in my case obviously – art, and in my husband’s – better ways and means to manage properties through managing the information and making it accessible through online portals.

    I have been tweeting them to my Twitter followers, who are largely artists, because they speak to us as a group who all too often have a hard time with sales and marketing! After all we’d rather paint than sell paintings or tutorials on painting techniques.
    I agree with your premise that building connections by ‘giving’ and sharing is really important and every time I find myself thinking I’m wasting time on art forums like Red Bubble, Flickr, PainterTalk etc. and on Twitter I have to remind myself that , that’s what I’m doing ‘building connections’ and getting my art out there to be seen. Besides I really do enjoy the people I meet and the ‘art’ I see doing this!

    Thanks for this great series…keep them coming, we’re learning lots!

    1. Hey Joan! Thanks for taking the time to join the discussion and share your feedback. I appreciate the kind words – it’s great to know that you’re getting practical value from my work here. 🙂

  12. Hey Peter,

    “Referrals are all you’ll ever need” Good to know!

    I couldn’t help but think as I read through the post … “It’s personal”. If you touch a person, personally, referrals will come. Business is personal.

  13. I have to agree with some of the other commenters, this is my favorite post of the series so far. I really liked the example about how you helped a friend get a job and later when he received a promotion he helped you get work.

    I have tried to add incentives to referrals in the past: “Refer me a client and I will give you 20% of what I make”. However, I don’t think that works. People would only think to refer to get 20% (if they refer at all), and it will come out hollow when they are in the process. I actually had a friend of mine refer someone to me and when I gave him his 20% he was surprised and wasn’t expecting it at all. Moral of the story: friendships > incentives 🙂


    1. There can be issues there though, depending on the industry that you’re in. I know when I started coaching ‘everyone was pushing the “refer someone and get a free session or $X”. Then someone realised that it was actually a breach of confidentiality to have to say “So-and-so hired me, here’s your referral payment”.

      Referrals can be difficult to track, it can be hard to get someone to remember where they heard of you, and/or remember to tell you.

      Mind you, affiliate marketing is a form of referral marketing, and that’s a huge part of what makes it so powerful.

      Just look at this Sales Psychology Marketing Series – the amazing James from Men with Pens is supporting and promoting Peter. A lot of people land here because they know and trust James. If he says someone is good then they trust his judgement and his recommendation and therefore trust Peter.

    2. The best, most effective type of referrals happen when businesses focus on innovation to such an extent that their products and services become so phenomenally game-changing that people WANT to talk about them.

      This is something Seth Godin talks about all the time – his book Purple Cows is all about it.

      The entire movie industry is pretty much built on this – it is word of mouth that ensure the long term success of a blockbuster tentpole…. that and millions of dollars of clever marketing designed to accelerate the word of mouth effect.

      However, advertising aside, when I think about the 6 or so films I’ve gone out of my way to see at the cinema…. every. single. one. was referred to me by a close friend.

      That is powerful.

  14. I think the Referral Engine positions referrals best for me (albeit in a much longer form) because it clarified that you have to be remarkable to be referrable. Which is the ultimate aim of all marketing, no?

  15. Okay cool. I’ve been doing this. I found that when people ask questions from me based on information posted on my blog that it activates me and makes me want to give them all the information I’ve got on the subject. Or research if I don’t know the answer yet.

    I definitely have to remind myself that telling someone about a product or service might not make them buy now, but introduces them to the idea of buying it. When they are ready, they will remember and come back to buy.

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