Cognitive Bias 12 out of 25: Excessive Self Regard Tendency
Referrals feed on pride. Self regard or pride is one of the more powerful emotions that humans face every day. It’s powerful enough to make any person into an unmovable stubborn force. Humans experience pride daily because people are more likely to overestimate their abilities, possessions, decisions, family, limits, etc. I guess that’s why it’s considered one of the 7 deadly sins… Pride is seen as a tricky emotion that most people typically avoid but I believe in embracing it.
Referrals are the most neglected part of most businesses and salespeople. This is due in part because businesses and salespeople don’t see the value in them. That’s because they aren’t trained properly on them, don’t see the value in them, know they take time, and extra work. While this is true the outcome of a powerful referral program can be very rewarding.
Pride drives referrals. People are extremely prideful of their decisions. Think about it, why would you ever make a buying decision that you wouldn’t be proud of? The answer’s that you would never do such a thing. If you do that’s called buyer’s remorse and then you just returned whatever you purchased.
The best part about the pride is that customers will go above and beyond to sell their friends, family, and colleagues on why they should make the sames decision. One, they don’t want to be wrong. Two, if they do get someone to make the same decision it reinforces their own pride and confidence. It’s like a perpetuating circle of pride… it’s no longer the circle of life but the circle of pride.
Here are a couple fun facts of why you should believe in referrals:
- “83% of consumers are willing to refer after a positive experience—yet only 29% actually do.” – Texas Tech University Study
- “People are 4 times more likely to buy when referred by a friend.” – Nielsen
- “92% of respondents trusted referrals from people they knew.” – Nielsen
- “Offering a reward increases referral likelihood, but the size of the reward does not matter. Non-cash incentives are 24% more effective at boosting performance than cash incentives.” – American Marketing Association
- “87% of front line sales reps, 82% of sales leaders, and 78% of marketers surveyed agree that referrals are the best leads your business can get.” – Heinz Marketing
- “Companies with formalized referral programs experience 86% more revenue growth over the past two years when compared to the rest. Only 30% of companies surveyed have a formalized referral program.” Heinz Marketing
I could go on much longer but hopefully you get the point. I hope you took the following from these facts:
- Customers are super likely to give referrals when given great experience. The issue is companies and salespeople don’t ask.
- The referred customer trusts you, your company, and your products/services more and is more likely to buy from you.
- Sales masters and business growth agree referrals are awesome.
- You don’t need to give away the bank or money at all to get a referral.
- Most companies don’t have referral programs.
So Now What?
It’s not the customers job to get the referral, it’s yours. Never put extra work on the customer. It’s most likely to not even get done. Salespeople and businesses need to play to this and strike while the iron is hot by asking for referrals. That means preferably asking for them right after a customer has either purchased, enjoyed or used their product or service, or if they’ve been long time customers and doing all the work. Timing is important because if your customers are happy and positive they’ll feel like returning the favor for a great experience. Reciprocation comes into play here. More on the science of reciprocation here.
Side note: If you’re afraid to ask that’s not a good thing. That probably means that you’re not confident that you gave your customers the best possible customer experience possible. This is an issue in itself; however, if you’ve earned the right to ask for one then do it. You deserve it after all.
If you don’t have a referral system or program set up, you need to stop everything you’re doing and prioritize this. Yes, even prioritize this over eating…
Alright maybe it doesn’t have to be that extreme but sooner rather than later. Every day this isn’t in place is detrimental to your business and performance. A strong referral program might even be the missing link to you hitting your revenue targets for the year and not. Every little detail adds up for your success. Let these recommendations be a gateway for you to want to get a referral program up and running. Happy referring!
If you liked this post check out my last post on cognitive biases How Denial Kills Business.
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