It is very important to know your referral percentage and below I will explain how to calculate it!
I regularly meet with prospects and help them understand how much business they are getting from their network. It is very enlightening and they are always surprised by their results. Do you know your referral percentage? No? Don’t worry, most people don’t know, but it is very helpful to understand. So, grab a pencil and a calculator and I will help you find your “Referral Percentage” here we go:
1. List 4 people in your network (not customers) who have passed you the most business by referral this year. For instance Tom, Sue, Bill, Kim.
2. Now, for each person write the number of referrals they have passed you in the last 12 months. Tom=4, Sue=12, Bill=5 and Kim=8
3. Think about each of those people, how many people do you believe each of them know? On average, we each know about 250 people. So, Tom=300, Sue=500, Bill=800 and Kim=200
4. Next step, add all of the referrals you have received together, in our example it would be 29, and then add all of the network members together. In our example, it would be 1800.
5. Last step, you will need your calculator to complete the process, 29 divided by 1800 equals .016%
What is your percentage for referrals? Are you surprised? Did you have 4 referral sources? Many of my clients are shocked and frustrated when they do this exercise. It is possible to increase this number. The very first time I did this it was .010 and I was shocked.
Here is the real question though, what are you going to do to change this percentage? What steps can you take to develop a higher referral percentage? Hint: Stop adding people to your network, instead start digging deeper into your network and develop stronger strategic relationships! Start with the 4 people you listed here and if you did not have four then work on the ones you do have. When you are sure that you have increased and strengthened that relationship, then move on to create a new one, until your have your “Four”.
