"Recommendations are the best method of generating new business opportunities." But are they really?

What Drives Your Business Today? Recommendations?

Often we hear and read that recommendations are the best possible method of generating new business (sales) opportunities. In addition to »cold calling«, recommendations are actually one of the few marketing activities that also work well in the complex B2B sales process – this was recently described by my colleague Tamara Ćetković in the article 'Do you really make sure you have enough »meat« for sale'. 

The reason for the effectiveness of recommendations is, of course, very simple. Recommendations work on principle of trust and acquaintances. One to recomend us, is usually a very well well-known person, our relationship is based on mutual trust – with recommendations, there are no concerns about inadequacy, self-interest or even malicious intents.

Such personal information are very much appreciated, as shows the BusinessWeek research which provides clear and convincing evidence: out of 700 companies surveyed, 22% of companies selected recommendations of acquaintances and business partners as the best method for generating new opportunities. Therefore companies strive to be recommended forward.

But is this true? Are personal recommendations really that great? Do they really generate so many sales opportunities and yield? Our experiences tell us no.

Recommendations from acquaintances VS. my ego

An important part of recommendations, one that is often missed in the professional literature and discussions, is the psychological impact that recommendations have on those to whom the recommendation relates.

What does a scenario that is doomed from the start according to our experience look like:

We at the Customer: "Well, do you know anyone else, to whom we might help the same way we helped you?"

Existing Customer ZX: "Yes, the person XY in the company XY also has similar problems. You can call them, here is the contact, and tell him that I sent you!"

We: »Greetings, g. XY. We are XY person from the XY company, and we are offering XY services/products, we also collaborate with your colleague ZX who mentioned that you have similar problems, and recommended you to hear more about it, so that you could find out if we can solve your problems as we solved his.«

XY swallows hardly: »Of course. I'll meet you at that time and there, LP.«

This is a mock example, however. What have we achieved with this? In principle, we were only able to step on XY's ego with this, when we told him, that we know, that something is not working properly. Even more – this was told to us by his acquaintance/business partner, i.e. a person that he is dealing on personal level with. His confidant therefore considers that XY is weak in a certain area, which is almost the worst thing that can happen to any individual's ego. If you already have a 'problem' (and you do), you certainly do not want them interpreted to an acquaintance. Nor to the company by an acquaintance recommendation. Finally, do we discuss the most serious problems with our partners or friends in private life... Or do we pretend to be strong in front of them, and rather repress problems or tell them to a »competent stranger«, i.e. a psychiatrist?

So we really have not done anything. We will get a first meeting, definitely. But we won't acquire more information or even perform a transaction. We are too close to the acquaintance of XY and there is a real concern that XY will be seen as weak, if he has any errand with us.

Are consequently personal recommendations worthless?

Absolutely not. Recommendations are dry gold in sales. However, they require a methodical approach and a well set plan of how to contact the person XY, when to pull recommendations out of the hat and how to do it.

Do you have opinions, comments? A good know-how from personal recommendations? Join the debate on LinkedIn or contact us at +386 (0)1 5444 999 or email us. 

  

Gal Kočar
Market Development Lead