The Bernie Madoff Referral Selling Method

Frank Rumbauskas
The Bernie Madoff Referral Selling Method

A couple of weeks ago I had a speaking engagement in front of a small group - my favorite kind - and we sat down for a roundtable discussion after.

One of the first questions was about the most effective method of referral selling. When I replied that the best way is by creating a "by referral only" persona, complete with a separate set of business cards containing that very statement, someone responded that that's how Bernie Madoff reeled in his "clients." (Actually victims.)

I was surprised by this, so I looked it up when I returned home - and sure enough it's true!

Now and then I watch "American Greed" which frequently features Ponzi schemes and I'm always baffled at how people will hand a check for their entire life savings over to a con artist.

Yet hearing about Madoff's method made sense, for this reason:

People crave exclusivity. People strongly desire what they cannot have.

What he was doing is the classic "takeaway" in a manner that was so convincing to people that they couldn't give him their money fast enough.

All because of three little words: "By referral only."

And that same desire for exclusivity, and for things that are out-of-reach, is the same exact reason why cold calling doesn't work: You're too available.

In fact, even traditional referral selling usually fails for the exact same reason: Because most salespeople practically beg for referrals when they go after them!

I've heard it a million times: "After you close a sale, ask your new customer for five referrals." I've even heard one sales trainer take it to a level that's totally obnoxious. He said, "Asking for five referrals isn't enough. Make the customer call them, right then and there while you're still in the office, and introduce you live."

Yeah, right. Try that one in real life and your new customer will probably get pissed off at you, tear up the contract, and kick you out.

Hard selling just won't cut it anymore, folks. It's not 1950 anymore. You have to be better than that - smarter than that.

So here's what you're going to begin doing right now: Scrap the old begging routine of "please, please give me referrals!" And quit wasting time at mixers and lead clubs where you're sitting around with a group of non-performing salespeople who never bring anything to the table.

Instead, go with the "by referral only" strategy and watch how fast you have people clamoring for your time and you attention. You'll even find your existing customers valuing you more, and feeling more satisfied - they'll be flattered that you chose to work with them even though you normally work "by referral only."

Once you apply this method, watch your results go up exponentially, to such a degree that soon you'll never have to prospect again.

Here's to your success!

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About Frank Rumbauskas

Frank Rumbauskas

Frank J. Rumbauskas Jr., the New York Times best-selling author who redefined selling and who continues to teach salespeople how to generate endless leads without cold calling, chasing, or begging, now uses the science of social dynamics to unleash unstoppable people and organizations.Frank learned… more


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