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In the current, competitive job market, noting a contact within an organization can be beneficial in gaining an interview with that company. A cover letter is an appropriate place to note this reference, provided that the reference is willing to promote your hiring. Building a connection within the company may earn your resume a valuable second look, allowing the prospective employer to note experiences that would benefit the organization. If references are not already working at the company, or do not have direct contact with the company, it is not appropriate to include references in the cover letter.
When typing the cover letter, interest in the position should be expressed in the first paragraph. Within this paragraph, mention the individual, or reference, who directed you to consider the position. For example, "a business associate, James Doe, recommended that I contact you regarding the open sales position at XYZ company."
Include references to support qualities that make you a strong candidate for the position. For example, "Mr. Doe recommended that I apply for this position as during my internship in summer 2010 I raised sales 25 percent through the use of a targeting marketing campaign."
End the cover letter by saying additional references are available and can be examined on your resume.
Remember that a cover letter is the initial opportunity to highlight experiences that would benefit the organization with the open position. Be sure to include clear, concise reasons for the application, in addition to the reference, in the cover letter.
Be aware that the individual receiving the cover letter might not have a relationship with your reference.