3 Common Delusions About Referral Sources

If you want to create meaningful relationships and maximize your networking efforts, read below for three pitfalls that you must avoid in order to be an effective networker.

Delusion No. 1: You should always get a referral when you’re in front of the referral source.
If your strategy requires you to be present in order to get a referral, you’re putting severe limits on your potential business. Referrals happen when you’re in front of the referral source only if your system is dependent on your asking for the referral and getting it at the same time.

In a strong, fully functional referral system, most of the referral process is going to happen when you are not present. You don’t want the system to shut down when you’re not there; you want your referral partners to be out looking for opportunities to refer you at all times. You want them to be in the habit of recognizing good opportunities for you and persuading prospects to contact you. If they don’t think of you when you’re out of their sight, you haven’t done a good job of training your clients or selling yourself to your referral partners–which probably means you haven’t been doing them much good, either.

You should make it your job to equip your referral partners with information about you that can be easily communicated to prospects. You should be making sure they’re motivated to refer you when you’re not around. And you should have a tracking system that can tell you what happened when you weren’t there in person.

Delusion No. 2: To maximize your chances of getting good referrals, it’s best to move from one networking group to another at regular intervals.
This is called “scorched-earth” networking, and it’s about as friendly as it sounds. The scorched-earth networker burns and pillages for new business. He’s a hunter at business meetings, more interested in bagging the big sale than in building relationships and helping others.  He does everything we say not to do if you want to build your business through referrals. He represents the absolute worst in networking.

The scorched-earth networker is constantly dissatisfied with the quantity and quality of the referrals he’s getting, so he moves on. He flits from one networking group to another, doesn’t establish any roots or relationships, networks relentlessly with everyone he meets (often inappropriately), believes that being highly visible is the key to referral success, and expects referrals from others even though he has done nothing that would make anyone else want to help him.

Serious networkers understand that, in order to build mature, healthy and mutually profitable relationships, they must devote a lot of time and effort to growing those relationships.  Have you heard the old saying, “Time equals money?” This is never truer than when it comes to membership in a referral-networking group. The longer you are committed to building the relationships, the greater the results you will experience.

Delusion No. 3: Your best source of referrals is your customers.
The reason people sometimes fall into this delusion is that they’ve been trained to believe it and have never pursued any other source of referrals. The only referrals they’ve ever received are from customers.

Don’t get me wrong: Customers and clients can be a good source of referrals; we know that. However, many businesses (especially big corporations) are out of touch with the fact that other referral sources are available that can be extraordinarily powerful. Clients, although often the most readily available sources, are not necessarily the best or steadiest sources of high-quality referrals. The best sources in the long run are likely to be the people you refer business to. When you help another businessperson build his or her business, you’re cultivating a long-term relationship with someone who’s motivated to return the favor by bringing business to you, who shares your target market and who will work systematically with you for mutual benefit.

4 thoughts on “3 Common Delusions About Referral Sources

  1. I am one of those people who truly believes that helping others to source referrals, actually pays dividends for my own business. In my experience it means that I do not have to work hard at selling my service, because someone else has done that already for me. Most of the time when I receive an referral the person at the other end of the phone is convinced that its my service that they want and all their asking is when can I come and see them and what my charges are; being a bull in a china shop gets very poor results.

  2. I am not sure I go along with Ivan’s assessment of the third delusion. I run a busy local law practice (5 fee earners) and have been active with BNI for the past 10 years. I keep a close eye on where my business comes from and my records tell me that consistently 64% to 81% of fee income comes from existing client referral. In the fullness of time, of course, the referrals earned from networking are absorbed into the pool and must, therefore constitute a portion of those existing clients. Loyalty, in Ireland, still counts for something.

  3. My favorite referrals are the ones where the soon to be customer says “My friend says to use you…” This happens all the time now that I have a huge referral system in place (thanks BNI!). At least a dozen times in the last 5 years people have hired me before we ever discuss the money! It’s a very good thing.

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