Referral Marketing A Risky Business

During a recent radio interview I did, the host of the program asked me whether I consider referral marketing the safest form of advertising. Without the slightest hesitation, I confidently answered, “By all means, no.” Based on his response, I’m sure he was shocked by that answer.

I went on to explain that I believe very strongly in the tremendous benefits that word-of –mouth marketing can bring. However, there are unique risks associated with referral advertising that are not an issue in commercial or other forms of advertising.

When you give a referral, you give a little of your reputation away. If the business you’ve referred someone to does a good job, it helps your reputation. But if it does a poor job, your reputation may be hurt.

As I said, the payoffs of referral marketing are immense—when it’s done correctly. But referral marketing involves a really big risk: giving away a piece of your reputation every time you give a referral to someone. When you tell a valued customer that a friend of yours is going to take good care of them, you must have confidence in that friend.

But what happens if your friend lets your customer down? It comes back to haunt you. Your customer begins to lose faith in you and, because of that loss of faith, you just might lose that customer down the road. This is why it’s so important to develop strong relationships with those to whom you’re referring business and vice versa. Once those strong connections are forged you can rest easy, knowing when you tell someone a business associate or a networking partner is going to take good care of him or her, that’s what will happen.

0 thoughts on “Referral Marketing A Risky Business

  1. Many a great relationship has been strained through traditional referral marketing. While referral marketing when referring someone to an establishment still remains the best form of advertisement, we should use great caution when using referral marketing of opportunities.

    What may work very well for us may not work very well for someone else. While you do give a piece of your reputation away for each referral, and an even larger piece still when the referral goes bad; we should use great caution when referring friends and family into opportunities.

    We all know success takes great sustained effort. So how many people do you know that will really do what it takes to succeed? And so for those that you refer into your business, that do nothing, yet expect success by proxy (you) because you referred them and made money on them; what is to come of those friendships?

    We call it the NFL (no friends left) club. When you desire to build a networking business like you would a traditional business, by building business relationships, feel free, call me, 713-429-4450


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