Gaining Referrals

Few experienced solo and small office professionals need to be reminded about the importance of referrals for maintaining a constant, if not increasing, flow of clients. For starters, referrals are relatively inexpensive. Requiring little in the way of time or money. More importantly, referrals bring a level of trust and enthusiasm. Someone that the potential new client knows has convinced them that the company’s products or services are worthwhile, so much of the barrier to a relationship is already reduced. In fact, in many cases the client may be begging to get started for whatever is being sold. While a potential sale may only close 10% of the time through traditional channels, it is not uncommon for referrals to close well over 50% of the time, if not higher.

None of that, however, goes to answer the question of how to get referrals. Some may be inclined to think that because referrals have to come from a client that they are nothing to be counted upon in the standard revenue stream. In fact, the opposite is very much the truth. With a few simple adjustments, any company can take the good work it is already producing for its clients and magnify it across the market.

While it may go without saying, the most important step in building the number of referrals that a company receives is to do good work. No one wants someone to come to their restaurant and spread that the food is just alright. Perhaps worse, no one wants a customer who is going to suggest that service is lacking. To achieve a large number of referrals, the company must offer something that causes people to want to talk about it.

Equally important, a company should have a process in place to encourage its clients to offer referrals. Depending on the nature of the company and the products offered, that could take on a variety of different forms.

At the most basic level, getting referrals is about asking for them. After a client has received a number of deliverables that are at a high enough standard, ask them to send potential prospects to the company. Feel free to incentivize this for the existing clients. For example, TV providers often offer existing clients a small bill credit for each new customer that signs a contract for service. The existing client gets a lower bill while the company gets a new client, meaning that everyone wins.

While it certainly helps for the referral program to be systematized like the cable TV referrals, it is not a firm requirement. An accountant working with a firm could simply ask the managing partner if he or she knows anyone else who would be able to use their services and if the client would be willing to put the two in touch.

Taken to the extreme, this could include affiliate programs, which offer a percentage of the new client’s fees as a reward for the referrer. However, this require some amount of caution. For a referral to be truly effective, it is essential that the potential new client understand that the referral is made with their best interests at heart, not the promise of monetary gain. After all, which would be more trustworthy, a website offering an affiliate link to a product, or a social media post from a friend to the same product in question? Chances are that it is the social media post.

Speaking of social media, it can create meaningful ways to achieve referrals, especially for those companies that market directly to consumers. A number of fast food places use this to their advantage, creating hashtags that allow their current customers to post about their experiences with the company’s product. Few people ever click on a sponsored hashtag to see how complete strangers enjoy a cup of coffee. However, it does offer a way for the customer to feel that they are helping the company – though it lacks the formality of a letter of introduction, it is a referral all the same.

Clearly, there are a number of ways to ask for referrals overtly, whether it is simply approaching the project manager or appealing to the masses via social media. However, not every company or professional will feel comfortable giving referrals. For many, there could be corporate regulations that stand in the way. For others, it may be something as simple as not wanting to endorse one vendor’s work as being better than the others. In these cases, it may be worthwhile to take a slightly different approach. Press releases which announce the completion of a project or milestone highlight the fact that two or more organizations have collaborated, and do not inherently create a referral. That said, many of the advantages are there, especially the ability to refer back to a bond and the inherent trust present.

Luckily, most companies are easy going when it comes to gaining referrals, as they see it as an opportunity to pay it forward. Speaking of which, giving referrals should be an essential portion of any plan to get referrals. By supporting a client’s business through referrals, there is not only an opportunity to help out a colleague, but also to see their practice grow. An accountant who refers people to a lawyer will see the lawyer do more billing, which means more finances to be tracked, which in turn means more work for the accountant.

Of course, referrals should be given freely when there is no promise for such direct financial return. In doing so, a relationship mentality is built between the firm and the client. This in turn serves two purposes. The client sees the firm as more of a partner than a vendor, making them more willing to pay higher prices, if necessary. Additionally, because the client views the firm in such a good light, it will see the firm’s continued success as linked to its own.

This idea of a partnership for the purpose of gaining referrals and encouraging other businesses is very much the reason behind a number of professional groups, as companies often have something to offer those who are not their regular clients. Even networking in a less formal setting can enable someone to refer a potential client as a friend rather than just as another ad off of the Internet. At their best, these professional groups become hives of referral swapping, with each member dedicated not only to his or her own success, but that of the other members of the group.

No matter how a company comes about its referrals, there are a few tips that are necessary to make the most of them. First and foremost, it is vital to thank those who offer referrals, no matter what the final outcome may be. The fastest way to lose a source of referrals is to take it for granted – after all, referrals do not come from employees, but instead those who are going out of their way to help another company.

Second, high standards must be kept for both new and existing clients. New clients are the most likely to offer new referrals, but having a long-time client suddenly drop a product or service, or worse yet, explain to others their disgruntlement can be especially damaging.

Finally, the worst time to go finding referrals is when they are needed most for the survival of the business. If a company is in such dire straits, it is best to look at the circumstances that caused the downturn in business. If it was a loss of quality, as is often the case, potential remedies should be examined first. If the loss of profits was caused by something else, then those causes should be identified and mitigated to the best of the firm’s abilities. In the long run, attending to such concerns will help make sure that any new referrals are given the attention needed to become new referees themselves.