There aren’t too many things that feel better than when someone refers business to you and you land a juicy new client without doing anything more than lifting the phone receiver. (Well, giving referrals feels pretty awesome too!)
Many professionals depend almost 100% on getting referrals as their business development strategy.
This strategy is great – when it’s working.
But what happens if or when your usual referral sources dry up? What happens if, as is often the case, people recommend you but these referrals don’t call you?
Why Depending on Referrals Is Dangerous
Barry is a partner in a mid-sized accounting firm. For years, 85% of the business he and his partners received was through referrals. Business was good, the coffers were flush.
Then, the market changed. The competition got fiercer, other firms were out their networking, marketing, and using social media to bump up their visibility, keep their services fresh and foremost in potential clients’ eyes.
Barry and his firm started to see their referrals slow, then trickle, then almost stop.
They were stymied about what to do. There was only one partner who was a real rainmaker and he was busy working on his own practice; he didn’t have time to service his clients as well as feed his other partners.
Unfortunately, Barry’s situation is not an uncommon one among service professionals and business owners.
Obviously, I am not saying that seeking referrals is a bad business development strategy; I am saying that being dependent on referrals may very well be costing you and your business.
If Not Dependent On Referrals, Then What?
The smartest thing for building your business is a business development program built on a healthy mix of action steps and approaches, both proactive and more passive.
Proactive strategies include:
- Targeted, relevant networking – connecting with ideal prospective clients, connectors, and introducers, as well as ideal referral sources.
- Marketing – including blogging, newsletters, article writing, video, social networking and social media actions, pay per click advertising, and possibly a PR program – if your budget allows (*note: most PR efforts cannot guarantee a return on investment because so much is dependent on what the press considers hot and relevant to their audience).
- Speaking engagements – getting in front of you ideal niche market, being seen as an expert in your field and then following up with attendees.
Passive strategies include:
- SEO -Using your web content to pull potential clients to your site and ideally to contact you.
- Referrals – Doing a great job for your current clients and contacts should prompt them to recommend you and your services to people in their network. Obtaining referrals can also be proactive if you consciously ask your current clients if they would recommend you to people in their network.
Looking at the options available to you, can you see how important it is to have a mix of proactive and passive strategies if you want a healthy pipeline of business flowing in on a regular basis?
Where is your business development strategy weakest? Proactive? Passive? Both?
Are you missing a strategy entirely?
Being dependent on the memory and proactivity of others sending you easy referrals is both lazy and dangerous.
Yes, I said it.
Receiving referrals is great; being dependent on referrals is simply being lazy.
I would assert that Warren Buffett, Bill Gates, and Steve Jobs did not build their businesses by sitting around, looking at the phone and waiting for it to ring.