What is a Referral?

What is a referral?

A few days ago, I delivered a training session for the Victorian Small Business Festival on “How to teach your Network to find you business”. I love sharing my knowledge on referral generation with business owners and was really excited to see I had a full room of eager students.

Not long into the session, it became really obvious to me that some of the participants had no idea what a referral was, so I stopped and help define it for them. It as a light bulb moment for some and for the rest of the room it was really clear that I had just opened their eyes to a future of great business generated by quality referrals.

Leads v Referrals

Before clarifying what a referral is, it is important to understand what a ‘lead’ is. I don’t like leads. I can buy leads from all sorts of sources and this is akin to cold calling. When I was at University I had a part-time job selling timeshare. Whilst I don’t recommend this to anyone, I did learn how to sell and I also learned that I absolutely HATED dealing with leads. So I think that leads are not for me.

Don’t get me wrong, some businesses and people love leads, if that’s your thing, knock yourself out, but I’d rather do business form a warm introduction any day of the week. Leads are all about the sale whereas referrals have a level of relationship attached to them.

So, a lead is simply another person saying, here, call Suzy, she needs a new (insert whatever you sell). You ring Suzy and introduce yourself and then you have to sell. Most of the time you don’t get the sale – leads are a numbers game and you have to be able to face a LOT of rejection to be able to succeed with leads. I’m a high “I” on the DISC profile so I don’t handle rejection very well. Luckily I don’t have to because I have built my business on referrals for 20+ years and now my business is also teaching people how to build their business by referral.

Another form of leads is ‘buying a list’ or using google to find contacts. You have no personal introduction to these people and even if someone from your network has introduced you, you have to sell like crazy to get anywhere.

When is a lead appropriate?

Sometimes a lead is completely appropriate under the circumstances. For example, if your shower explodes and water is spraying everywhere and you ring me up and scream “I need a plumber” and I send you over the number of my trusted plumber, that’s a lead, but a very welcome one.

If you want a complete bathroom makeover, you’re probably going to want a referral from someone I know like and trust so you can be confident you’re going to get a job well done.

A lead could also be asking me for a good local masseur, restaurant or gym and me really not knowing anyone well, but knowing that there is one of those services in the local community. “I’ve seen a gym down on Bourke Street, I’ve never been there, but it always seems to be busy, so it’s probably worth checking it out”.

If I really don’t know much about a business and I’m not making an introduction, that is definitely a lead.

Businesses also ‘buy’ leads. You’ve probably been on the receiving end of a lead when a random salesperson calls you up and tries to sell you their product or service. I don’t know about you, but very rarely do I buy something from a random call or email – the offer has to be really timely and something I desperately need.

Social Media: Leads or Referrals?

In the class this week, one of the participants said to me she gets referrals from Social Media. She was very insistent that her paid Facebook advertising was generating leads. I was very quick to point out that this is advertising and not referral generation

Referrals – it takes 3

On the other hand, a referral involves 3 people: the person referring, the person being referred to and the person asking for a referral. This is absolutely key to generating a referral so if you keep this in mind because it will help you work out of you’re getting leads or referrals.

For example, if I want to do business with John (because I have identified him and his company as my Target Market) and my colleague Mary knows him and I ask for a referral to John, Mary would introduce, get permission from John for me to contact him and hopefully prime John before I call. Mary and John know like and trust each other, Braith and Mary know, like and trust each other and when Mary introduces us, the transference of trust happens between John and me because of the relationship I have with Mary and she has with John.

Unless Mary has contacted John and got his permission for me to call, this would simply be a glorified lead.

Effort equals reward

To make my referral as strong as possible, I want Mary to edify me with John, share relevant information and even share a story or two about how I have helped another business-like John’s. Mary can do this because I have taught her what a great referral looks like and shared stories with her about previous clients like John. The more effort Mary puts into making John and my meeting stronger, the more it is likely that we do business as trust has been transferred between all three of us.

Trust – the vital link

Referrals come with trust, it’s what sets them apart from a lead. But trust comes with a price. Break that trust and the person I have referred you to will think you’re not that great a person to do business with, but they will think of me something else entirely (and it’s not good).

So your job when I refer you is to make me look good no matter what. Whilst this can be edifying me, it also means:

• Following up on the referral in a timely manner
• Providing clear and transparent communication
• Doing what you say you’re going to do
• Being honest and admitting if you can’t do the work and referring the client back to me or onto someone else
• Being punctual/reliable/clean (if you’re a tradie or the like)
• Delivering the product or service described
• Keeping to the price quoted

All of the above says to my colleague that I have referred a quality business person and that I am to be trusted with this and future referrals. Making me look good is also very Pavlovian (as in ‘psychology 101’ – the dog experiment)

What does a good referral look like to you? It is up to you to decide what a great referral looks like and if I am a trusted individual in your network I will take the time to learn from you and help to find you the kind of referrals you want, build trust and in the process, deepen our referral partnership.

By | 2018-12-17T07:12:03+00:00 December 17th, 2018|Categories: BNI, Business Development|Tags: , |Comments Off on What is a Referral?

About the Author:

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Firstly, he's a pretty great guy you'll want to hang out with him. When you're not hangin out with him, Braith runs the Melbourne franchise of BNI and helps people connect with their dream clients by finding their target market. He likes helping people through online courses, workshops and public speaking - so why not find out more about him?