When asked, “Where do your best leads and clients come from?” most people will answer, “From referrals”. When you are contemplating the sale of your business one key attribute is a strong pipeline of good leads – and that’s exactly what an effective referral strategy can provide.
You can see why referrals are viewed so positively:
- they come with the endorsement of the referrer
- they are usually from your target market
- the referred person will often have a positive opinion of you already
- they may well have a genuine need
- they are ‘low cost’
- and having an introduction gets over that tricky ‘cold call’ challenge.
What’s not to like?
If referrals are so good for your business do you have a strategy for getting more of them? If you spend any money promoting your business shouldn’t you prioritise your budget and efforts to getting more referrals?
To a potential acquirer your business will be more valuable if there are established processes for gathering referrals, strong relationships with potential referrers and therefore the prospect of ongoing, high quality leads.
At our Henchards monthly lunchtime session we discussed and shared views and experiences with referrals – and as you might expect opinions varied.
Whilst we all acknowledged the importance of referrals, the steps taken varied from specifically asking for an introduction to relying on delivering great service and hoping that referrals will follow. Few had a formal referral strategy with identified budgets although they may well have money allocated to other more direct marketing campaigns.
The incidence of paying for referrals in the form of a commission or success payment was very low. Most preferred to rely on reciprocal referrals even if the opportunity for a ‘balance of referrals’ was unlikely. No-one expressed the view that they expected referrals in return for one given. (Anyone who has read Adam Grant’s ‘Give and Take’ will appreciate this perspective.) Likewise, no-one felt that they would wait to receive before giving!
It was seen as important to ask – even if quite passively – and to give some guidance on the type of referral that would work best. There is little point wasting anyone’s time if an introduction is made where the requirement is a complete mismatch – however even then it may provide the opportunity to introduce ‘someone I know who may be able to help’. A person with a positive mindset will focus on moving someone closer to the eventual solution through a further introduction.
In conclusion the overriding sentiment was that building relationships is an important precursor to any referral, that we should make it easy for each other to give and receive referrals and that a mindset of giving before taking is the key to building positive business networks.
A good referral process takes time to establish and if you are contemplating the sale of your business in two to five years’ time one key attribute is a strong pipeline of good leads. Talk to us about getting your strategy in place.
(Background photo created by wirestock – www.freepik.com)