Be deliberate in your networking and generate more referrals
Hey, I’m Michael Eckstein 👋, and this is ‘Ordinary & Necessary’, a weekly newsletter about the boring business topics that don’t get enough traction on the web, but will help you manage and grow your business. You signed up on my website. If you’d like to unsubscribe, just click the link at the bottom of this email. No harm, no foul, I’d love to have you back sometime.
Everyone loves referrals. They’re the best leads. You’re just going about your business then you get an email/call from someone new that tells you they heard about you from a colleague or another client. It’s awesome. You didn’t do any marketing and you have a new high-quality lead that’s already heard all sorts of amazing things about you. And, referrals make some of the best clients! Unfortunately, referrals are also sporadic. They only pop up every now & then and it feels like there isn’t much you can do to drive more referrals.
The problem is that most business owners don’t have a referral strategy. They just hope it naturally happens. Or, they go to networking events/meetings, chat with the people there, and hope referrals come their way. But, that rarely works and it’s a waste of time. Networking and referrals should be systemized, like the rest of your business. If you network more deliberately (with ideal referral partners) and have a smooth follow-up and referral process, you can reliably increase the number of referrals you get.
Referral tips:
Referral partners: If you aren’t already getting referrals, you need to figure out who your best potential referral partners are and focus on them. Sometimes, it’s obvious (eg, accountants and financial advisors make a great pair). Other times, it isn’t. When you’re brainstorming, ask yourself, “who would already be talking to my ideal client when they need to purchase my services?” For example, I helped a client brainstorm potential referral partners last week. He runs an IT company and his ideal client has 50+ employees, needs a full IT install, and recurring monthly management. Some potential partners we thought of were: cybersecurity companies (they manage security but don’t do installs or general management), insurance agents (they have conversations about risk with clients including IT and cybersecurity risk), and commercial real estate agents (they’re talking to businesses that just rented/bought empty office space that needs IT installed).
Become genuine friends: Don’t force a referral relationship with someone you don’t like. You should want to be friends with them because, if everything works out, you’ll be doing a lot of business with them. Also, “All things being equal, people will do business with a friend; all things being unequal, people will still do business with a friend.” The same goes for referrals. You’ll refer to a friend sooner than you will to a stranger.
Stay top of mind: Periodically check in with your referral partners. Call them once every month or two. Send them cards for the holidays and their birthdays. Be a pal. (Maybe you could even add them to your newsletter where you say smart things every week 😉)
Make referring easy: Remove as much friction from the referring process as possible. Mention exactly what kind of clients you’re looking for (be polite and also ask them who they’re looking for), give them business cards/pamphlets to hand out to clients, and tell them all about your business and process so they have something to tell potential referrals. Most importantly, let them know how to send you referrals and what you’ll do from there. (eg, “Just connect us over email and I’ll take over. My process is: discovery call -> reviewing past work -> proposal -> 2-week onboarding -> etc”)
Ask for referrals: You need to ask. It’s uncomfortable, but closed mouths don’t get fed. You don’t need to be salesy or hit them over the head with it, but periodically, remind your partners that you appreciate them, you have more availability on your calendar, and who your ideal client is.
Clients can be referral partners too: At the end of every engagement (or whenever your client is the happiest with your work), ask them if there’s anyone they could introduce you to. If a particular client sends a lot of referrals your way, treat them like any other referral partner: become friends, keep in touch with them, give them business cards, and explain your process.
A note on paid incentives: I’m not a huge fan of offering incentives for referrals in service businesses. But, it’s up to you. That said, if you’re going to offer paid incentives, they should be modest and shouldn’t impact your overall cash flow. For example, a recurring percentage makes sense for SaaS companies, but has a huge impact on service businesses.
Action Item: Add a weekly recurring meeting to your calendar to call referral partners. Call one referral partner each week just to chat, catch-up, and stay top of mind.
Have a great Labor Day weekend and stay safe! 🌭🍺
Michael Eckstein
P.S. My ideal referral is a freelancer or digital agency that needs help with accounting, taxes, or understanding and navigating their business’s finances. 🙌 🙏