“Trust me. I know a guy.”
While we’ve heard this line too many times before, the cliche harbors a core truth of the private sector: relationships are usually what makes all the difference. And while our own close relationships tend to max out at a hundred and fifty people, we can supplement that with referrals: votes of confidence in a new person, client, or customer, from someone we trust.
In his bestselling marketing book “Building A Storybrand,” author Donald Miller starts his whole section on referrals with one observation: “Ask any business owner how they get new customers and the majority will say ‘word of mouth.’ It would seem obvious, then, that every business out there has a system for generating more word-of-mouth referrals. Unfortunately, that’s seldom the case.”
Makes sense, doesn’t it?
It also makes sense given human psychology; for all our adaptability and insight, we can be pretty good at seeing the tree but not the forest.
If you’ve ever referred someone to a client, or a colleague, (or in our case) a financial lender specializing in helping small to medium-sized businesses gain momentum, then you probably know the difference it makes. Trust us—for all the methods and approaches to finding the right customer, client, agent, or company for your business, word of mouth is king.
If something’s beneficial to other people, your network, the industry, and even your own career, why wouldn’t you make it a routine habit? To Miller’s point, why wouldn’t you refine a skill set or even a system for giving high-quality referrals that help others out and ultimately benefit you?
Referrals Pay It Forward
The rationale for giving referrals should speak for itself, even if the occasional referral turns out to be a dud.
With any luck, that wasn’t the case.
More likely, the person you referred came back, thanked you, and then paid it forward by referring someone else or giving someone referred to them a much-needed foot in the door. Who knows?
They might even have referred you right back.
While a referral program like the one we’ve built for our own clients might have put some change in your pocket, the additional benefit was building your standing and your reputation in the eyes of people you’d like to work with.
Not Convinced? Crunch Some Numbers
As usual (and as long as you’re reading them correctly), the numbers don’t lie.
If you’re not sold on the concrete benefits of getting and giving referrals, consider these facts compiled on birdeye.com.
Referral relationships are vital, and they’re worth getting better at because:
- “Customers are 4x more likely to buy when they have a recommendation from a friend.” (Nielsen)
- “You can expect 16% more profits from customers who have been referred to a business.” (HBR)
- “64% of marketing executives said that word-of-mouth recommendations were the most effective form of marketing. However, only 6% of executives say that they’ve mastered it.” (Forbes)
This last one might land a little too close to home, but there’s no shame in admitting you should be better at the most effective way to market your brand, build your network, or build reciprocity with people in your industry.
All this to say, it’s a double-edged sword. To some degree, dropping or passing on a name does put your reputation on the line.
But if you’re stepping out there—and in case it’s not clear, you absolutely should be—here are some fast thoughts on how referral relationships work to your advantage.
Referral Relationships Make an Impact
People trust people they know, and this opens doors that usually don’t open otherwise. Helping someone build their clientele, get a much-need asset-based loan, or launch an entire career trajectory is an enormous yield for a tiny gesture.
Referrals Build Your Reputation
One last way to look at referrals is through the pragmatic lens of spreading the word about you. Who doesn’t want to be known as the person who sent a client, a colleague, or a customer along who turned out to be great for business?
Referrals Don’t Cost Anything
Unlike nearly all other forms of marketing and some forms of pay-to-play networking.
Unless you’re counting the cost of the phone plan for that text you sent or the storage space on the remote server farm that’s holding your Linkedin message, your pocketbook isn’t down for the count.
Referral Create Reciprocity
As we mentioned, referring someone also gets your name, brand, or service out there…sometimes when you least expect it.
The impact we talked about goes both ways.
With all these reasons in mind, here are a few basic principles for strategizing referrals so that they work for you and the person you’re referring.
Aim for Referrals That…
… Build a great experience for everyone involved.
Where Word of Mouth is everything, anyone you refer, or any business or company you refer them to should be top-notch.
Use discernment…and if you’re dropping a name to someone, make sure it’s the very best, or at least a name you’re excited about. People remember world-class service, or even great experiences working with someone.
Go with the cream of the crop.
… Hit the timing right.
Details matter more than anything, and timing is no small detail.
If someone’s looking for a lender who will give a loan based on their invoices, that lender has to be one that will hit the ground running. If they’re looking for more of a long-term commitment then that makes for a different option.
Knowing what someone needs, or what they offer, and what their timeline looks like is the difference between hitting a target or watching the payload land miles away.
…If you want someone to refer you, make it worth their while.
We’re not saying “better grease some palms,” but we are saying that you probably have happy satisfied customers and clients.
If they’ve had a good experience, why not turn them into evangelists for you, your company, or your services? A discount, a small gift, or an extra offer for every recommendation they send your way is no strategy to cross off the list.
…Work with your process
Keep it simple.
That could be like sharing a VCF file with someone’s contact info, passing along a business card from your snazzy, engraved, business card holder, or if you’re tossing out names like frisbee passes right and left, investing in a referral software program that can get things running quickly and smoothly.
However you do it, make referrals as smooth and painless as possible, both for the two parties you’re connecting and for yourself.
This means communicating clearly, promptly, and on some occasions, with friendly follow-up.
…Pay you something in return
Not every company has a referral program that pays for referrals that lead to deals.
But we do.
While we’ve got a little more to say on that, the final thought here is it’s OK to think about the benefits. A referral isn’t usually a “you scratch my back, I’ll scratch yours” deal but reciprocity, potential, and career growth are no small benefits. There’s nothing wrong with referring people (or preferring people) who are likely to refer you back. Or at least respond with a profuse “thank you.”
All that to say, what if a company valued word of mouth so much it was willing to pay for it?
Growing our network means growing our business, so we pay our partners for referrals.
If you’re in touch with a business or company that’s looking for alternative financing, it’s in your interest to give us a shout.
As much as we love launching entrepreneurs and companies into high gear with creative, timely solutions, we love building our network, meeting new people, and seeing where the journey goes.
However, and whoever you refer, keep in mind that we’ll reward you for your effort.
Each new referral reminds us that first and foremost, people matter.