Why do Businesses Underestimate the Power of Referrals?

7 Blind Spots Might be Stopping You From Seeing Your Goldmine

I watched my six year old excitedly rip through the wrapping to open her birthday presents. The look on her face told me everything I needed to know about the importance of the present in her 6 year old existence. Every time she opened a present, she squealed with delight and gave a running commentary about the merits of that present, who else had it and why she loved it so much. Later that evening, when I went to a networking event, I couldn’t help thinking, “do I light up and truly appreciate the gift of a referral or am I taking it for granted?”


Interestingly, all successful businesses attribute at least 50% of their business to referrals or repeat business. Yet how often do companies truly appreciate the value of referrals? What percent of our marketing resources are allocated towards strategically, systematically and proactively seeking repeat and referral business? Imagine, if you spent $1,000 consistently every month on direct mail marketing and got 50% of your leads from it (ok hypothetically; go with me on this number), would you do it again? I bet you’d have a darn good system in place to make sure it got done every single month and train every single team member on it (not literally but you get the point)!

 So then, given the statistics, why don’t companies invest more proactively in getting referrals?

These 7 Blind Spots Might be Stopping You From Seeing Your Goldmine


The  The assumption is that the process of getting referrals is already working great. Just because you are getting some referrals doesn’t mean you can’t benefit even more from your relationships. Your referral partners and clients have relatively short memories much like yourself and need a refresher every now and then.  Take a look at your referral relationships and ask, “When was the last time I reached out to a referral partner or a client? Who else could be a potential partner now?” You’d be surprised to find a lot more gold.


2.      Most marketing strategies require some kind of investment. You have to take out your credit card or checkbook and make a payment. Rarely, do you write a check and tell someone you want a referral. It’s funny how our minds work. When you don’t pay for something, you don’t always value it! Every time a referral turns into business, write a check for 10% of that amount and put it in your marketing fund for reinvestment back in your relationships.


3.      Another assumption is that referrals will come if you are doing great work. True, but that’s only half the story. Your customer buys the entire experience from you, not just the results.  Take a moment and put yourself in your customer’s shoes. Is this the ideal experience you’d like them to have? Conduct a survey or simply pick up the phone and call a few customers you trust to find out what will make their experience awesome. Where in your process can you build the emotional experience?


4.      Measurement drives behavior. Measure referrals and that’s what you’ll get more of. The simple act of measuring something can drive improvement, even without a change in the activity. Many companies know instinctively that they’re getting referrals, but very few can tell you exactly how many and where they’re coming from because it’s not always measured. Start measuring today- anything from a simple spreadsheet to the state of the art CRM software will do.


5.      While I’ve heard many business owners speak highly of their word of mouth marketing, very rarely can someone tell me the exact step by step system. “It is just something that happens,” is what I hear most times. There is no system in place to strategically, systematically and proactively get repeat business and referrals. Because it is left to chance, it rarely becomes a predictable strategy that will bring in new leads and repeat business consistently. Go back to the drawing board and do some detective work. Take a look at your last 10-20 referrals. Where did they come from? Do you have more of such partners in your referral base? What triggered a referral? Was it because you kept in touch with someone regularly and they thought of you? Take a look at your current process. Where in your process could you build more of those trigger points?


6.      It’s uncomfortable to ask for referrals. Perhaps. But not when you focus on building the emotional experience in your process and delivering on your promise. By doing that you’ve shown that you value your customer. Look at your process and decide where does asking for referrals fit naturally? What is the best time to ask for the referral?


7.      After all we only have 24 hours in the day and it can get hard to keep up with all the business relationships. It’s hard to make time or put in the effort to build those relationships. Build a system for staying in touch with your referral partners consistently so you’re the person they think of when they have a referral. It doesn’t always have to be in person so think of ways you can be in front of them (preferably not in their face).


The first step in changing something is to know where your blind spots are. Especially when you realize that:

“Profit in business comes from repeat customers, customers that boast about your project or service, and that bring friends with them.”

- W. Edwards Deming



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