“I would be terrified if my sales depended on referrals”
– Philip Morgan
In the consulting and professional services space, the vast, vast majority of business is generated through referrals – that is word of mouth recommendations.
In my research project, referrals and networking were the number one source of leads for independent consultants, as well as consulting firms size 2 to 10, firms sized 1 to 50, AND firms sized 51-200.
It is not a stretch to say that referrals are sacrosanct.
The reason why referrals are so important is – in brief – because consulting services are risky, expensive, invisible, relationship-based services. (Watch my video on why selling consulting is difficult)
Spending a lot of money on something risky and invisible like this requires a huge amount of trust from the client. And so, getting a personal referral is the number one option.
However, despite the huge dependency on referrals, they do not always work well.
- For example, if you have a small network, then you will get less referrals. Yes, that’s obvious, but not everyone has a huge network.
- If you have “tapped out” your network, or goodwill from your network, then then you will get less referrals. This often happens in the second or third year of a business, after the initial boost of support from peers and friends starts to fade away.
- If, like me, you have a large network but who are not the right people to refer ideal clients, then you may get a lot of referrals, but they’re not always GOOD referrals.
- If you are a natural introvert, or have social anxieties, or are just starting out, or a whole host of other reasons, you may not get many referrals.
- It’s also hard – not impossible, but difficult – to control when you get referrals.
- And when referrals come to you, sometimes they don’t come along with a huge amount of trust, because it was a weak referral, possibly because it was from someone they haven’t built trust with.
I see three potential solutions:
- Constantly and deliberately build out your network in a strategic way, and learn how to ask for referrals.
- Do some form of outbound (cold-email, cold-calling, using LinkedIn outreach).
- Become an recognized authority in your specialization, and have ideal clients come to you.
The last option is very much my preference, and that’s what I’ll be talking about on my email list and podcast.