Yesterday, I discussed some of the downsides of a dependency on referrals:

It’s unpredictable, you can tap out your network, they can bring in bad-fit prospects if your business changes, your network shrinks as people change jobs or retire. This makes it hard to grow, change your business model, and limits your choice of clients and projects.

Steven replied with a super point:

My experience is that consultants who think they have a referral business often neglect what those referrals see first. The consultants think every referral simply picks up the phone, when in fact, they’re likely to look at the consultant’s website, LinkedIn profile, etc.

So consultants often think “everyone” who is referred calls them, but they have no idea that there were other referrals who were unimpressed by the first impressions and moved on to someone else to whom they were referred.

This is a super point.

I think there’s a survivor bias in the story they’re telling themselves.

(Survivor bias tends to skew decision-making by focusing only on successes and ignoring failures, leading to overconfidence and risky choices based on incomplete information.)

In this case, they are only seeing and considering the successful referrals, while being unaware of – and therefore neglecting – the potential referrals that they lost due to unimpressive online presences. This leads to a skewed perception of how effective their referral system truly is.

For me, the logical conclusion is that even if reliance on referrals is your primary source of lead generation, you should still actively manage and enhance your online presence, try to make a great first impression through your website, LinkedIn profile, and other platforms.

By doing so, you can capture a larger portion of your referrals, including those who are initially hesitant. It also is a great start if you’re intending to start actively building your authority. More on that tomorrow.

– Alastair.

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