by 
I’m of two minds when it comes to referrals as a lead source. On one hand, I’m jaded by the people who claim their number one source of clients is “word of mouth and referrals,” when they really mean, “I have no idea and no plan.” On the other hand, I know people and businesses that have absolutely mastered the art of referrals, driving all their growth through this one channel.
It’s easy to separate the two. The latter has a plan and actively works it, and the former has none, as I’ve already pointed out. What’s most interesting to me is how few firms are successful at codifying an effective referral strategy when the results can be so profound. One of the reasons for this is that not all firms can reap the same benefits from referrals.
Firms That Absolutely Should Formalize an Approach to Soliciting Referrals
If your firm meets these two criteria then you should absolutely prioritize a referral strategy.
1. You Sell Strategic Services to Senior Executives
As my 2Bobs podcast co-host David C. Baker pointed out to me years ago, we don’t take referrals from people that we view as beneath us. Rather, we consider the referrals that are passed down or laterally across to us. That means the more senior the client, the more powerful the referral.
Think of all the referrals you’ve received in your career. There are the ones that came from your most esteemed referral source where the referral itself is often enough for the person to decide to hire you. Then there are the referrals that came from less lofty sources. There was still lots of work to do on these ones, a competitive sale to navigate, perhaps with an RFP to reply to or an unpaid pitch to make.
And, of course, if you’re dealing with someone senior then the work you’re doing is likely to be strategic in nature. A brand or marketing manager might refer you to another manager in the same company, but they’re less likely to refer you to peers in other companies. Even if they do, it’s at best a lateral referral from a mid-level manager.
2. Your Clients Talk to Each Other
Sometimes being vertically specialized in an industry brings a referral advantage because clients talk often and refer freely. Verticals of non-rivalrous goods or services like Hollywood entertainment—movies—tend to be collegial like this. But some verticals are more competitive or even secretive (think CPG or FMCG), with clients reluctant to help their competitors. You have to learn the lay of the land in the vertical you serve.
One group that does talk to each other, however, is CEOs of large companies. This is a hard group to reach via regular content marketing channels unless you’re doing TED talks, speaking at exclusive events like the World Economic Forum, writing New York Times best-selling books, publishing in Harvard Business Review or getting quoted in the Financial Times or Wall Street Journal. If this is your audience, a referral strategy is—or should be—a meaningful part of your lead generation plan.
Almost every other business can benefit from referrals, too, so stick with me while I share the story of the most compelling and successful referral program I have ever encountered.
The Universal Referral Framework
I’ve read 5 or 6 books on referrals in search of the magic formula and my conclusion is that every one of these books should have been a blog post or even a tweet thread. It’s just not that deep of a subject. And still, many businesses that should be generating meaningful referrals struggle to do so.
There’s a simple, universal three-step framework for getting more referrals. I learned it from Strategic Coach, the coaching system for entrepreneurs, but it’s at the heart of all the referral systems needlessly stretched out into 250-page books, including the best system I have ever seen. Here it is:
- Do good work
- Say please
- Say thank you
It’s that simple. Almost.
Doing good work is straightforward—your clients aren’t going to spend their political capital on you if your work is merely okay, efficient or inexpensive. But there is some nuance to steps two and three—how and when to say please and thank you. I won’t go into all that detail here but I will share one of the best systematic referral machines I’ve ever encountered. Unsurprisingly, it too comes from Strategic Coach.
A Proper Referral Machine
I was in Strategic Coach for three years and referred at least a dozen people to them in that time and many more since then. Why? Three reasons:
- They did good work
- They asked nicely
- They thanked me
Strategic Coach has a saying, “Everyone is referred and everyone refers.” In fact, if you attend one of their sessions and you look at the coach’s classroom list you will see that next to the name of every entrepreneur in attendance is the name of the person who referred them. The saying, “everyone is referred and everyone refers,” says to the entire organization, “we are serious about referrals. Referrals are everything to us.” And so they have a tight system built around these three simple steps.
Step One: Do Good Work
The Strategic Coach experience isn’t perfect, but it doesn’t have to be. For me, it was very good. It delivered value. I enjoyed it. And it was a joy to watch a well-run organization deliver the goods. Enough said.
Step Two: Say Please
They asked. Every time. And at exactly the right time.
Four times a year I would spend a day traveling to the city where the day-long sessions were held (Vancouver, in my case). I would spend the next day in class, then travel back home the following day—Wednesday to Friday.
Monday, I was back in the office and my phone would ring before noon. The same Coach sales rep would call every time and ask me how the program went. He was a salesperson, but he had deep knowledge of the content, having sat through these sessions many times. After a debrief that was more like a one-on-one coaching session (this is an important point: he was providing value in the call, not just asking me for something. See Step One: Do Good Work, above), he then asked me for the names of other entrepreneurs I knew that might benefit from the same experience. I never wanted to disappoint him. I always searched for names and often came up with them. From there I volunteered to make the introductions.
He was the only salesperson I have ever encountered where I knew he was going to ask me for a referral and I found myself wanting to provide one.
I contrast that with every other request for a referral I have received—the majority of which have made me wince in discomfort—and there is no comparison.
The classroom experience was valuable. I was spending a lot of time and money on it. The salesperson always added value in the call. He timed his request perfectly. He was comfortable asking because he was certain that he and his colleagues were delivering value. I introduced him to people I truly thought his organization could help, and I felt good about it.
Step Three: Say Thank You
By my estimation I have referred close to $1m in business to Strategic Coach. Some of you will join because of this post. You will cite me as a referral source and they will thank me. I’m not trying to drive business to Strategic Coach—I’m just talking about their great work. And they will thank me without rewarding me financially. And I will appreciate it. All of this happens because they have codified a simple process.
With every referral, I receive a signed note from one of the owners, Dan or Babs Sullivan, thanking me for referring someone into the program. When I was in the program, the thank you note was accompanied by one of Dan’s books or an Amazon gift card of a token amount. They weren’t rewarding me in a financially meaningful way. They certainly weren’t bribing me. They were simply thanking me with a personal note. And it worked. I was and still am delighted to get the thank you notes for helping to build a good business.
Many of your clients would feel the same way if you similarly codified this simple process.
Now It’s Your Turn
Beyond doing good work, how might you add value in the conversation where you ask for a referral?
Where in the engagement should you be asking for the referral?
How will you say thank you in a manner that doesn’t cost you much, but brings a smile to the face of your referring client?
And how will you codify all this into a system, track it and report on your progress?
Some of the most profound results we achieve in business can be had through codifying a simple process. Generating leads through referrals is one of those areas. It’s not complicated. You just have to map these three simple steps in a way that is right for your business, and then execute consistently.
-Blair