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3 Common Delusions About Referral Sources

Avoid these pitfalls if you want to create meaningful relationsips.

Delusion No. 1: You should always get a referral when you're in front of the referral source.
If your strategy requires you to be present in order to get a referral, you're putting severe limits on your potential business. Referrals happen when you're in front of the referral source only if your system is dependent on your asking for the referral and getting it at the same time.

In a strong, fully functional referral system, most of the referral process is going to happen when you are not present. You don't want the system to shut down when you're not there; you want your referral partners to be out looking for opportunities to refer you at all times. You want them to be in the habit of recognizing good opportunities for you and persuading prospects to contact you. If they don't think of you when you're out of their sight, you haven't done a good job of training your clients or selling yourself to your referral partners--which probably means you haven't been doing them much good either.

You should make it your job to equip your referral partners with information about you that can be easily communicated to prospects. You should be making sure they're motivated to refer you when you're not around. And you should have a tracking system that can tell you what happened when you weren't there in person.

This doesn't mean that you shouldn't ever expect to get referrals when you're present. Sometimes things work out very well under these circumstances. Everybody's had the experience of being introduced to someone at a meeting or a mixer and coming away with a juicy business opportunity in hand. In general, though, you shouldn't limit your referral business to people you've just met. This is known as linear marketing, and it's self-limiting. You can't meet people fast enough to sustain your business and still have time to operate it. Networking is all about leveraging the impact you can have on your target market. If you have others out there promoting and referring you when you're not around, your results will be exponential rather than linear.

Avoid turning every gathering into a quest for immediate referrals. If you ask for referrals from clients every time you meet them, you're harming yourself in at least two ways. First, you're training your clients or referral partners to refer you when you're there, but to forget about you when you're not around. Second, you're just making withdrawals from your relationship bank when you should be making deposits by finding ways to help them in return. You're giving your partners little or no incentive to refer business to you.

When you're dealing with a client, bringing an expectation of referrals into the meeting sends the client a subtle but destructive message: "I'm going to take care of you, and after I've taken care of you, I'm expecting you to refer me." Or: "Not only do I expect you to pay me, I expect you to refer me." It's better to keep the two transactions separate: one meeting in which your sole purpose is to take care of the customer, another meeting at which you discuss how you can benefit each other's business.

Delusion No. 2: To maximize your chances of getting good referrals, it's best to move from one networking group to another at regular intervals.
This is called "scorched-earth" networking, and it's about as friendly as it sounds. The scorched-earth networker burns and pillages for new business. He's a hunter at business meetings, more interested in bagging the big sale than in building relationships and helping others. He's the old-time "gladhander" at business mixers, the guy with all the sincerity of Herb Tarlek (the salesman in the old TV show WKRP in Cincinnati). He does everything we say not to do if you want to build your business through referrals. He represents the absolute worst in networking.

The scorched-earth networker is constantly dissatisfied with the quantity and quality of the referrals he's getting, so he moves on. He flits from one networking group to another, doesn't establish any roots or relationships, networks relentlessly with everyone he meets (often inappropriately), believes that being highly visible is the key to referral success, and expects referrals from others even though he has done nothing that would make anyone else want to help him.

The scorched-earth networker doesn't stay in one place long enough to build the kind of relationships it takes to truly capitalize on referral networking. If he were an apple farmer, he wouldn't be a very good one. He would plant rows of apple trees, and when they didn't mature and bear fruit after only a few days, he would become impatient and start pulling up and replanting the trees in a "better" place. Every time the trees were uprooted, they would grow weaker and weaker, and finally they would die.

Serious networkers understand that, in order to build mature, healthy and mutually profitable relationships, they must devote a lot of time and effort to growing those relationships.

Have you heard the old saying, "Time equals money?" This is never truer than when it comes to membership in a referral-networking group. The longer you are committed to building the relationships, the greater the results you will experience.

Delusion No. 3: Your best source of referrals is your customers.
The reason people sometimes fall into this delusion is that they've been trained to believe it and have never pursued any other source of referrals. The only referrals they've ever received are from customers.

Don't get me wrong: Customers and clients can be a good source of referrals; we know that. However, many businesses (especially big corporations) are out of touch with the fact that other referral sources are available that can be extraordinarily powerful. Clients, although often the most readily available sources, are not necessarily the best or steadiest sources of high-quality referrals. The best sources in the long run are likely to be the people you refer business to. When you help another businessperson build his or her business, you're cultivating a long-term relationship with someone who's motivated to return the favor by bringing business to you, who's sharing your target market, and who will work systematically with you for mutual benefit.

With a well-developed referral network, you can realize more good referrals from one or two professional referral sources than from all your customers combined. Why? Because these professionals are better salespeople than your clients and they spend more time in contact with your target market. They know how to sell to your client base. They talk your talk. If you've done your job of educating and training them to refer business to you, they can communicate your value better to their contacts.

There's also a built-in problem with customers. If you're spending part of your time with a customer trying to get referrals, you're generating a conflict of interest. Instead of devoting all your time and attention to the customer's needs, you're diverting part of that effort toward your own self-interest. Customers may sense that they're not getting full value--and they may be right. You may be sending mixed messages. You may be polluting customer service time with "gimme business" time.

Yes, you can expect to get referrals from a happy customer, but you'd better make darn sure the customer is indeed happy. This means keeping your attention, and your motivations, focused on the customer's needs when that is the purpose of the visit or call. However, there's nothing wrong with asking for another appointment specifically so you and your client can discuss how you can help each other.

The author is an Entrepreneur contributor. The opinions expressed are those of the writer.

Ivan Misner is founder and chairman of BNI, a professional business networking organization headquartered in Upland, Calif. He is co-author, with Hazel Walker and Frank De Raffele, of Business Networking and Sex: Not What You Think (Entrepreneur Press, 2012).
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