Many people rely on referrals from others as a primary source of business. However, not everyone who relies on referrals is successful. Why is this? I've studied these folks -- and those who are not successful seem to have "surface level" referral relationships.
They know just enough about their referral sources' businesses to get by. They don't actually know a lot about the people themselves. They tend to say vague things like: "He is really nice," "You'll like her; she's a good person," or "Well, if you just meet with him, I am sure you'll like him." If pressed further, they probably couldn't tell you much more about those people -- and they almost certainly have not built enough social capital with them to count on them when they really need something from the relationship (and vice versa).
Building the deep referral relationship -- the kind of relationship that leads to referrals -- is almost completely dependent upon the social capital you have built with someone. Social capital is like financial capital. To amass financial capital, you have to invest and grow your assets. You have to have money in the bank before you can make a withdrawal.
Relationships are very much the same, referral relationships in particular.
Here's a great example of someone who amassed quite a bit of social capital. . . from me!
Alex was what I would call a casual business associate, but from early on after our introduction, every time I spoke to him, he invested in the relationship. He gave me ideas, gave me his time, he even did some work on a website for me. He invested. . . and invested. . . and invested.
I kept asking him how I could help him -- to return the favor and reciprocate for all the kindnesses and great help he'd been to me. His answer every time was, "I don't need anything. I'm happy to do this."
This went on for almost a year. Every two to three months, Alex would show up on my radar and do something for me.
Then, one time, he phoned me and said, "I have a favor to ask. . ." and I stopped him right there before he could say anything else.
"Yes!" I said.
"But you didn't even hear what the favor is!" he said, laughing.
I replied that I didn't have to hear what the favor was. I told him I knew him well enough to know he was not going to ask me something impossible, and that he had invested so much into the relationship that I would do anything in my power to help.
When he told me what he needed, it was easy, a small promotion by me for one of his services. It was such a big thing for Alex, and something easy for me. I was happy to do it!
In my career, a huge number of folks come to me and ask me to promote something for them. The thing is, the majority of those who contact me have never actually met me or had a previous conversation with me. They've never invested in the relationship, yet they want a withdrawal from it!
Before you ask for a withdrawal, make sure to make an investment, and build a deep referral relationship. If you can answer yes to most or all of the following points about a person and her business, you would have a pretty deep referral relationship:
- You trust them to do a great job and take great care of your referred prospects.
- You have known each other for at least one year.
- You understand at least three major products or services within their business and feel comfortable explaining them to others.
- You know the names of their family members and have met them personally.
- You have both asked each other how you can help grow your respective businesses.
- You know at least five of their goals for the year, including personal and business goals.
- You could call them at 9 o'clock at night if you really needed something.
- You would not feel awkward asking them for help with either a personal or business challenge.
- You enjoy the time you spend together.
- You have regular appointments scheduled, both business and personal.
- You enjoy seeing them achieve further success.
- They are "top of mind" regularly.
- You have open, honest talks about how you can help each other further.
You may be shocked at the level of personal knowledge required for a deep referral relationship, and you may want to argue that referrals should be all about business. I completely disagree. Referrals are personal. When you give a referral, you give a little of your reputation away. You need to know the person that is going to affect your reputation. It takes a lot to develop this type of relationship, but those who do will certainly succeed at building a business from referrals.
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.