A referral is a referral, right? At first glance it doesn't seem too complicated to develop basic referrals for your business; however, there's quite a big difference between a basic referral and one that's been properly developed.

In an earlier article, I talked about the difference between a lead and a referral (see "What's Better: A Lead or a Referral?"). Here I would like to discuss the varying levels of a referral, starting at a level that's just one step above a cold lead. These types of referrals are ranked in quality from lowest to highest. Number 1 is the lowest-ranked type of referral (the least desirable) to give and receive, and number 8 is the highest (most desirable). You'll find these principles work for both giving and cultivating referrals.

1. Names and Contact Information Only. Getting a name and contact information from a referral source is better than nothing--but not much. Unfortunately, this is what many of your potential referral sources probably think of the first time you say the word "referral" to them. Receiving the name of a prospective customer from a friend isn't a bad thing--it does represent a certain level of trust in you by your source. But the networking value of just having a name and contact information and nothing more is quite low.

2. Authorization to Use Name. Once a referral source has given you permission to tell the contact she referred him to you, you can feel fairly certain that you've established a good level of credibility with her. By allowing you to say that she endorses your product or service, your source has given you valuable leverage with the prospects that know her. The problem with this type of referral, however, is that the work of developing the prospect still rests with you. Once you've conveyed that she recommends you and your business, the task of selling really begins.

3. General Testimonial Statement and/or Letter of Recommendation and Introduction. It's a noteworthy accomplishment to develop a referral source to the point where he's willing to say and write nice things about you. This demonstrates that you've built a moderate level of trust with him. Going a bit further and providing you with a letter of introduction is even better, because this usually includes background information and a description of your product or business that's filtered through the lens of the author.

4. Introduction Call. This level of referral takes the effort on the part of the referral source up another notch. The source who's willing to take the time to make a personal phone call is committing to a phone conversation with a prospect that'll require at least a small amount of preparation. The inferred purpose of this call is to prepare the way for communication from you.

5. Note or Letter of Introduction, Call and Promotion. The impact of a letter followed by a call which promotes your business implies an even higher level of commitment on the part of the referral resource because of the time required to do both. Promotion is advocacy--an outright recommendation of your product and business accompanied by a description of its features and benefits.

6. Arrange a Meeting. By arranging a meeting for you and the prospect, your referral source moves beyond the role of a promoter to that of a facilitator. She works out the details of getting you and the prospect together. In effect, your referral source is acting as an active business agent. In the mind of your prospect, the referral source has made a serious commitment of time and energy on your behalf, which conveys a deep trust in and approval of the product or business you provide.

7. Face-to-Face Introduction and Promotion. Adding promotion to the in-person introduction increases the effectiveness yet again, because your referral source is now actively engaged in selling your product or business, rather than just being a meeting facilitator.

8. Closed Deal. After your referral source has described the features and benefits of your product or business, he then closes the sale before you even contact the individual. Nothing else is required of you except to deliver the product and collect payment. This is the highest level of referral you can achieve.

To get to the point where you're getting those 8th-level referrals, you'll have to work with your referral sources and tell them what you would like from them. This develops over time, as well. The better someone knows you and is confident in and sure of your business, the more frequently you'll receive these higher quality referrals. It's all about education!

Make it your goal to operate at the 8th level as much as possible with your referral sources. Keep in mind that you'll want to begin referring others at the 8th level, as well. It's a real testament to that old adage: "What goes around, comes around!"