Referrals rank among the most uncomfortable necessities of the business world. Yet, regardless of one’s people skills, most individuals are usually uncomfortable when seeking referrals from valued customers. Why? Because they sense customers may feel imposed upon. By its very nature, the request for referrals too often focuses on “getting” not “giving.” When this happens, it’s likely to leave customers feeling somewhat manipulated—an emotion that does not bode well for future relationships.
That Unsettling Feeling
Generally, with the request for a referral, nothing is said that might offer value to the customer—and the individual asking for the referral knows it. No one would think of prefacing a referral by saying, “I want something from you and I’m not offering anything in return,” yet the customer undoubtedly senses this attitude based upon the way the request has been presented. Is there any wonder why both sides are resentful over referral requests delivered in this way?
The initial hesitancy and reluctance for both parties can be overcome easily if the person initiating the request for the referral takes the time to do some homework first. The requestor needs to find out about the customer’s situation, including answers to these vital questions:
- Has our (corporate or personal) performance always met the customer’s expectations?
- If not, what can we do to make things right?
- Do we know if the customer’s current business situation is positive or negative?
- If the customer previously gave us referrals, did we follow up and deliver what we promised?
Without such preparatory groundwork and understanding of the customer’s situation, a referral request may be seen as nothing more than a sales cold call. This represents an awkward situation that does not bode well for either party.
Referrals and Business Ethics
At first, it might seem like the referral issue is irrelevant to any discussion of business ethics, but quite the contrary is true. The ethical environment can only be present when there is a mutual business proposition that offers value for both sides. When this condition exists, two key tenants of ethical behavior – fairness and respect – are also present.
In this context, it is important to consider the motives of the individual seeking a referral. In an interview in “Management Consulting News,” David Maister, author of several books on building professional service practices, observed that “people who are interested in others and are skilled at building business relationships get more business…get more referrals.” It is this interest in others that demonstrates respect.
Unfortunately, pure motives are often the exception, not the rule. The common request for a referral often becomes a fishing expedition, e.g. “can you give us the names of three companies we can contact?” When this happens, the customer has just been sent an unintended message that not only lacks respect but fairness too. Why? Because the request is one-sided. No thought has been given to the customer’s success. Rather, it’s all about how one company can use another’s name.
Another ethical consideration regarding referrals has to do with giving or getting commissions or other “gifts” in exchange for getting new business (as a result of referrals). To avoid misunderstandings or the appearance of any kind of impropriety, this issue should be addressed in a formal corporate referral policy. Then, both parties are clear up front, and a commission is paid or earned only when all the conditions are met. Not all companies offer referral fees, but for the ones that do, a defined policy is a necessity when it comes to ethical conduct.
Giving and Getting Go Together
What makes giving referrals as important as getting them? For starters, it presents the image of a company that is equally interested in a partner or client business as well as its own. Effective referral policies, especially those emphasizing giving, focus on the value of extensive networking. Don’t overlook such modern technology networks as Linked-In, Twitter (gradually gaining a following for business purposes) and the established method of joining and participating in business and professional organizations.
Remember, a clearly executed policy of giving referrals can help open other doors. When such a guideline is in place and well understood by those in the referral front lines, there is less likely to be either apprehension on one end of the call or resistance on the other. That is why a practiced effort in giving referrals is likely to have the desired effect of getting more of them.
Marketing Tips
When establishing a referral policy, include the following guidelines:
- Make referrals part of the organization’s positioning and customer relations strategy.
- Insist upon standards for those asking for the referrals.
- Require an understanding of each party’s business and environment when giving referrals and requesting them.
- Follow-up on all referral outcomes.
Recommended Reading
- Endless Referrals, Third Edition, Bob Burg
- Networking Like a Pro: Turning Contacts into Connections, Ivan Misner, David Alexander and Brian Hilliard
- Make Your Contacts Count: Networking Know-how for Business and Career Success, Anne Baber and Lynne Waymon
- Get More Referrals Now!, Bill Cates
- The Referral of a Lifetime: The Networking System That Produces Bottom-Lien Results Every Day (The Ken Blanchard Series), Tim Templeton, Ken Blanchard and Lynda Rutledge Stephenson
Business Resources
Need help with giving and getting referrals? Check out these links for more information.
- Visit the website of Entrepreneur.com, type “referrals” in the search engine and discover more than 100 resources on referrals.
- BNI is the largest business networking organization in the world, offering members opportunities to share ideas, contacts and business referrals. Their mission is to help members “increase their business through a structured, positive, and professional “word-of-mouth” program that enables them to develop long-term, meaningful relationships with quality business professionals.” Visit their website for more information.
Quarterly Quote
“Merely satisfying customers will not be enough to earn their loyalty. Instead, they must experience service worthy of their repeat business and referral. Understand the factors that drive this customer revolution.”
–Rick Tate