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When, if ever, is it time to quit building a relationship with a potential referral source?

Guest post by: Andy Lopata

Article Overview: I was recently asked this question on Twitter. It's a very interesting question. Referrals come from people with whom you have built relationships over a period of time. In some cases the relationships may take years to develop. So how do you know when to focus your efforts elsewhere?

When, if ever, is it time to quit building a relationship with a potential referral source?

The first thing to understand is how a referral comes about. People are more likely to refer you, and provide you with quality referrals, the more they trust you and understand what you do. Some businesses need greater levels of trust and understanding before people refer them than others. For example, you will probably be more comfortable referring a printer you have only recently met than an accountant. Everyone you meet and everyone around you is potentially a referral source. Whether they are clients or colleagues, family or friends, they will have their own network and will potentially come across opportunities to refer you.

A referral strategy, however, requires a degree of focus. While you can make efforts to build stronger relationships with everyone around you and communicate your needs more clearly to them, it makes sense to spend some more time developing specific referral relationships with a small group of people.

In each of these cases, you need to understand how much they want to and are able to refer you. In other words, how much do they trust you and understand what you do? These are the first two areas to focus on, unless they score highly on both these counts you can't start asking them for referrals.

To do so, you have to look at each person individually and ask yourself what will inspire them to want to refer you. How can you get them to trust you more? What do they need to know to understand better what you do and who you do it for?

Each of these steps take time. Some people in your network will be ready and able to refer you straight away. Others need a lot more attention.

It is this attention that provides the answer to Vena's question. In theory as long as a relationship is growing and remains positive, you shouldn't write off anyone as a referral source. However, if a lot of time and effort is required to develop the trust and understanding to a sufficient level for them to refer you, it is time perhaps to consider the return on that investment.

A harsh way to talk about relationships, perhaps, but a necessary evil. If you are investing your business time and resources in cultivating relationships with the intention of generating referrals, you need to have a clear vision of what success will look like.

Think about who people know and the conversations they are likely to have. Once they have reached a sufficient level of trust and understanding to refer you comfortably, are they re in a position to refer you on a regular basis to the people you want to meet? If so, carry on investing the time and effort to get to that stage. If they have a limited network and don't have the type of connections you are looking for, perhaps you should look elsewhere.

Ideal referral sources are in a position to keep introducing you to potential customers and other potential Champions for your business. Your referral strategy will be far more efficient if you develop strong bonds with ten key people who each refer you five or six times a year, than if you try to build relationships with 50 or 60 people who might refer you once.

I don't think you ever need to 'quit building a relationship with a potential referral source', or with anyone with whom you have a rapport. You may, however, choose not to spend as much time developing that particular relationship if the return is outweighed by the investment.

Related Articles
  Seven Strategic Tips On Dealing With Referrals From Your Strategic Thinking Business Coach
  When Good Referrals Turn Bad by Keith Rosen, MCC
  When to Ask for Referrals
  The Importance of Sales in Networking
  Getting Referrals

Article Tags: accountant, colleagues, quality referrals, referral source, relationship, relationships, small group, two areas



Related Forum Posts
Re: Earn Customers For Life On Twitter - [quote="tyroneshum":3ecia3ub]Most social networks in present are used in businesses already. This is caused by the fact that most people spend most of their time surfing the net and updating their sites. This post gave a lot of tips on how to earn customers through social networks and it is the same as treating your clients as your friends too, building up a relationship with them which you can use for your business purposes.[/quote:3ecia3ub] That is the main point, to build a relationship first. Doing business whether it is online or off your sales base is dependent on building a good relationship with your potential customers. People still are happier buying things from someone they feel they know and can trust. MichelleJ
Re: Your weapon for success - Thank you for the list, keeping that customer relationship is vital because they can also act as your own little marketing team when they talk to their friends and family. Also ask for referrals! Each referral is way better than 40 cold calls.
Re: Beating a bad economy -- from home - Heheheh, since I quit my job in September to go at my home-business full time, my profits have nearly doubled. I speculate that I would have been laid off by now if I hadn't quit...
Re: Twitter Woes.... Whats slowing you down? - Hi Dallasberry, I must admit it took me a while to warm to the whole concept of social networking. It seemed that some people were using this as one way traffic for their business adverts and Tweeter is very much like this. It is for social interactions and relationship building first of all and if business follows as a result then great. I agree with GT that Tweeter disciplines you to be brief with the 140 character limit but I quite like that part of it. The other side of the coin is that you can’t force people to read your tweets no matter how good an offer or service you are sending as you have to log on and look for messages which a lot of people just don't do so I am still not convinced of it's value as a business building tool but time will tell, regards, Mal.
Social Networking Site Endorsements - I'm curious what you all think - On Linked In social networking site, members can give "endorsements" to their Linked In "friends". I see this the same as giving someone a referral or endorsement in a business sense. When I consider endorsing or recommending a person in business- I want to have an actual business relationship with them. This would include former employers or employees, clients, co-workers -- this kind of thing. Today I get an endorsement request from someone I know from a distance and he has written one review for me. That really doesn't give me any point of reference so I told him that I didn't think I knew enough about him to write an endorsement. I have also noticed negative things in the way he deals with some acquaintances that concern me - so the fact that I really don't have much personal experience with him - is a good reason not to give an endorsement. My feeling is that when I give an endorsement, recommendation or referral, I feel that I'm putting my reputation on the line and I'm not willing to do that for people I don't know well. Any thoughts?? He was offended and told me that I don't understand what an endorsement is. How do you all view endorsements?? Shri


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