Referrals aren't Scalable

Many business owners seek to build their business off the back of referrals. I must confess that a large proportion of my business has come from referrals. There is no disputing that it is an effective way of generating new business as generally, people like to do business with those who they know, like and trust.

If Sally did a good job for you and I like her, then I might be happy to recommend her to you.

Notice, I said "might".

There are two main problems with referrals as a scalable growth strategy:

1 You can't control the sales cycle

You can't switch me on and off as a referral generator. I don't work for you. I'm not your sales guy. I am just a happy customer that might recommend you if someone happens to ask me whether I can recommend anyone and it happens to be your business area.

Did you clock the high level of 'happen-stance' here...?

2 There is risk for me in recommending you

You might have done a good job for me. But if I recommend you to my mate John, what if you do a terrible job for him? Now I suffer the embarrassment with my mate. What if it's a big ticket item and it affects our relationship? It's just too big a reputational risk for me so I am more likely to stay quiet (espec for high ticket items). Soz.

There are potential ways of mitigating point number 2, for example by encouraging satisfied customers to point your potential "recommendees" in the direction of some freebie that you offer - they can then make their own mind up about whether they want to take the next step and engage you. This reduces your risk.

But referrals are not sufficient in of themselves for most businesses to grow and thrive. Sure, include them as part of your marketing mix but I wouldn't expect to build a (big) business off the back of this strategy.

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Posted from my blog with SteemPress : https://businessn2k.com/referrals-arent-scalable/

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