Amanda sat at the conference table and had the five documents with her that members of my top end Business Owner Growth Program are asked to prepare in advance of their first 1:1 coaching session.
As we were evaluating the strategies she had used to grow her business, she shared that referrals were one of her top three ways of getting project leads. I asked her about her best projects in the last year and where they originated. Many did come from referrals. What was even more surprising to her was how many of those referrals kept coming from a few really good sources.
“Without knowing it, you’ve done a great job creating strong referral chains,” I said. The quizzical look on her face invited elaboration.
“A referral chain is created by simply asking someone you know to introduce you to someone else for a specific purpose, then repeating the process over time,” I explained. “When it happens naturally, it’s serendipity. By cultivating more of these relationships, you can skyrocket your business growth.”
Size, speed, and potential are the three biggest reasons why you want to use referral chains to grow your business.
The size. Each person you know has relationships with at least 200 other people, on average, according to social research studies that were conducted pre-social media. Because you’re interested in this topic, I think it’s fair to say that with one link on the referral chain, you have access to over 200 people directly. If each of these people give you access to their first level networks of 200 people, that’s 40,000 potential people with whom to do business. LinkedIn does a terrific job of making this network effect apparent; look on the bottom right corner of your profile page to see your second level contact number.
The speed. Warm introductions from someone who knows, likes, and trusts you bring you past the initial hurdles of skepticism and defense in a business relationship. Imagine telling me that you were going to launch a new venture and wanted a great looking web site launched fast. I know dozens of people who could do a terrific job for you. Maybe after a few more questions, I say,”OK, you’ve got to meet Erin Hyland. Work with her and the Jack Out of the Box team. They’ve done work for us and they are perfect for what you want to accomplish.” Then I tap my iPhone and send you her contact info on the spot. If you take people with whom you’ve done business or supported, such as vendors, past clients, and associations, into account, that speed in jump-starting a business relationship adds up fast.
The potential. All too often, business leaders acknowledge that a particular channel, relationship, product, or project is top priority and then fail to support it with time, attention, and resources. With businesses either on the verge of the growth stage or well past it, knowing where and when to step on the pedal is vital. For example, if a single referral chain is worth $200,000 to your business, a) it doesn’t hurt to spend time together periodically and show your appreciation, and b) it’s very much worth your while to cultivate other similar relationships. Once you really decide to grow your business and can see the way that referral chains work, you’re much more committed to developing them ever more deliberately and skillfully.
When you are building links in your referral chains, you’re creating both short term growth and long-term value in your business, just like Amanda.
Reach out to the people you know through business and find a way to serve them. Offer information, resources, contacts, and the benefit of your experience. Accept that not everyone will be equally enthusiastic or clear on what to do next, but reward those who do respond and participate and engage with even more value, appreciation, and ways of improving their business conditions and personal lives. Embrace your role as a referral source and gladly seek to offer your best advice, contacts, and resources to colleagues and friends and any others whom you encounter.
Bill Ringle is a CEO, former Apple exec, published author, and angel investor. Through Grow Business Now, he offers strategies and tools to elevate growth for executives and entrepreneurs from more than 46 industries. Bill has conducted nearly 200 podcast interviews on My Quest for the Best, where industry and business leaders share their secrets to success.