In our previous post, we discussed how to decide if a referral process will help your business. If you are reading this post, I assume you are ready to take the next step and put a referral process in place, so let’s get started.

Why Do People Refer

Before building a referral process it’s important to understand what motivates people to suggest a business when their friends, family or colleagues need a product or service. The reasons people refer are many, they include:

  • Social currency – It makes the referrer look good or clever.
  • Helping someone boosts the referrer’s self-esteem.
  • Making a connection with people.
  • People just want to be helpful, with no other motive.

You can aid the referral process by understanding the following and trying to use each to your advantage.

  • The world is complex and we need shortcuts.
  • When we care, we share.
  • Remarkable things get brought up more often (Talk triggers).
  • People like to tell stories.

Trust Is Vital

There is a risk involved in making a referral. What if someone refers to a company and they fail to deliver a good service? That does not make the referrer look good or clever and damages their relationships (connections). Instead of being helpful, the referrer has achieved the opposite.

The referrer must have complete trust in the service provider. That is one reason I do not recommend paying past/current clients for referrals, as it erodes that trust.

The Process

As outlined above, to generate a consistent flow of referrals of significant and measurable value, you need a process. The steps in that process are:

  • Identify referral sources.
  • Define the referral processing team.
  • Define the marketing process.
  • Develop materials & resources.
  • Develop relationships with referral sources.
  • Train the team and referral sources.
  • Deliver
  • Monitor/measure/adjust

Let’s briefly look at each step in turn.

Identify Referral Sources

The first step is to identify who might refer your business to their friends, family or colleagues and why. How you might persuade each of these groups to refer is covered below:

Typical referral sources include:

  • Existing clients
  • Past clients
  • Acquaintances
  • Former colleagues
  • Complimentary businesses
  • Lead generators

Some referral sources are obvious, others less so. There are many potential sources of referrals from complementary businesses.

One example of a complementary business is one that services the same potential client base, but at a different stage in the transaction. For example, an estate agent and a solicitor. Another more loosely linked complimentary business is one that satisfies the same generic need. One example is Accountants and IFA firms.

Some complementary businesses are less obvious. They could appear to be competitors, but on closer inspection, they may focus on different market sectors. There could be a mutually beneficial relationship to explore.

Lead generators are often online-based and come in many forms. For some lead generation is secondary to their main business objectives. For others, their only aim is to generate leads and make as much revenue as possible from selling those leads.

My experience is to treat lead generators with extreme care. It is too easy to pay a high price for poor quality (or fraudulent) leads. That said, some can produce results, but those results tend to fall away rapidly after the first few months.

In all cases, treat referral relationships with other businesses with care. As mentioned in our previous post, there are often industry-specific rules and regulations on referrals.

Define The Referral Processing Team

Somebody needs to have overall responsibility for the referral process. The same person should collect and distribute data on how well (or not) the process performs.

What happens when a referral lands must be clearly defined. There should be no confusion over expectations and who is responsible for action.

Sounds simple, but it is where most referral processes founder. There is no point in allocating time and resources to a referral process if nobody gives it the attention it deserves.

If someone is responsible for referrals, then some other task may need to be reallocated or deleted. People need time to ensure the referral process runs as intended. Fail to give them that time and the process will almost certainly fail.

Define The Marketing Process

With referral sources identified (see above), a process should be established to make sources aware of the process and then progress them towards action.

The marketing process will vary to an extent depending on the referral source. The tactics will be online, offline (including outreach) and face-to-face and will vary depending on the situation.

This process needs all the skills and expertise you might expect to put into a lead generation process. It is too involved to cover in detail here and will be the subject of a future post.

Develop Materials & Resources

Any marketing process is fuelled by content (text, images, video, printed material). Those materials must be in place before the launch of the referral process.

This activity does not necessarily need to be time-consuming or expensive. There are tools emerging that simplify the content creation process. Activities, that were once outsourced, can be brought back in-house.

Develop Relationships With Referral Sources

This is the key step. Hopefully, you will have strong relationships with current and past clients. However, as time passes, you will need a process to keep reminding past clients that you are still active and still have lots to offer.

With other referral sources, it is all about personal relationships and making people feel valued. Services firms have relied on these relationships for decades, so it is nothing new. It just requires the time to (consistently) nurture relationships.

Train The Team & Referral Sources

Your referral sources need to know what you define as your perfect client. You will receive referrals that are not a good fit, that is inevitable, but you want those to be a small percentage of the total. That said, regardless of the fit and outcome, each referral must be left with a positive impression of the firm.

You will have more control over some referral sources than others. Businesses that refer you can educate over time. It is more difficult to control the referrals received from past and current clients.


It is unlikely a referral process will run smoothly from day one. It needs time to deliver results. As you measure and adjust then each small refinement will compound to deliver on your objectives.

The establishment of a well-defined referral process can contribute to the long-term growth of a services firm. By fostering strong relationships with clients and partners and implementing clear communication channels, a services firm can harness the power of referrals. But, to achieve that aim, they need a process.

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