You just had a wonderful lunch with Susan, a colleague of 4 years. You exchanged stories about your families, you gave each other a progress report on your respective businesses, and you shared some details on some great promotional strategies you’d learned earlier in the month. Now you’re back at your desk, answering a few urgent emails that popped up on your phone in the last hour, and a coworker stops by and casually comments: “You sure do spend a lot of time with Susan. She must be sending you a ton of referrals.” The comment catches you off-guard, and you realize there’s a tough question swirling around in your head—one you’ve been avoiding: “When was the last time I actually received a referral from Susan?”
This scenario spotlights a key question facing many sales people regarding referrals. Have the professional relationships you’ve developed over the years become fruitful referral partnerships, or have they simply remained pleasant friendships?
A referral partnership begins with vetting a professional associate in the hopes of creating a relationship that mutually benefits each other—specifically one that yields a consistent stream of referrals. It’s an involved and nuanced process that often takes months, and sometimes, years, to cultivate, and there are some common mistakes, resulting in the referral part of the relationship falling by the wayside. Here are the top 3 pitfalls and ways to avoid them:
#1 You were not transparent about your intentions.
After several encounters with a potential referral partner, you might be convinced you’ve landed a perfect fit, while the person you’re vetting has no clear idea what you want from the relationship. Even worse, you may feel strongly about a potential partnership, and be completely unaware that the feeling isn’t mutual. The key here is to fully disclose your thoughts and ideas so the potential partner knows exactly how you see this alliance developing. Here is an example:
“Dave—as you know, our services overlap in many areas, and I’m impressed with what you do. I think there might be an opportunity here for us to refer each other. What are your thoughts on that idea?
A lot can be explored once you’ve presented this possibility, but the most important point is to be transparent about your interests in a partnership, and to give the other person an opportunity to express his or her thoughts on the prospect.
#2 You did not state your expectations and identify specifics.
Even if you’ve both acknowledged that a lot could be gained through a referral partnership, each of you still needs to name what is expected from one another. Think of it as an operational agreement:
- How often will you meet? (Quarterly? Monthly? Weekly?)
- How many referrals do you expect? (One per year? Five per week?)
- How will the referred prospects be introduced? (Over the phone? Email? Letters of recommendation? A combination of methods?)
- Are the referrals reciprocal? (Customarily, the expectation is that an equal amount of referrals will flow back and forth. Depending on the type of business, sometimes referrals are expected to only go one-way, e.g. an established physician referring patients to a new physical therapist’s office. Just make sure the expectations are clearly understood by both parties.)
- Is the referral relationship exclusive? (Are you agreeing to only refer each other’s services, or will it be okay for either or both of you to refer other associates in your industry?)
By naming these specifics, you’re setting up a clear outline for what you can expect from this relationship, and what is to be expected from you. Naming specifics also helps you gauge the time investment necessary to meet the agreed expectations, and takes the guess work out of assessing the success of your alliance.
#3 You did not check in with your referral partner, and assess your progress.
There is often an initial flood of referrals in a newly-formed partnership, but within a year, the numbers usually dwindle to almost no referrals whatsoever. This isn’t a matter of bad luck; there are 2 critical steps commonly missed in the process that, when implemented, will greatly increase the chances of a productive relationship in the long run.
First, you must be sure to track the number of referrals you’ve gotten as a result of this arrangement. Having those metrics in hand will serve in your assessing the actual benefit of a referral partnership. Further, if you decide down the road to discontinue the partnership, there’s the potential for one or both parties taking it personally. Those kinds of discussions will be easier to keep on the professional track when you’ve got actual numbers as a reference point.
Secondly, and most importantly, you need to schedule periodic reviews of these metrics with your referral partner. These scheduled meetings are great for determining and implementing small-but-necessary tweaks to the process. For example, you might find that email introductions are more effective than phone calls, but neither of you are consistent or intentional with your referral methods. Or maybe your partner has been neglecting to articulate key points about your business that differentiate you from your competition. Taking time to assess each other’s referral efforts (and to honestly communicate about the process on a regular basis) is the best way to optimize your process, and to ultimately determine if the relationship is a good use of your efforts.
The main theme of this article is to point out the neglected steps that often occur when people enter into referral partnerships, sometimes due to both parties not treating them quite professionally enough—which, unfortunately, often results in frustration and a waste of time for all concerned.
That said, there’s great value in developing professional friendships without expecting to receive any referrals or business-related benefits whatsoever. The fact is, friends and family members often don’t relate to the specifics of your professional endeavors, and can even find it off-putting if you share too many details pertaining to your work and your projects. For this reason, professional friendships are important for swapping business ideas, venting frustrations, and sharing your job-related victories.
If you would like to learn more about creating referral partnerships, read Part 1 and Part 2 of an earlier article.
