Strategic, or just comfortable?
Referrals are awesome. You don’t have to spend time marketing and selling (yuk!), and since they come with a warm introduction, they tend to close at a much higher rate.
Less work and easier to close? No wonder 71% of people in our survey said they get the majority of their leads through referrals.
It’s comfortable, no doubt… But every yin has its yang.
So today, I want to play devil’s advocate a bit to challenge those of you who aren’t marketing yourself because you already have enough referrals…
1. Referrals Are Unpredictable
Like I said, referrals are great — but they’re mostly passive. You don’t control when or how they come in, and even if they’ve kept you busy up to this point, there’s no guarantee they’ll continue.
And if they stop?
Without a proactive marketing strategy in place, you’ll be flat-footed and starting from scratch. Scrambling to figure out what works and what doesn’t while you’re desperate for work is not a fun place to be.
2: You Get What You Get
Referrals tend to reflect your current client base. So, if your current projects are low-budget, guess what? The people they refer are likely to be the same. People run in similar circles, which means relying on referrals makes it difficult to grow.
Marketing, on the other hand, gives you the power to be more surgical. It doesn’t have to mean more work, it can mean better work. Bigger budgets. More interesting projects. And the freedom to choose the types of clients you really want to work with.
3: Referrals Could Undermine Your End Game
Whether you’re just starting out or starting to think about retirement, there will come a day for all of us when we’re no longer running our agency.
If your lead flow is based solely on referrals, potential buyers aren’t going to give you much credit for that since those relationships will likely dry up as soon as you leave.
But a business with a proven, proactive marketing system? Now that’s something a buyer will pay attention to. It takes things from selling a book of business to selling a company that can continue to print money. This could, potentially, double or even triple your buyout.
So, be honest…
I’m not saying referrals aren’t great (they are), and I’m definitely not saying you should turn them away (you shouldn’t) — but ask yourself these three questions:
- What happens if your referrals slow down or stop?
- Are you working on nothing but your dream projects making more money than you want?
- Are you building a business that can thrive without you?
It may be that relying solely on referrals is simply more comfortable than it is the best strategic decision.
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