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How to build a referral-based business

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Without question, getting clients through referrals is the most powerful way to build your business, not to mention the most enjoyable. Bob Kerrigan, one of the most successful salespeople I know, says, “The way of the world is to meet people through other people. And the referral is the warm way we get into their lives.” Think about this for a minute.

When you’ve needed to find an attorney, an accountant, a car repair shop, a dentist, etc., have you gone to the yellow pages? Did you wait for someone to cold call you? Probably not. Don’t you usually ask a few trusted friends first? Why? Because you’d rather not “buy cold,” you’d rather be referred.

Since your prospects would prefer to meet you through a referral, you’d better make that your preferred method of prospecting.

Two powerful elements at work

Referrals work so well because of two main elements. First, commonality. The fact that your prospect and you know someone in common warms up the conversation from the very beginning. Usually, the better the relationship between your referral source and your new prospect, the warmer this first interaction will be.

The second element present is endorsement — either implied or explicit. An implied endorsement comes when you use the name of your referral source right away and mention that the referral was given because of the great service you provided. An explicit endorsement comes when your source speaks to your prospect before you call.

These elements of commonality and endorsement don’t just make the first conversation easier. They also significantly increase the chance of winning the new client. You’ll get fewer obstacles and objections, you’ll immediately operate from a higher level of trust, and your new prospect-turned-client will have a stronger sense of loyalty right from the start.

Another expert in the area of referrals, Joe Stumpf, makes this distinction: a customer is someone who works with us on an ongoing basis. A client is someone who works with us on an ongoing basis and gives us a referral. An advocate is someone who gives us a steady supply of quality referrals. Part of your referral system is to create as many advocates as you can.

The success trap

Do your clients know that you value their help? Do they know that you’d love them to become an advocate for you? Truth is, many of your clients have advocate potential. If you don’t have many advocates now, either you aren’t delivering incredible service, they don’t trust you as much as you think, or they don’t realize you’d like their help.

A trap that many people fall into is what I call the “see how successful I am” trap. Since you know that people like to do business with other successful people, you want them to think you’re successful. Nothing wrong with that. However, in your effort to build credibility, are you sending an unconscious message that you don’t need or value their help? Have you ever had a client say, “I gave your name out to a friend; I hope that’s OK”? If you ever hear that, all I can say is shame on you. It means you haven’t let your client know that you value their help.

The power of leverage

It’s time to let your clients know the value to them by taking a stake in your business. Jay Abraham calls it “ethical opportunism.” I like the word “leverage.” As you serve people better, as you create relationships of trust, a little proactivity on your part will yield many opportunities for your clients to help you reach your vision of success.

Bill Cates, CSP, recently released the Referral Advantage video training program. He is the author of “Get More Referrals Now!” and “Don’t Keep Me a Secret!” and is offering a free subscription to his referral newsletter. Go to To contact Bill, send him an email: [email protected].

For more on referrals, see:

Let prospects know referrals are expected

Don’t over-think referrals

3 steps to developing a successful referral system

For more from Bill Cates, click here.


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