3 Perspectives: Shooting Yourself in the Foot with Word of Mouth Referrals

Reading Time: 2 Minutes Beyond

Let’s say you worked with a client and have developed a wonderful working relationship. You and your client are off to a good start, with a solid level of trust as your foundation. Most of us understand that leads can often come from referrals within our vendor or colleague pool. Yet have we stopped to consider how much we’re putting on the line each time we give out a referral? You may be jeopardizing your relationship with your hard-won client each time you send out a referral.

They say who you know and associate with is a reflection of you. The same principle applies to a professional environment. The people you work with or refer have a direct impact on your reputation. If they perform poorly, the law of association says the client you referred will think poorly of you too. After all, it was your judgment call to offer the referral and essentially trust another company with their needs. There are a couple steps you can take to side step a bad reputation from the fallback of a referral gone wrong.

The next time a client asks you for a referral, recommend two to three competitive options. You should also discreetly disclose any additional information the client might need to make a decision. For example, one vendor might be better suited for a market. Or perhaps another offers great work, but communication can be a challenge, in which case you can offer tips on how to best communicate with that vendor.

Surprisingly, too many people aren’t very well-versed with the overarching unwritten rules of referrals. From a client’s perspective, there are some things that just aren’t done. First, never disclose how much you paid for a service. Stating a specific price compromises the vendor. If you’ve gotten a fantastic rate on a service, it isn’t in stone that someone else will get the same service for the same price. One client could get a better rate for a number of reasons including: (a) the vendor was desperate for a client at the time, (b) the vendor was partial to the clients industry, (c) the industry or client requires less maintenance than another. Stating your price is poor business etiquette that ensures you’re sending over a difficult client to your trusted vendor.

From a vendor’s perspective, always have at least 3-5 go-to vendors for each service type. For example, if you work with graphic designers then you should have at designers vary in their area of expertise. Some may be better with luxury brands, while others prefer print work or higher base budgets.

From a receiving vendor’s perspective, you should offer referring vendors a referral or finders fee of about 20%. This services two purposes. First, it encourages others to send work your way. Secondly, and more importantly, it stimulates higher quality referrals. Offering a referral fee shows your respect for a vendor and entices them into respecting that leads match your preferred client parameters.

The best client referrals are structured to ensure that all three parties are satisfied with the process (and of course, the results).

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