Generating New Business Through Referrals

I am struck by the fact that the companies and individuals who are weathering this economic storm best are the ones who have cultivated a strong referral network. Business is about relationships. Right now, you need a business development plan that generates short and long-term results. Cultivating strong referral relationships helps to accomplish both.

How can you build your own referral network? Here are some ideas:

  1. Determine your core referral network. Who are the businesses and individuals that could be great referral sources for you? Ideally these are the people who are in a complementary business to your own. They do business with the same people that you do. They sell services that are related in some manner to yours. If you can name even a few people or businesses that fit this description, they could be very valuable to your business.
  2. Quite often, a handful of referral sources are responsible for a significant percentage of a company's annual revenue. While we want every customer to be a referral source for us, not all referral sources are created equally. It is often smart to find and focus on a few people or companies that can be significant, ongoing sources of new business for you.

  1. Get Face to Face. You have to spend time with people on a regular to cultivate them as a referral source. Don't wait for referrals to walk through your door. Get out and schedule visits to those people who can and should be great referral sources for you.
  1. Generate leads for others. There is no better way to get leads then to give them. Look for ways to send high-quality leads to people who could and should be doing the same for you. Do this a couple of times, and then suggest that you meet together to discuss how you can help each other through ongoing referrals. On the one hand, you have to be patient at developing these relationships - not everyone can refer business to you immediately. But if there is no reciprocity from the other person, you should move on and find a better referral partner.
  1. Create or attend events that foster relationship building. Find any good excuse to spend time with good referral sources outside of work. Conferences, trade shows, golf outings - billions of dollars are spent annually on such events in part because they are such fertile ground for making business connections. In this economic environment, you may prune back spending on such events - but don't eliminate it. Be strategic about the events that you attend, but keep showing up.
  2. In addition, consider sponsoring events yourself. Host a Chamber of Commerce event, hold a seminar at your offices, or create an annual golf outing. All of these are valuable settings for cultivating referral relationships. Furthermore, by creating or hosting the event yourself, you create a "home field advantage" for yourself and your business.

  1. Constantly educate your network about your business. Educate your network about the range of products and services that you provide. We often assume that others know what we do. They don't. Many people do not understand the full range of products and services that you sell and the breadth of customer problems that you solve. Particularly with your referral sources, be intentional about sprinkling a little bit of "business education" into every interaction you have with them.
  1. Branding and Public Relations. Everyone likes to be associated with a winner. When you invest in building your relations, you give everyone in your network an opportunity to point out your business and provide you with an endorsement. If the point of marketing is to generate leads, then the right kind of marketing helps every one in your network to generate leads for your business.
  1. Deliver a consistently great customer experience. I recently visited one of my favorite restaurants in Philadelphia for lunch - and came away disappointed. Two of their best dishes were not available and the overall quality of the food was disappointing. This, after the restaurant invested in a significant expansion and "facelift" in their dining area and kitchen just last summer. While I have been a proponent of this establishment and taken a number of people there, I am now n the lookout for a new lunch place.

All referrals ultimately rise and fall on your delivering a great customer experience. Focus on all the other initiatives that you want, but make sure that the customer receives real value and is treated well. Without that, no manner of smart strategy on generating referrals will matter.

Like so many other things in business, generating a continuous flow of referrals is easy to understand but requires a lot of hard work. In summary, here are the steps to follow:

  1. Find people whose businesses and self-interest intersect with your own.
  2. Find ways to be of value to them, including sending them referrals.
  3. Be intentional about spending time, in person, with these people.
  4. Continuously educate your network about your business.
  5. Build a brand that helps your network generate referrals.
  6. Keep your own customer experience strong.
  7. Watch the referrals flow!

Eric Herrenkohl is Founder and President of Herrenkohl Consulting (, a management consulting firm focused on creating organizations that drive growth and profits. His work has been published or cited in the Philadelphia Inquirer,,,, and  Eric is also the author of Performance Principles, a monthly e-letter that reaches thousands of subscribers across North America and is re-printed in a number of industry and company newsletters.