Ever find yourself in an unfamiliar neighbourhood looking for a good place to eat?
If you’re anything like me — you won’t walk in to a random restaurant and take your chances. You’d rather send a message to one of your foodie friends to see if they know of anything good in the area.
If your friend, who knows more about food than you do, says Benny’s Diner is a good place to get a sandwich — who are you to argue?
The fundamental appeal of the referral — from the perspective of the one making the request — is that it absolves you of the responsibility for making the right decision.
When your friend suggests Benny’s Diner, it’s no longer your fault if the sandwich is terrible or the service is slow. You only went to Benny’s on his recommendation. If anything goes wrong, it’s his fault.
At the same time, you recognize that your friend has a better chance of picking a good restaurant because he has more experience than you do when it comes to food. The upside is clear and you don’t have much to lose.
Why Referrals are the Lifeblood of a Healthy Professional Services Business
As a rule of thumb, the bigger the stakes and the more intimate a purchase, the more important referrals are.
It should come as no surprise that many professional firms rely strictly on referrals to generate new business — for the simple reason that buyers are often unwilling to engage a service provider unless it’s on the back of a trusted referral.
Think about the last time you had to find a new lawyer or accountant. Did you open up the Yellow Pages to see who was listed?
Probably not. More likely, you asked around to see if anyone in your network could make a recommendation. And you’re not alone.
Hinge Research Institute found that 71% of buyers choose to ask friends and colleagues when searching for a professional services provider. In some industries, that number was as high as 87%.
The question is, given how important referrals are to driving new business, what are you doing to get more of them?
Two Types of Referrals (including the one you probably haven’t thought about)
According to Hinge’s latest study on referral marketing, there are two types of professional services referrals:
- Experience-based referrals: These are your typical client referrals. A client makes a recommendation to a friend or colleague based on their direct experience working with you. You get the benefit of the doubt and the prospect mitigates their risk by relying on the referral. Everybody wins.
- Reputation-based referrals: These are referrals that come from people who do not have direct experience working with you. It could be someone you met at a conference, someone who read a post on your blog, or someone who just heard good things about you through the grapevine.
While experience based referrals are where most firms focus their efforts, reputation-based referrals are another powerful source of new business that is often neglected.
81.5% of firms receive referrals from folks they have not worked with directly. These referrals aren’t made in the dark — they’re based on experiences of your firm other than a vendor/client relationship. Specifically, they draw on your reputation and what referrers understand about your areas of expertise. In short, these referrals are built on your brand. — Hinge Marketing
How to Get Referrals from Strangers
While getting experience-based referrals comes down to providing overwhelming value and excellent service to clients — reputation-based referrals are a different monster altogether.
Short of working with you, what would motivate a complete stranger to recommend you?
If they believe you can do what you say you can do.
Fundamentally, this is the same reason a client would refer someone to you. The difference is clients know first-hand that you can deliver because you’ve done it for them.
The challenge, in generating reputation-based referrals, is building that kind of trust and authority with people you’ve never worked with.
The good news is it’s easier than it has ever been. The rise of content marketing has created opportunities for firms to earn reputation-based referrals by publishing content that demonstrates their expertise.
Here are 3 simple ways to get started:
- Publish a weekly newsletter – An email newsletter is the easiest and fastest way to build a reputation-based referral source. The way it works is simple: start publishing content for your target audience via email and encourage your contacts and other influencers to join the newsletter for insights. If your content is good, influencers will jump at the opportunity to share and look good in front of their colleagues. More on that here and here.
- Develop a social media presence – Once you’re in the habit of publishing insights on your newsletter, how can you expand the scope beyond your existing audience? Turn to platforms like LinkedIn and Twitter to share, publicize, and amplify the content you’re already creating. Influencers and connectors will be quick to share content that makes them look smart.
- Get on the speakers’ circuit – Find opportunities to speak at local conferences, events, and business meetings. The credibility and goodwill you can earn through an effective workshop or presentation cannot be understated. Many professionals swear by speaking events as their primary source of generating new business. To turn this into a digital strategy, record the speech and post the video on your website or live stream it via Periscope.
The trouble with reputation-based referrals is the path to winning business is unclear. But the potential should be obvious — there are far more people who haven’t worked with you than those who have.
If you can find a way to get the legions of people who have never worked with you to become referral sources, you’ll have your hands full pretty fast.