When someone asks me what is the one thing they can do to get more referrals, I almost always say, “ask for them.” That’s because most small business owners err on the side of not asking for referrals. They don’t ask because they’re afraid to bug people, they don’t want to appear needy, they’re not sure what precisely to say, and so on.

However…

There are times when you should not ask for a referral. In fact there are times when asking for a referral would be detrimental to your business. Is this sacrilege at the alter of small business marketing? Read on.

Reason #1. Don’t ask for a referral until you demonstrate performance

Several years ago, my husband and I hired a financial planner to help us manage our investments. About six weeks into the our work together, we received a letter in the mail from him asking us for referrals. Although I understood his reason for requesting referrals, the timing seemed wrong. After all, he hadn’t actually done much for us beyond running a canned investment analysis.

When would it have been appropriate for him to have asked us? Because we hired him with the intention of having a long term relationship, it seems waiting a year so that we could get a sense of his style and how well he managed our investments would be the minimum.

It all depends on how long it takes to establish a track record. For example a hair stylist can easily asked for a referral after three successful visits. With one visit per month, that’s enough for most clients to trust that the stylist really knows what they’re doing and the great cut they got on their first visit wasn’t just a lucky fluke.

Reason #2. Don’t ask for customers you really don’t want

Take a moment and think about your clients or customers. Can you honestly say you enjoy working with most of them? Or do you feel mostly dread and resentment?

If you answered the latter, chances are you aren’t attracting the right customers for your business. If you keep getting pain-in-the-butt customers…especially through referrals, stop. Please.

Take some time to think through and write up an ideal customer definition. Give your definition to your referral sources and tell them these are the types of customers for whom you do the best work.

When you do this, your referral sources send only prospects for whom you will do great work and who will appreciate your work. Those people will go back to your referral sources and thank for telling them about you. Your referral sources will feel like rock stars. It’s a win-win for everyone involved.

Reason # 3. Don’t ask for referrals if you lack the resources to do a good job

When people ask about my More Referrals Now program, I always ask them if they have the time, people, and resources to handle double the business they have currently.

For example, if a financial planner is currently working with 80 clients can he or she comfortably handle 160 clients within 6 to 12 months?

This tends to be more of a problem for product-based businesses. For example, if you sell hand knit caps made by grandmas living in Lithuania (an acquaintance of mine has a company that does just this), when you sell out, you are sold out until your get another shipment of hand knit caps.

Yes people will wait, to a point, if your product is very special. But more often, they’ll get annoyed and buy from a competitor.

But service-based businesses need to be careful too. I used to refer people to a technical services consultant who did really good work but eventually he got so busy that he stopped returning phone calls and sometimes completely forgot about appointments. I stopped sending him referrals because no matter how good he was, the referrals I sent became frustrated because he didn’t seem to want their business and that made me look bad.

Bottom Line

Although not asking for referrals is one the biggest mistakes most business owners make, asking for a referral at the wrong time, for the wrong type of customer, or when you’re unprepared, can be every bit as damaging. Make sure your referrals are a triple win: for you, for your referral sources, and for the prospects they send you!  

This entry was posted on Monday, November 17th, 2008 at 2:15 pm and is filed under More Referrals. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.