Stop relying on referrals for your business

Hey guys, welcome back to a brand new video. And in today's video, I want to talk about the pros and cons of relying on referrals. Mainly the cons when relying on referrals because a lot of people rely on referrals. So referrals can be a valuable source of leads for business owners as they come from satisfied customers who have already placed their trust in the business. However, relying on referrals can be risky as it can lead to a lack of control and inconsistent lead flow. So we're going to talk about the advantages and disadvantages of referrals. So just to kind of clarify, advantages are of course that close early, they close faster, and they're just a good lead source. And disadvantages are more to do with you as a business owner, not with the referrals itself. If you're getting 30 referrals each month, I think you're good. All right, let's talk about the advantages of referrals and I'll just fly through these. So trusted leads, referrals come from satisfied customers who have already placed their trust in the business. So it's a trusted lead. It's super easy to close. If somebody's referred your, referred your business to someone else, then they trust, they trust that person and that trust is kind of taken over to your business. So that's why it's easier to close them because it's coming from a very good source. That is why sponsors use other creators platforms to market their products, because it's coming from a credible source. So if you've ever thought like, why don't they just like use Instagram Boost or something? That's because Instagram Boost is good, but it's not as good of a credible source as it would be from someone who has already built their audience and then market their product and market their product for them. Number two is cost effective referrals cost almost nothing to acquire and they, yeah, that makes them a highly cost effective source of leads. So like I said in the start of the video, if you're getting like 30 to 40 referrals every single month, you're solid because you basically have this flying legion of referrals that comes to you like single handedly out of nowhere. So it's literally saving you thousands of dollars each month.

But yeah, we're going to talk about that too. And longer lifetime referrals tend to have a greater lifetime value as they are just likely to remain loyal and continue doing business with you. So depends on the business as well and how well you perform, they're just most likely to stay because it just your clients working with you. The person who referred is still working with you. It's just a pleasant interaction, which is point number four. The just pleasant to work with as they already have a positive perception of the business.

Let's talk about the risks on relying on referrals only now, lack of control. So when you rely only on referrals, you have less control over the flow of leads. And that's very important. As you are dependent on your satisfied customers to refer new clients to you. You could get them the best results possible in this entire planet.

But you can't force them to get you referrals. Like, you can email them like, hey, do you have any referrals for us? But if they're busy, if they're doing their own thing, they're not going to refer you. So it's something you can't control. They might refer you to six other people. Who knows? And that's the key point. Who knows? So if you've been doing this for a while and it has been predictable, good for you. Like, it's actually very good and very impressive that referrals have been coming to you on a consistent pace. But then again, like for example, the pandemic hit, for example major, nobody could have predicted this. No one knew it was coming. But then like, customers would just stop referring you out of nowhere and then you have no control over that. So if you had like a control lead gen, you can tweak things. You can just retarget campaigns and just tweak a lot of things for the particular event that was taking place in that period of time. Your lead flow could have been a little more consistent. Which comes to my next point. Inconsistent lead flow. The inconsistent nature of referrals can lead to an unpredictable lead flow, making it difficult to plan and scale your business effectively. If you don't know when your next lead is coming from or where your next lead is coming from, or you just have to wait for a client to refer you to someone else. It's not very predictable or you can't really predict growth in any sort of way. You need like a consistent lead flow where you're like moving people about, okay, this person is qualified. This person is not qualified. Let me talk to this person. Let me follow up with this person. Like, it needs to be consistent. You need to have a separate system where new people see your things every day. And then you put them into another system where you can qualify them and then sell them and you need to have a proper system for lead flow. Referrals don't require that. You might have to follow up with them and then still all do all of that part. But it's like just easy mode referrals. Referrals are easy mode. And I say easy mode in the most respectable manner because you've already done the hard part, which is satisfying your customer. That's props to you. Like, you've satisfied your customer and that's why they're referring to you. That's very solid. Different mindset. Referral leads have a different mindset compared to leads who have found you through other channels, such as online or even cold outreach. This requires a different approach to communication and conversion.

If you're. Let's say you done referrals pretty much.

All the time. Like, you only deal with the referrals. Talking with a referred lead versus somebody who's cold or semi interested is just different.

Like, referred leads are ready to work with you. You still have to sell them, but most of the work is already taken care of. Like, even if you're, like, not that good at sell, they know that they've come from a credible source. They've seen results on whoever referred to them. Now it's easier to close them because they have trust in your business. So it'd be more impressive for you to like, lose that lead at this point.

So I have this extremely detailed visual of the difference between the conversation between a referral and a cold prospect or somebody interested. So I will just stare at this for a minute or two. So this is you with your. This is you over here, and this is your referral. Referral customers. I don't know why this is in Asia, but, you know, this is you. And this is. These are referred customers. And this is called outreach. And semi interested people. So this is you. And look, look how she's staring at you. That's the cold prospect right there. She's staring at you with all seriousness. She's like, what are you. What do you have to sell to me? You have five seconds to entertain me or I'm walking away. That's a cool prospect right there. And these people, semi interested, they're there. They're willing to listen to you. If you make sense, they might buy. If you don't, they'll leave. But these people, to see them, they're just like chilling with you. That's referred right there. It's actually a pretty good image.

All right, now I have this diagram over here for you guys.

So communicating with a non referral Lead Establishing credibility so when talking to a lead who has not been referred to you, it's important to establish your credibility and expertise upfront as they may not have the same level of trust in your business. You don't have to establish credibility with a referred lead.

Non referral leads may have more questions and concerns about your services, so it's important to list do. It's important to listen carefully and address their specific needs and objections. This is where content comes as well. So if you have for example, questions about referrals, like you might be watching this video. So I'm already addressing one concern of yours. Nurturing the relationship. Building a relationship with a non referral lead may take some more time and effort, but it's important to be patient and continue to provide value and support throughout the sales process. Pretty self explanatory. You need to nurture the relationship. Follow up with them, keep, keep talking to them, keep showing them your content, make sure they're viewing your content and over time they might, they might convert.

And just learning about them. Doing your research on the prospects, this is arguably very important. You have to do your research on the prospect itself. Like what do they do? How can you actually sell to them? What are their pain points? You need to do all of that with a non referred lead.

The importance of diversifying lead sources. So referrals, they're, you know, valuable source of leads. It's not important. It's important to not rely on them exclusively. We already talked about referrals. Number two is using your online platform, online profiles and creating systems around it. Developing a strong online presence such as websites, social media channels can help you attract leads from other sources. So utilize content. I've said this like many, many times. Start building your personal brand, start building your business brand and just market your product to your target audience. It's so simple. Cold outreach. Engaging in cold outreach such as email marketing or networking can also help you diversify your lead sources and reach new potential clients. So cold outreach is a lot of manual work, but if done right, it's also very powerful.

So it's important to effectively do both. If you don't know how to communicate with leads and convert them from semi interested to interested, you could have 5,000 leads coming to you every single month. You will still have better chance with the referrals. So that is the whole video. It's just.

The main topic was to not just only rely on referrals and what happens when you only rely on referrals, it makes things unpredictable. You know, I don't understand how people are okay with that like just relying on referrals unless it has been super predictable. But it doesn't offer you growth because if your business is unpredictable then you can't predict growth either. You can't predict downfall. That's also true but you can't predict growth either and I would argue that predicting growth is much more important.

That's all for today's video. Hope you got some value out of this and I just wanted to talk about my newsletter real quick. Five short emails Monday to Friday I sent super super valuable like the thing we were talking about right now. It's right on my newsletter. It's a short read and tons of value. Put a lot of thought into it. And also if you're a service based business who is looking to get one on one help on building their social profiles, the whole funnel from start to finish. Just click on the calendar, link in the description and we'll get on touch. I'll see you next time.