Peter Vander Wall explains how early-stage businesses get trapped by accepting bad referrals. When you take any client, you attract low-paying prospects who refer similar ones, locking you into a cheap market. Build a marketing system to reach better clients and qualify referrals before they waste your time.
Chapters
How do you know when to stop taking referrals? Well, the short answer here is I wouldn't ever stop taking referrals if they're qualified for the service that you're trying to sell. The problem a lot of people run into though is when you first start your business, you'll just take any client that you can get. And so this often ends up in a lot of like low paying work. But you're glad to take it because you need the money. As you grow, you start to get pickier with the type of clients you take on. But remember, the current clients you have, the people you're already working with, are representative of the type of referrals you're going to get. Customers. Cause they're gonna refer people they hang out with, they hang out with people just like them. And so what happens here is you get in kind of this death spiral where those low quality clients you took on originally are referring tons of business to you because they like the service and it's cheap. And the people they're referring expect that same level of service, but at that cheap price point. So what this means is you need to build a marketing machine that can get you into those higher level circles with that new elevated type of client you're trying to get. And you need a qualification system for those referrals that you're already getting so that only the few who are actually qualified to work with you end up actually making it onto your sales calendar and taking up your time.
