Developing referral partners is a great marketing strategy - and key to accelerating your business growth. But as simple as this sounds it's not as easy (or foolproof) as we'd like.
Keep reading for 4 challenges... or dare I say mistakes, that can derail you in developing referral partners.
Mistake #1 - Poor Fit
Referral partners must align with you - they must have enough "Opportunity". If they don't have enough access to your target prospects, it doesn't really matter how much they like you or believe in your services or products because they're unlikely to have much opportunity to send you many referrals.
For example, if they sell to the fortune 500 companies and your target is home based businesses it's unlikely you'll have much opportunity to pass referrals to each other.
Referral partners should also align with your values, goals and objectives. How do they treat their clients? What are their business ethics like? If you're selling high value and they're all about low price, many of their referrals may not fit.
To save yourself frustration, take time early on to ensure the fit is right - do they understand and value what you do? Do they have enough opportunity to connect with the right profile of prospects?
Mistake #2 - No Follow-up or Follow-thru plan
Like any good relationship, communication is key. Without it, relationships die and fade away. Referral partners are the same. Consistent and frequent contact is important to develop and deepen the connection... and ultimately gain you more referrals.
Ask your referral partners how they'd like to stay in touch, coffee or lunch dates, emails or phone calls. An effective way to connect is by inviting them to events they may value - networking meeting, association lunches or speaker events... in sunnier days even a round of golf with you both bringing a client or prospect makes a great business outing. Mix it up, but stay in contact.
Also, remember to always give feedback on every referral received - especially for referrals that didn't work out. Talking about what worked and didn't is important in fine tuning the process and generating more success in the future.
Here's the key - treat them like you would treat your BEST client... because in a way they are.
Mistake #3 - Lack of Understanding of Who to Refer and What You Do
It's not that you expect your referral partners to become sales people for you. But to be successful at sending you pre-qualified and prospects with the right fit, referral partners must fully "Understand" you and your business.
Over several meetings share information about your niche and target customers; how to identify if someone is a good prospect - what would they be experiencing or saying, how to approach and introduce your referral partner, how should the referral be passed etc. Learn about each others' process and services so you can endorse and pass the referral with confidence that they'll be well cared for.
The more both you & your partner know about each others' products and services the more referrals you'll yield for each other.
Mistake #4 - No Compensation Agreement
Taking time in advance to figure out how to thank or reward your referral partners for their referrals will save you potential misunderstanding and ill feelings later on.
In some situations, it's common to pay a referral fee, in others, a fee is an insult. Do you give them a gift certificate, lunch invitation, a simple but heartfelt phone call or just a thank you card? If you chose to give a gift make sure it's something your referral partner would find of value - not everyone loves hockey, golf or the opera.
Let's say you give a $100 gift card for the first referral, what happens on the next or twentieth referral. Do you treat each referral the same or use the Las Vegas style of random reward by occasionally send a gift of some sort.
For true 'referral partners' (as opposed to the casual one-time referral source), I suggest you have an open dialogue to clarify whether money or other compensation will be exchanged.
Once you create your plan, create a way to easily track and monitor it. When it comes to money, many relationships can crumble without communication and a solid foundation.
Schedule some time to take a serious look at your referral results - are you making any of these mistakes? What do you need to fix, amend or change?