How to Turn Your Vendors into Powerful Referral Partners

When it comes to building a referral network, many business owners look to networking groups, the local chamber of commerce, referrals from current clients, online networking sites, and their own industry associations. But one area that is often overlooked is your current supplier base. With a little effort and some pre-planning, you can turn your vendors into a gold mine of referrals that generate a flurry of sales. Here are a few of the ways you can go about building solid referral partners from your current vendors...

Identify strategic partners. The first place to start is to decide what kinds of companies make good referral partners for you. Basically, you want to look at the services you offer and identify companies that offer products or services that are closely aligned with your own. For graphic designers, a good place to start is local print shops, sign companies, marketing consultants, copywriters, commercial photographers, etc. In addition to having similar or supporting services to the ones you offer, the companies you choose also need to be reliable, have a good reputation with their own clients, and have smart business and billing practices. The last thing you want is to end up getting referrals that are the wrong kind of customer for you, or don’t pay on time.

Build relationships. Take a good look at your relationships with your existing vendors. How well do you know them and what they do? How well do they know you? When you call, do you get a different person each time, or do you always speak to the same person?

The idea here is to build rapport with one key person from their company. If you always talk to a different person, try to find one you like working with and ask for them each time you call. The important thing is to make sure the person you choose has the authority to make recommendations to their company’s clients on your behalf. Also, when you talk with them on the phone, don’t overlook the value of “small talk.” Spending a little time at the beginning and end of each call getting to know the other person -- and more importantly, letting them get to know you -- helps you establish trust. People are more willing to recommend their clients to people they know personally, so invest some time and effort into building relationships with your current vendors.

Educate. How many of your current vendors and suppliers know what you do for a living? Do they have a vague idea, or do they know enough to be able to tell someone else what services you offer? Chances are you’ll need to spend some time educating your new referral partner about what you do, the services you offer, how you charge for them, etc.

Notice I called them a referral partner? It’s at this point you want to begin thinking about them this way, and subtly “planting the idea” in their mind as well. Offer to take them to lunch, or stop by their company for a tour to learn more about what they do. This also gives you an opportunity to talk about your services, and suggest the possibility of “teaming up” to get more clients for both companies -- yours and theirs. Also, make sure you approach this in the right frame of mind. A successful referral partnership involves both parties sending referrals to each other, so you want to make sure it’s a mutually beneficial relationship.

Offer your expertise. Once your referral partner knows what you do and is receptive to exploring the possibility of teaming up as referral partners, the next step is to help them create referral opportunities. Let’s say you’re a graphic designer and your referral partner is a printer. Offer to go with them on their next sales call as their design consultant so the two of you can present the client with a complete design-print solution. This will give your new referral partner the opportunity to listen to how you present and sell your services -- which will help them refer people to you when you’re not around to make the presentation yourself.

Create a reseller program. Another way to encourage referrals is by developing a reseller program. There’s a couple ways you can go about this. One way is to set up wholesale pricing that your referral partner can mark-up and resell to their client. The other way is to bill their client directly and offer your referral partner a percentage of the sale as a referral fee. With my own design firm, I’ve found that it’s a pretty even split between those that want to resell my services versus those that just want to refer the client and have me send them their “finder’s fee.” So it’s best to prepare both options and let your referral partner choose which way they’re most comfortable working with you.

With the right planning and by investing a little time, you can easily turn your vendors into a powerful source of referrals. Besides the fact that this kind of word-of-mouth advertising carries no out-of-pocket cost, you have a much better chance of closing the sale with someone that has been personally referred to you by someone they know and trust. So put a little effort into developing mutually-beneficial referral partnerships with your vendors, and watch your sales grow!