Why Referral Sources Go Sour

By Will Turner


As a salesperson, you can geometrically multiply your impact in the marketplace with some well-connected referral sources and strategic alliances. Think about it. What would you be able to accomplish with four, five or six other salespeople diligently working on your behalf, uncovering opportunities and making high-level introductions for you?

Creating alliances and referral source relationships is an easy concept to grasp. A referral source is someone who provides an ongoing stream of qualified referrals to you. Special emphasis is on the words “ongoing stream.” We’re not talking about random referrals which will happen from clients or others who like what you do and how you do it.

A strategic alliance, on the other hand, usually denotes a more formal arrangement where there might be joint promotion or client servicing between companies with complimentary products or services. So the premise of both alliances and referral sources is that other people in different organizations are helping you grow your business faster than you could grow it by yourself.

With that said, shouldn’t every salesperson have at least a few referral sources or strategic alliances that they can rely on? In our work with clients, we find that most salespeople fall way short in this area. That’s because building relationships with referral sources and strategic alliances is not on their radar screen or because building successful referral sources and strategic alliances is harder than it looks.

In fact, Karen is a client of mine. With some frustration she asked me, “How can I make referral sources work? I’ll have a great meeting with someone and we both seem excited about helping each other and referring business back and forth and then nothing seems to happen.” Karen’s experience is very typical.

The reality is that most people skip important steps in the process because no one has ever taught them how to successfully build referral relationships and strategic alliance partnerships. Since most salespeople are winging it and flying by the seat of their pants much of the time, you have a recipe for disaster.

In order to create a referral source strategy that will turn into a well-oiled money-making machine, you must avoid some common mistakes.

Mistake 1: Start referring business immediately. Any good referral relationship requires a foundation of trust. In other words, if I’m going to refer my valued relationships to you, I better be sure that you are going to take care of my referrals to my level of satisfaction. Otherwise, my reputation and my relationships are damaged.

Instead, you’ll need to gain a comfort level with your potential partners. Do you respect and trust them? Will they live up to their word? Do they provide the level of service that you and your clients demand? Are you both in a position to help each other at a level that meets your needs?

Depending on what you already know about them, this relationship building process may take a couple of interactions or many more. Take the time to get it right. No good will come out of jumping in bed with the wrong partner.

Mistake 2: Expectations aren’t communicated clearly. This is one of the problems that my client Karen was experiencing. She was having a positive meeting with a possible referral partner and then any momentum that was building came to a halt.

Each party needs to clearly articulate and agree to what is expected in the relationship. For example, if I expect you to give me three referrals per month and you don’t deliver, I’m going to be very disappointed. Create expectations that are specific, measurable attainable and have a deadline.

To avoid disappointment or frustration, you should also communicate basic terms to make sure that you are both on the same page. For instance, there is a difference between passing someone a lead and passing them a qualified referral. How would you define a qualified referral? How would your referral partner? Make sure that you reach a common understanding.

Mistake 3: No accountability and/or lack of commitment. For any referral relationship or strategic alliance to work for the long-term, there must be an appropriate balance of accountability and commitment by both parties.

If I’m willing to dedicate five hours per month to reaching our goals and building our relationship and you’re only willing to commit to an hour per month, we’ve got a problem. We could realign our expectations, adjust our commitment level to be more in sync or be willing to walk away from any partnership.

Mistake 4: There’s no shared process for the next step. If we decide that our initial goal is to get one referral for each other, how can we best do that? If we are both left to our own devices, it’s likely that one or both of us may fall short.

Instead, develop a process to make it easy. One way you can do this is to help each other identify opportunities. There are lots of ways this can be done. Each person could bring a list of their five best clients or relationships to the table to discuss and review with each other. Or each person could bring a list of their top 10, 25, 50 or 100 contacts that meet a certain predetermined profile. A next step or course of action should come out of the review and discussion of your contacts.

Mistake 5: No strategies for accomplishing our tasks. Now that we have identified opportunities for each other, we will need to determine what strategies will work best. In other words, what can we each do to facilitate a proper introduction for the other. The answer is going to depend on the people involved and our relationship with them.

A strategy with one contact may be to set up a lunch with everyone where you can personally make the introduction and lead the discussion. Or a strategy could be to ask permission from your contact to have your referral source call them. Each situation is different and may require a different strategy.

Mistake 6: No follow-through to see what worked and what didn’t. After you have executed the strategy, you and your referral partner need to evaluate how things worked. Was the end result accomplished? Is there anything that could have been done differently to improve the results? Are there some lessons learned that will allow us to improve the process the next time?

Taking the proper time to debrief afterwards will be very educational for both parties. Consequently, you’ll be able to learn better ways to introduce and position your referral partner.

Mistake 7: The process doesn’t get repeated. Once you go through the process of identifying, strategizing, executing and evaluating, you can’t stop there. Take the lessons you’ve learned and repeat the process again and again.

Over time, you will need to adjust your expectations and commitment to each other to make sure that you both stay on track. Open and honest communication with each other will bind your relationship.

While creating referral relationships or strategic alliances is not without its challenges, the rewards are many. A good solid partnership will enhance and benefit both parties. It will also benefit your clients and other contacts because you’re able to provide valuable resources and connections to the people that need them.


About the Author:
Will Turner is the Founder and President of Dancing Elephants Achievement Group, a sales training and consulting company focused on getting dramatic sales growth for service-oriented companies that want to grow their business-to-business sales. Will is a speaker, author and trainer with 25 years of sales, marketing and sales management experience. Will created the Sales Magnetism program and co-authored Six Secrets of Sales Magnets. His clients increase sales an average of 56% in the first year of working with Dancing Elephants. Visit www.DancingElephants.net for more tips, strategies and ideas to become a sales magnet or email Will@dancingelephants.net.