Word-of-mouth marketing and referrals are great for increasing business without having to pay for the client acquisition or do the work of finding and converting a lead. Right?

Unfortunately, not every referral is a good one. In fact, they’re rarely good.

Most of the time, referrals will not improve the quality of your business. Why? Because unless you’re already well positioned—to the point where all of your clients are ideal customers—the referrals they make will be either of equal or lesser quality.

If you’re striving to level-up, referrals can bring you down.

Referrals: Equal To or Less Than

Even if your existing clients are core, they’ll probably be aiming to help their friends, relatives, previous colleagues or associates by referring them to you. After all, you’ve done great work for them, so it makes sense that you’d be perfect to boost business for a peer.

If you’ve done work on both internal and external positioning, you already know how important it is to select clients that are a good fit for your own agency growth objectives.

When you’re prospecting and marketing to bring in qualified clients, positioning works to attract the people and companies that align with your goals.

But when you receive a referral, you’re potentially stuck with a client that you didn’t choose, is likely not ideal, and may work against the vision you have for your agency.

How to Deal with Referrals

In dealing with a less than ideal referral, you have to be careful to not break your existing client’s trust and faith in you. Of course, you don’t want to take on a client that’s a poor fit for your objectives just to keep your existing customer base happy, but you also don’t want to make them look bad to the person they’re referring.

You can tell your referring client that you will do your best to help, but that doesn’t necessarily mean that your agency will be the best fit for them. Thank your existing client for the referral, and tell them that if it turns out that you’re not a good fit, you’ll be sure to find an agency that is. Tell the person you’ve been referred to the same thing, making sure to stay positive throughout.

It may seem like a lot of work to do for someone who isn’t going to add to your bottom line at all, but it creates goodwill with your existing client.

Moving Beyond Bad Referrals

Referrals are tricky as the primary source of client acquisition because by giving up control over lead generation—leaving it up to your existing clients, strategic partners, etc., you’re also limiting your own ability to choose the types of clients, projects and engagements that align with the vision and growth opportunities for your agency.

That being said, if people are talking about your agency in a positive way you can certainly use that to your advantage. The key is to make sure that you have positioned your agency very well, so that your clients know exactly what you offer, to who, and how.

If you provide specific services to global corporations, for example, that’s part of your unique value proposition, and should be made clear in your marketing, messaging, and communication with clients. Your positioning works on many levels—to both attract ideal clients and help non-ideal clients and poor referrals to disqualify themselves.

Be clear about your positioning in order to improve the types of referrals you’re receiving.

If you’re unhappy or frustrated with the referrals you’ve been receiving, the issue may very well be with your positioning. Questions? Let’s talk »