What IS a Referral?

If you ask the right question, you get the right answer. If you don’t ask the question, the answer is always no. Well, in this case, if the question doesn’t get asked, the cost could be not receiving a real, bona fide referral. Here’s a question sent to me from a training department for a large insurance company trying to set a good precedent for their financial advisors in the field:

Networking Referrals“I wondered if you could “weigh in” on a question about the true difference between referrals and introductions. In your book, you give a great definition for both and some have wondered if they are truly one in the same. Would you mind adding some clarity by providing some examples to illustrate the difference?

In addition, we also have the same question regarding prospecting and networking. Are they both one-in-the-same or are they truly different? How would you define each?”

First and foremost, a “referral” is in the eye of the beholder. For example, I know of some financial advisors, brokers, reps, agents, wholesalers, and other sales producers that consider a referral a name of someone they should talk to. Others consider it an introduction to simply talk business. “Just give me some names!”

In a networking group I was a part of many years ago, the residential realtor would accept names of people that were selling their homes by themselves or without the help of a realtor (For Sale by Owner or FSBO’s) as “referrals.” He would receive slips of paper that had names and addresses of people that had no intention of using a realtor but to him they were considered a “referral” all the same. Not a lot of those “referrals” would turn into business for him but hey, that was his measure. You get what you ask for!

So what is the quality of a referral for you? What is your measure?

Here’s mine!

A “referral” is an introduction to someone that’s expecting your call to discuss the prospect of becoming your client. The key here is they have to know ahead of time why you’re contacting them – to become your client. A referral is a specific type of introduction.

“Here’s the name and contact info of my neighbor who’s selling his home. He doesn’t have a realtor helping him list the home but he is interested in speaking with you to discuss the prospect of having you become his realtor. He’s expecting your call.”

“Give my friend Raymond a call. He just got married and he and his wife are getting themselves organized and one of their first orders of business is to get life insurance. I raved about you as being a great agent so he was interested in speaking with you further. He’s expecting your call to set up some time to meet.”

Beauty is in the eye of the beholder. And so is a great referral!

So how does a referral differ from an introduction?

I know this sounds funny, but an “introduction” is simply being introduced to someone for any other reason. The introduction could be a networking connection or discussion to explore how you might refer one another business. The intro could also be a sales meeting that hasn’t quite reached “referral” status.

Prospecting is any form of sales or marketing you engage in to get clients. A prospect (prospecting) is someone you meet or get referred to that is interested in becoming your client. Direct mail, cold calling, and social media are all forms of prospecting. And yes, networking is a form of prospecting.

Does it really matter what the difference is between a referral and an introduction?

I suppose that’s up to you. It depends what you’re willing to accept. When you ask for a referral, do you truly want to speak to people looking to do business with you? Isn’t that the goal?

Remember, you get what you ask for. And be careful what you ask for.

What’s your measure?


Image courtesy of StockMonkeys.com

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One thought on “What IS a Referral?

  1. Tom Daoust

    The proper phrase is “one AND the same.” Yes, a bit redundant. Another common phrase that is misspoken? “I could care less.” Oh, so you must care a great deal. The proper phrase is “I could NOT care less (because I am caring very little right now).”

    I enjoy your emails.

    Reply

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