Your business can build many different types of referral networks. They include those with formal agreements and those very loosely built. All can offer genuine advantages to various types of businesses. This guide explains referral networks and the types of businesses benefiting from them.
What is a referral network?
Basically, a referral network collects individuals or organisations that provide referrals. Official referral networks include companies within related industries. They band together to provide referrals to one another. For example, a real estate agent may build a network of home staging professionals, mortgage brokers and moving companies. When your customers ask you about getting a mortgage or handling their moving details, you provide the name and contact information of those in your network. This provides value to them. Customers often expect you to provide them with this type of information. And when one of the other businesses in your network encounters a customer looking for a real estate agent, they can refer customers to you.
But informal referral networks also exist. For example, you can network with other professionals in your industry. Just share business cards or contact details. Without an actual agreement, simply refer potential clients to those businesses. And nurture the relationship. Offer clients incentives like discounts or gifts to encourage them to refer their friends to you when relevant. Then nurture those relationships through regular communication.
In some instances, you may even be able to connect with larger businesses that provide the same type of service as your company does. Many large service businesses only work on large projects, but don’t want to turn away potential customers who don’t meet those requirements, since that can lead to a negative experience. So by connecting with these large companies, they have a place to send those leads and you get access to some extra business.
Who can use a referral network?
If your business could benefit from referrals, then you could also benefit from a referral network. The concept tends to be especially popular with service businesses, since personal recommendations often hold a lot of power in those instances. They can also be especially relevant to businesses that have complementary professionals related to their industry, like the example of real estate agents and moving companies.
This concept can be relevant to nearly any business that shares a target audience with other businesses, without actually offering the same product or service. For example, an online business coach may connect with an online branding and design agency that also works with business clients. They don’t take clients away from one another, but they provide extra value to their own clients and get extra referrals as well. It’s a mutually beneficial relationship.
How to build a referral network?
The process of building a referral network depends on the types of relationships you’re interested in cultivating. To connect with industry professionals and other businesses that may be relevant to your target audience, try attending trade shows or industry conferences. Start by just connecting and sharing contact info. From there, you can stay in contact and maybe send a referral or two their way.
Your local chamber of commerce or online communities relevant to your industry may also be helpful in facilitating these connections. But in any instance, it’s important to identify those who have relevant connections to your target audience. Then work on building genuine relationships with those people or organisations and creating a mutually beneficial arrangement.
Bringing customers and clients together
If you’re interested in building a network of customers or clients who provide referrals, then you might offer a discount or rewards program that recognises them for any new sales they bring in. To do this, you’ll need a system for asking new customers how they learned about your business. That way, you can track where your referrals are coming from and recognise those customers or partners in some way. It’s also important to nurture those relationships via email messages, social media or in-person communications. This reminds them about your services, helps you build connections and lets them know about the opportunities available for those who refer their friends or family.
In any instance, it’s important to provide referrals only to the businesses and professionals that you truly believe in. By recommending a business that you aren’t familiar with or confident in, you could be marring your own reputation when the client is not pleased with their service.
A referral network is a wonderful thing to have. But you shouldn’t think of it as a shortcut or a cheat code. You need to focus on building genuine connections and providing value to your target customers. Anything that is contrived or forced will be less likely to benefit your business in the long run.
Morris Finance are well-equipped and committed to helping you achieve your goals.
Contact us today to unlock your business potential. We will give you the tools your business needs to get ahead.