Paying attention to where your business – or clients – come from helps you make decisions on where you should be spending your time and resources. When your client is still a prospect, do they find you through networking, advertising, speaking engagements, direct mail, or being referred to you? All of the ways a prospect finds you and then becomes a client are called lead generation sources, or “sources” for short. Let’s break down how to identify your client sources and then dive into the holy grail of those sources, the referral source.
Identifying Your Lead Gen Sources
One of the best exercises a business owner or sales professional can do is to identify where their business or clients are coming from. It helps direct where you should spend your time and energy and what areas you should step back from if it’s not producing results.
The easiest way to do this is in a 3-step process. Let me break it down for you.
- Pull a list of your clients from the last three to four years. If you’ve only been in business for a year, then work with what you have. You don’t need more than a few years’ worth of data to get a clear picture of where your business is coming from.
- Identify the source of each client – did they find you through a Google search, meet you at a networking event, connected with you on LinkedIn after you reached out, you knew them as a colleague from a previous company, they are your neighbor, or were they referred to you? If they were referred to you, make sure you capture the name of the person referring them.
- Sort by source to get a clear picture of where your clients are coming from. Are your surprised by which source makes up the majority? Or are you concerned that one area that cost you money isn’t working to produce clients?
Now keep in mind this just tells you part of the picture of your lead gen success. For a complete picture you need to run through the 3 steps again with your list of prospects (those who did not or have not yet become clients). Then combine your lists together in step three to have a complete view of where your business is coming from.
During this process I hope you identified people who are referring you, as cultivating a group of referral sources is the easiest way to grow your business. Let’s learn more about these referral sources so we can start to receive more referrals from them.
Defining a Referral Source
The simple definition is a referral source is always a human. Period. In step 2 above, where you identified the people who referred you a client or prospect, they’re your existing or current referral sources.
Keep in mind, you aren’t referred by your networking group or leads group but by someone in that group. And an existing client cannot refer themselves, they are a repeat client when they come back to work with you.
It’s important you always track the first and last name of your referral sources when they refer you because you won’t be able to cultivate a relationship with them to receive more referrals if you don’t know who they are and which client or prospect they referred to you. Knowing the names of your referral sources is key but you also want to know which type or category they fall into as that will help you determine how best to cultivate them.
Four Types of Referral Sources
Now that we know a referral source is always a human, let’s go a little deeper to understand the four types or categories of a referral source.
The four types are:
- Centers of Influence (COIs)
- Friends & Family
Clients as a referral source are pretty self-explanatory. Current or previous clients are great referral sources but that doesn’t mean all of your clients will become referral sources. And some of you may find yourself in an industry or with a type of work focus where clients won’t be your best type of referral sources.
Centers of Influence (COIs)
COIs are people who know what you do, don’t do what you do (so there’s no competitive overlap) and come across your ideal client with some level of regularity. But please note, COIs who refer you is not everyone in your network but a much smaller group of people who can refer you because the opportunity is there, and you’ve cultivated the trusting relationship. Another business owner, vendor, networking group associate are examples of COIs.
Friends and Family
Some industries lend themselves to receive referrals from friends and family more regularly than the other referral source types – like real estate agents, interior designers, etc. But if you don’t receive referrals from friends and family – don’t worry as it’s not that common. You may find that when you started your business, more friends and family tried to refer you but as you moved into year two or three, that started to dry up. It’s normal as the “newness” of you starting your business begins to wear off and they stop looking for opportunities to support you. Never take it personally.
If you follow my work then you know I believe that referrals only come from relationships built on trust and top of mind connection. So then, how can a stranger refer you? In this case – they are a stranger to you, but you aren’t a stranger to them. And for some reason they have decided to trust you and refer people to you they think you can help.
Pro Tip: when you categorize your referral source list by type – if you have any strangers, anyone you don’t know – take advantage of the opportunity to get to know them so they can become a COI who refers you.
Categorizing Your Referral Sources
At this point, if you’ve done the exercise in the beginning of the article, your next step is to label each referral source by their type. As you reflect on who falls into which category, consider which type is the largest, if any type surprised you and if you have any strangers who need to become COIs (see pro-tip above).
For some you will have one dominant type, others will have a sort of balance between two types or maybe three. And others will realize they don’t receive enough clients via referrals because they don’t have enough referral sources, enough people referring them.
Wherever you find yourself after completing this exercise, it is valuable data for your business so you can take the next steps to start generating more referrals.
Here are some resources to help you with your next steps:
If you discover you have a good number of referral sources but want more referrals from them, check out this podcast episode on creating the first layer in your referral strategy which is focused on existing referral sources (episode #138). In the episode that follows (#139), a financial advisor shares how he went through the process I outlined above in this article and how empowering this process was for him.
If you need more – or any – referral sources, then check out this podcast episode on creating the second layer of your referral strategy which is focused on turning clients and COIs into referral sources, your potential referral sources (#141). And in the episode that follows (#142), you can listen to an architect share how she put her potential referral source layer into practice and started receiving 3 to 4 referrals per week.
Stacey Brown Randall is the author of the multiple award-winning book Generating Business Referrals Without Asking, host of the Roadmap to Grow Your Business podcast, and a national speaker. You can find her at www.StaceyBrownRandall.com.