So why would you take the time to focus on referral sources when there are other business development activities you could be spending your time on? First, it’s often much easier to get business from a referred prospect. In fact, research suggests you are almost twice as likely to get business from referred prospects. This is because they have essentially been pre-sold on your services by someone else who presumably had nothing to gain by making the referral.
Leveraging referrals may also be the most cost effective way to get business. Some business development experts have suggested that it may cost up to 400% more to get business from a prospect who has not been referred. It can also take up to twice as long to get business from a prospect without a referral because you haven’t yet received that third party endorsement. As a result, unreferred prospects will often require you to demonstrate your experience, participate in a lengthy proposal process, provide a number of references or jump through other hoops, substantially lengthening the business development cycle.
Finally, when cultivated and cared for, referral sources are likely to stay with you longer, utilize more of your services and ultimately spend more with you. And they will often end up being most loyal Clients you have. Oh, and referrals are also free. All in all, it’s hard to think of a reason not to focus on referrals. They are as close as you can get to printing money.