Why Building a Business on Referrals is not a Strategy

[00:00:00] Hello. Hello. Welcome to this week's episode. This week I want to have a conversation about building a business purely on referrals and why I think that is a dangerous strategy. Actually, I think building a business totally on referrals isn't a strategy. [00:01:00] And I've been having conversations with so many clients recently, so many new clients actually, who have come to me because for a number of years, building their businesses on referrals was awesome until it wasn't. So they started their business often based on referrals, their business grew based on referrals. They were so busy delivering work, following through on that referred business that they actually have not done any of their own business building and any of their own marketing. And of course, building a business on referrals works until those referrals dry up. And then, unfortunately, because there's been very little marketing or own business development happening, they're starting all over again. So we see, I'm seeing it so much right now. Businesses that are doing okay on referrals, then the referrals dry up and [00:02:00] suddenly it's zero and they're having to start from scratch.

So that's what I want to talk about and I want to share three things that you've actually got to do if you're going to actually have a strategy behind your business. Now there was a time when becoming successful in business was pretty simple. You know, you'd couple of great products with a great service and soon you'd be renowned as the go to expert in that area.

Word of mouth was extremely important and large amounts of revenue used to come in from referral business from current or or repeat clients. Unfortunately, many people who built their businesses when this was the way to become successful, they haven't necessarily learned how to do things differently.

You know, maybe you fell into this model. Maybe you're already in this model of business. You've fallen into it by accident. Maybe unknowingly, this has become your strategy when referrals have been rolling in by the dozen. And maybe in those early days, often I see it's people leaving corporate, referrals are [00:03:00] easy as people knew how good you were, when you were an employee, but simply relying on referrals for a hundred percent of your business isn't a strategy, definitely not anymore in this highly competitive world that we are in. So what should you be doing instead? Well, building a business of any kind really does require three critical pillars. It requires the pillar of attention.

It requires the pillar of attraction. And it requires, the pillar of activation. Let's just go through each of those. So, the first thing you've got to do, by the way, referrals are great. I'm not saying don't worry about them. we all want referrals. We want people to come in with very little effort.

But the point of this podcast is to say to rely on that as a hundred percent of your marketing strategy is not a strategy, you're setting yourself up for massive risk down the line. As I said, it's okay as it works, but when it stops working, if you haven't done any of [00:04:00] those three pillars of attention, attraction and activation, you're going to be in strife and you're going to have to start doing those things.

So first up, let's talk about attention. You've got to dial in your positioning because getting noticed and building your positioning and being recognized, around the impact that you are making is the very thing that will start getting you noticed. Being the world's best kept secret doesn't serve anyone.

I don't care if you are great at what you do. If you're not letting other people know that, if you're not letting the world know that, if you're not letting your ideal clients see that that is what you do, then you are serving no one. Being the world's best kept secret serves no one. It's about showing up.

You've got to Be seen. You've got to be heard. You've got to be noticed for what it is that you do, who you are, and how you serve your target clients. Become the expert in your field, become known [00:05:00] for what it is that you do, build your positioning, step into that spotlight, shine as the incredible individual that you are and let the world know who you are, what you do and how you serve them, build that personal positioning, get recognized for what it is that you do. Because here's the thing, when you get known for what it is that you do, when you build your positioning, you stop competing on price. You start leveraging those years of experience. And this is what I mean about attention.

Attention is key. You've got to stand out. You've got to get noticed. You've got to add value out into the world. And you've got to start letting those future clients start seeing who it is that you are, what it is that you do and how you help them, why they should care about the work that you do.

Attention absolutely matters, but that on its own doesn't work either. In the early days of my business, I put loads of content out [00:06:00] into the marketing. You know, it was very much that thought leader space of sharing what I think, what I know, my entire intention was about serving my audience and I gave away lots of stuff, which was brilliant.

I got noticed, I got positioned, but that doesn't build a business either. You've got to do this second thing, which is about attracting the right clients into your world. Getting noticed is only one thing. You've got to attract people into your world. You've got to build that database of you, build that email list, get the people in, don't rely on the social media platforms for your list.

Because if they shut down tomorrow, you're going to be absolutely buggered. You've got to create lists. You've got to have an email list. That is your biggest asset. And you've got to regularly attract those ideal clients into that list. So who are ideal clients for you? I call them the A grade clients.

Who are they? Do you know who they are? This is [00:07:00] not about serving every single person that walks in your door. This is about you getting really clear on who your A grade clients are. Who are the clients that are paying you what you want to be paid and who are the clients that you love working with and that love those clients that love working for and with you.

I reckon there's five things that you need to ask yourself when you're starting to get curious about these A grade clients. You know, one of the questions to ask is, do you want to work with them now? Yes. And do you want to work with them into the future? You know, these A grade clients, who are they? Do you want to work with them now?

Yes. And do you want to work with them into the future? Second question is, can you deliver massive results for those clients? Yes or no? Obviously, we're looking for a yes. So write that one down. Can you deliver Massive results for your A grade clients. Third [00:08:00] question I want you to ask yourself is do your ideal clients, do those A grade clients know that they need help?

And do they actually want help? Subtle difference there, right? So many of us end up working with people that know they need help, but those people don't do the work. They're not willing to pay for it. They might be the tire kickers. They want everything for free. And that's not what we want.

We want to find The A grade clients, our A grade clients, they have to know that they need help and they actually want help. So ask yourself that. Fourth question I want you to ask yourself when you're trying to identify these A grade clients is, are they easy to find? Can you find them? And are they able to self identify?

So this is where it's about not going really broad. It's not about saying, I work with business women. I'm a business woman, but can I identify with that? Yeah, but it's so broad I'd walk [00:09:00] past. It's about being really specific. I help 40 plus year old, female business owners that work in, The area of consultancy or professional services, and they're making over 10 to 15 K a month and their client base is predominantly corporate.

Who are your ideal clients? Who are those A grade clients and can you self identify them? This is really hard, right? Because we all want to serve everyone. And I often hear that it depends. It depends. I go, yeah, yeah, but you can't sell it depends. You've got to get really clear on who these A grade clients are so that you can attract them.

That second pillar, you've got to attract the right clients. And the fifth thing is, can they afford your services? Can they easily afford your services? If we're marketing to a client base that essentially is starving financially, it's going to get really hard to attract them into your business. And so we want to get really clear on this second pillar of [00:10:00] attracting our ideal clients, our A grade clients into our business, because when we know who they are, actually it helps us do that attention piece, that positioning piece, that marketing piece, much more cleanly and much more targeted.

So two things. First, we've got your positioning. You've got to attract them. You can't be the world's best kept secret. You've got to attract those. You've got to build attention, sorry, amongst your ideal clients out there in the marketplace. And secondly, you've got to make sure that you know exactly what you're saying to attract the right clients into your world, and we want them on an email list. Don't get me started. I will do a different episode around the importance of email list because, Oh my God, the amount of people that don't have lists and they're relying on social media platforms doesn't work. That's also not a strategy. So the third thing to do so that you are not building a business on referrals and putting yourself at risk on that is we've got to tighten up your offer.

You've got to really create a [00:11:00] beautiful streamlined offer. You got to be easy to buy because if it's hard to sell, if we're hard to sell, we're not going to be able to activate the sale. It's going to be really hard to convert those new clients into your business. So when you know who it is that you're working with, when you're building a tension amongst them and you're attracting them into your world, it's way easier when we can speak to their direct problems and show them how we can help.

This might mean that you've got to reduce your product offering. You can't be all things to all people. It's not about having a smorgasbord of product offering. It may be that you've even got to put your prices up or put your prices down or unpack what your products are. Having a whole plethora of products isn't necessarily a smart way.

It makes it hard for you to sell yourself. It makes it hard for people to buy you. And often what happens is that choice fatigue kicks in. I [00:12:00] get this sounds simple, but so many people aren't. As I said, the reason I wanted to record this episode is because so many people come to me because they've been relying on referrals for so long, their referrals dry up, and then they're asking me why they've got no leads.

And often it's because they haven't done these three things. They haven't been actively building their own positioning in the marketplace, they're not doing their own marketing. They haven't got their own marketing strategy set up, often because they're way too busy delivering on the referral clients.

So they haven't been doing their own marketing. They haven't attracted, target clients into their world. They don't have a database. And we've got to do that. We've got to nurture and attract our ideal clients into our world. And then finally, they've been offering everything as opposed to really neatening up and tightening up their offer.

So that ability to activate the sale, to cultivate, to convert the [00:13:00] sale is absolutely key. And we need to have this strategy in our business. It's about those three key pillars, attention, attraction. and activation. Referrals is not a business strategy. What is a business strategy is a plan of how to build attention in the marketplace, of how to continually attract your ideal clients into your world.

I'm talking lead generation. A strategy around activation and converting those sales. Attention, attraction, and activation, and a strategy around that is a business strategy that will allow you to grow and scale that will allow you to manage the growth of your business throughout challenging times and that will allow you to dial up or down.

Relying on referrals is not a business strategy. Now, if you're struggling with this and you're going, Oh my gosh, Janine, where do I start with this? I'm going to put in the show notes today, a link for you to access [00:14:00] my focus finder. It's a quiz, a five minute quiz that will stop you relying, on the whims of the marketplace and help you identify the opportunities that exist in your business right now.

To double down on, to put in place so that you actually have a strategy in place that will allow you to grow your business over time. So that's going to be in the show notes because here's what I do want you to know that cashflow doesn't have to rely on word of mouth and referrals. It can be predictable, it can be consistent, and you can have a plan around growing your business consistently, and you can have a strategy that you can dial up and dial down depending on what activity you want and how much you want to grow your business over time. You just need that right strategy. So, building a business on referrals isn't a strategy. You've got to have a strategy [00:15:00] around attention, attraction, and activation.

I'd love to hear, thinking about those three pillars. Attention, i. e. marketing and positioning. Attraction, getting ideal clients, right clients into your world. Have you got them? What are you doing with them? And then the activation piece, converting, what are you doing there? I'd love to know which one of those three pillars is the one that you need to double down on right now.

Make sure you grab a pen, make sure you write some notes, maybe listen back to this episode and make sure you do that focus finder. Because that's going to give you some really quick wins of where you need to double down to unlock your next opportunity for growth in your business. Hope you've enjoyed this week's episode and I will see you next week.