This article, Referrals Are Fantastic But Can’t Be The Sole Source Of Your Business Development Pipeline, is part of our Destination RSW Summer Blog Series, designed to help you navigate the hazards encountered on the road to new business.
We’ll have new challenges featured throughout the summer, so be sure to check back in each week for a look at the latest content!
This post is from our VP of Sales, Lee McKnight Jr.
It’s no surprise that agencies typically rank referrals so highly as a lead generator.
You do great work and referrals (can) follow.
It’s a lot easier than an ongoing new business program, right?
New business is hard — hard to maintain, hire for, and keep up consistently.
And, let’s be honest, agencies typically aren’t very adept at it.
So referrals become the default new business option, which is not a bad thing.
If your agency doesn’t have a process in place to drive referrals, you need to implement that — yesterday.
Having said that, you simply cannot rely on referrals alone to build and grow your agency.
I know there are agencies that will contradict me on this saying, “It’s working for us.”
I say that’s fantastic, and you’re doing that part of it right — but you rely on them at your peril.
There are several reasons why:
1) Referrals aren’t necessarily the right type of client.
For several reasons this could be true (wrong fit, too small, no budget), and you could find your team spending time on the wrong types of work.
2) Referrals are not a consistent and scalable source of new business.
Just as your agency experiences certain lulls given the nature of your clients’ businesses, referrals function in the same way.
3) If you’re a small- to mid-sized agency, larger agencies are going after what they didn’t use to.
It’s a trend that’s gained momentum, which means those referrals you’re relying on have a better chance of slowing, or drying up altogether.
4) Agencies continue to get more aggressive when it comes to new business.
In our own survey reports, 86% of respondents say they’re getting more aggressive in their outbound and inbound activity.
To be fair, I take this one with a grain of salt, as agencies, bless them, tend to come out of the new business gate like gangbusters and lose steam rather quickly.
Not a knock at all, but it tends to be true.
However, it’s all about balance and scale.
Clients have to come first, of course. But you need a blend of referrals, outbound, and inbound that you can manage.
There’s a reason insurance exists — if you’re crushing it on the referral front, look at the outbound/inbound component as your insurance policy; it’s not the easiest part, but it’s absolutely necessary to your success.
And your business development pipeline will thank you for it.