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Being a business coach exposes me to hundreds of business owners hungry for referrals. I meet butt-loads of people a month. I have a huge network of contacts. I’m a connector. But I’m not an indiscriminate referrerer. I’m careful with the products, services, companies, and people who get my seal of approval. There are three types of referrals: 1) Ethical Referrals, 2) Relationship Referrals, and 3) Transactional Referrals. So let’s evaluate referrals as a sales development strategy.

Every business thrives on sales. New leads drive new sales. There are a multitude of bad ways to get sales… cold calls, cold emails, annoying the snot out of people over LinkedIn (the official network of annoying spammers), and sitting at a stop light of a busy highway with a spinning sign. But no lead generation method beats referrals. Let’s look at the three types of referrals:

  1. Ethical Referrals – The most valuable and rare. The Ethical Referral is simply referring a quality product or service because you’ve used it, it was awesome, and you’re a believer.
  2. Relationship Referrals – Refer someone you like to help, even though you have not used their service or believe they are necessarily the best provider.
  3. Transactional Referrals – Paid referrals. Referring someone because it puts plenty of pennies in your pocket with no regard for quality or fit. If you recommend a service because of the Benjamins without revealing the conflict… that’s Transactional.

In full disclosure, I incent clients and only clients who refer me to a new prospect if that prospect becomes a client. No money changes hands; I simply offer my service to the referring party at no charge or a reduced price, depending on the nature of the new client arrangement. Is that ethical? I think so. I rationalize that because the referrer is a paying client, which means they are using my service, which in and of itself is an endorsement. But yes, they have something to gain by recommending me. So maybe I’m splitting hairs.

As a person who has a large extended network… I get approached all the time by people who offer me referral fees to recommend their service. I don’t take advantage of these arrangements. I don’t recommend companies because I get paid. I’ve never received a check for recommending another person.

When I was a Vistage Chair and decided to go out on my own, multiple chairs offered me cash to give them my group. Instead of accepting graft, I chose a chair who 1) didn’t offer me a penny and 2) who I would have wanted to be my chair. I told him I didn’t want any money for the transaction. Two months after I left Vistage, he sent me an unsolicited gift… a prepaid American Express card with a substantial amount of cash. Okay… I kept it. I rationalize that because it was after the fact… it didn’t count. But I don’t sell referrals for multiple reasons:

  1. Reputation – A person’s reputation takes a lifetime to build and just one bad incident to destroy. If I don’t believe in what I’m recommending, I’m not recommending it. I can’t afford a recommendation to turn into a failure. If I don’t have experience with the service, if I don’t know of a history of highly successful outcomes, if I know of a better provider but recommend a lesser service for monetary reasons… I can’t afford to be that guy.
  2. Focus – I’m in the business of being a business coach, a peer group advisor, and a business strategist. That’s how I pay my bills. I’m not a for-hire sales shill. I focus on being the best in my business and not being the best salesperson for other people’s products or services. I’m focusing on building my business and the business of my clients. That’s my first priority and with a focus, I believe in first thing first, second thing never.
  3. Karma -The weight of transactional referrals that backfire will affect a person’s interactions with others. At the same time, there is huge goodwill and positive payback for connecting good people with great products and service providers. I’m going for the good karma.

We all love good stuff. I am a passionate supporter of quality. When I receive quality service, I want to ensure that the business provider stays in business and is available to serve me again. When I recommend a great service to a friend, I want them to thank me… think well of me, and someday return my favor. That’s why I’m in the business of ethical referrals and don’t take a commission to recommend a product, a person, or a company.

Referrals should be accompanied by warning labels, like the labels on cigarettes or ingredients on medications (you know, may cause insomnia, headaches, nausea, diarrhea, and/or death. Don’t take Badrefferaexamis if you’re allergic to Badrefferaexamis (how would you know if you’re allergic if you have never tried it before)). All referrals should be preceded with one of the following messages:

  1. I have paid for and used this product
  2. I have an acquaintance who used this product
  3. The company I am referring is a client of mine
  4. I work for this company
  5. This is my brother’s company, and I want him to stop borrowing money from me so pay him some money
  6. I hate you and this product, so I want you to use it because I know it sucks
  7. I want you to use the product so that I can see if it’s any good, and then I’d buy it (once when in my youth, I convinced a guy to buy a new model car because I wanted it but there wasn’t enough information about the car. He bought it, hated it, and so I bought a different car
  8. I flipped a coin, heads recommend, tails don’t…. it was heads

When making a referral, the referrer should also disclose one of the following: 1) I receive no incentive for this referral, 2) I receive an incentive for this referral.

Full disclosure, I get paid when I recommend me. I pay me a 100% commission. I want to be upfront about that here and now. But I also recommend you try me first before making a decision. If you’d like to up your game as a business person and improve the service you provide to gain more ethical referrals… why don’t you try a complimentary, no-obligation, online coaching session. Schedule a session now by pressing the little button at the bottom of this post. Also, why not check out some of my ethical referrals…

Patrick Smith
CEO, Power Supply

“Having Glen as a sounding board has been incredibly helpful to me in three particular ways: perspective, sharp questions and pattern recognition. 1. Perspective to pull me out of the weeds 2. Sharp questions that force me to face my own hidden assumptions and faulty conclusions (i.e. that cut through any bs that I tell myself or others) 3. Pattern recognition that can alert me to hidden dangers easily avoided but only easily seen unless you’ve been there before He’s also a really effective group facilitator, keeping the conversation on track and on time while stimulating great group dynamics.”

Joe Landa
Founder/Inventor/Owner, BriarTek
“I am one of the most cynical people on the planet and think for the most part the earth will be better off after the Zombie apocalypse. Having said that, Mr. Cranky is one of the few people I would let into my safe house (at an undisclosed location of course) because Mr. Cranky is one of the few people I know who actually “tells it like it is.” No sugar coating, no pumping sunshine up my skirt, just good honest feedback from someone with relevant experience.”

Paul Erickson
President, Senior Principal Architect, LeMay Erickson Wilcox Architects
“There are two observations I would offer about the 2 1/2 years that I worked with Glen as an executive coach. First, he always was “present” in the best sense during our coaching sessions, as a friend, a seasoned businessman, and an inquisitive mind. Glen thinks outside the box, and when we met for our sessions, it was easy to see that his mind was always working. Which leads me to the second observation: Glen has a unique skill for asking the right question. In the process, he separates the wheat from the chaff to reveal what is important. If you’re honest and are willing to act, this insight gives you the basis to move your company forward in new ways.”

See all Ethical Referrals by linking here

If you’d like a complimentary, no-obligation, online coaching session to find out why people refer me? Let’s work on an issue together. Let’s turn you into an ethical referral of my coaching service.