In the business world, people tend to use the words “lead” and “referral” interchangeably. When, in fact, they are very different. Today, we are going to dive into the difference between a lead and a referral, and how they both can help grow your business.
Leads vs. Referrals
In simple terms, a lead has the potential to be a prospect. They may or may not need your services and are basically equivalent to cold calls. They are not expecting to hear from your organization, and no one gave you an introduction or a personal endorsement. Examples of leads include email subscribers, event registrants, membership lists, business directories, and emails collected through lead magnets and marketing funnels—like a website contact form.
As you can guess, leads require a lot of time and effort, often with little payout. However, for the right business with the right processes in place, leads can be very fruitful. For example, you may run a business with lots of sales professionals that sell a high volume of products or services. In this situation, leads that get funneled into a sales process can be quite powerful.
On the other hand, a referral is a personal introduction to a qualified lead. A qualified lead means they need your services. They know who you are and how you can help them. And the introduction comes with a stamp of approval from someone they presumably know, like, and trust. As a result, they are primed to become a client.
Referrals are typically much easier to close and often result in higher client satisfaction. Simply because the person is an ideal client, and you are the right fit for their needs. Just remember, a referral is not a guarantee of business. After the introduction is made, you are responsible for what happens next.
How to Convert a Lead into a Referral
If you want to become a trusted referral partner, you need to learn how to qualify leads to give proper referrals. Before you begin this process, you need to first learn about the organization’s business, services, and ideal clients. Otherwise, you are just going to waste both the person in need and the organization’s time. Once you understand the organization, you can listen for when a person that fits the bill needs their services.
If you are not sure if a person fits the bill, then you need to run them through a filter. First, are they in need of the organization’s services? Second, do they fit the organization’s ideal client profile? If you answer yes to both questions, then you offer the person an introduction to the organization. If—and only if—they accept, you introduce them to the organization. A simple email introduction is usually best, just make sure to provide context for both the person and the organization. I like to sing my praises about the organization and provide a connection if they have something in common (like a client, friend, or hobby). And depending on the situation, I like to give the organization a heads up and some background information as well, in a separate call or email.
How to Give Great Referrals
Not all referrals are of the same caliber. If you follow the guidance on how to convert a lead into a referral, your referrals will become more effective and will result in better, more trusting relationships with your partners. The key is to do your homework on your partners, screen the leads, and provide thoughtful introductions. If you skip any one of these three steps—especially the first two—your referrals may fall flat. I also find that the last step, when you give a thoughtful introduction, is often neglected. In your haste and excitement, you may forget to take a few extra minutes to write a thorough email. And that haste can not only prolong the sales process for the organization but could cost them the referral altogether.
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