Why Referral Based Businesses Are Weaker

Do you know that most small businesses I meet are referral based? In fact, a research by thinkimpact.com reveals that 75% of B2B decision are made based on word-of-mouth recommendations. It’s no wonder that 65% of B2B leads come from referrals. Referrals are awesome. They are free (unless you pay a referral fee or have an affiliate program). They close faster and at higher rates. Referral based leads stay longer as clients. It’s just one happy referring family, right? Well, judging by the title of the blog, you know where I’m going with this.

Why Weaker?

In my experience when businesses begin to rely solely on referrals, their marketing muscles become anaemic. In every way they are more vulnerable to the changes in circumstances, the economy and of course, their referrers. The cost of not having control over who and how they attract prospects can take a heavy toll on a business. Here are some other reasons why referral based businesses are weaker.

Buyers Are Consumers Too

When referral based companies ignore social media (“we never need to do that!” as one CEO told me), they forget that every B2B decision maker becomes a consumer themselves after work hours. Social media has permeated every facet of our lives. So if you refuse to play in that part of their world, you are weaker.

Prospects Google You

Especially since the pandemic, most B2B decision makers are going to be Googling you. Even if you are being referred to them by someone they know and trust. If you rely solely on word-of-mouth, you most likely have very little content pumped out on the webs to satisfy them. Lack of content equals being naked online as a business now.

Talent Cares About Culture

Your silence in your marketing doesn’t just turn off prospects, it also shows up as a red flag for people who want to work for you. If there are no sponsorships, causes, positive press or any opinions expressed by your company online, it makes you weaker.

They Are Buying You

Remember the old adage that people aren’t buying your products or services, they are buying you. Ask every Tesla owner if they know the name Elon Musk. Every CEO needs to be visible. In marketing and in business, visibility equals cash.

Competition Is Doing It

When referral based companies don’t bother to market themselves, successful competitors who do have a marketing and digital presence will always be poised to steal market share. Even and especially in the hyper-competitive B2B world.

Rolodex Runs Dry

Above all, the biggest fear of referral based companies should be if and when there’s a fluctuation in their referral sources. What happens when the business simply stops rolling in? Will you have a plan in your back pocket so that you don’t have to look for a solution while the kitchen’s on fire?

Uplevel Referral

Coasting on clients somebody else sends you might seem like a great stroke of luck but if you want to shape and direct WHO is referred to you, you need a marketing plan. Clients often come to me for marketing help when they want to up level their client spend or change their client base.

In the end, referrals are sweet but having a rinse and repeat marketing plan that you control is even better!

Want to reposition your messaging to grow your leads? Follow me on Twitter, friend me on Facebook, watch my Podcast on YouTube or connect with me on LinkedIn –and let’s talk.


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About Chala

Chala Dincoy is a Marketing Strategist who helps B2B service providers reposition their marketing message to successfully sell to corporate clients