How To Build Lucrative Referral Relationships for Your Freelance Business

Discover two big lessons I've learned about referral partnerships and get tips on creating successful referral relationships that grow your business.

Referral Relationships

Early on in my freelance career, I did a lot of networking and there was one woman who came to every single networking event and constantly pushed her marketing services on everyone in attendance. Her pushy approach felt a bit icky, but she talked a good game and as a freelance designer who offered graphic design and web design services, I was interested in getting to know freelance marketing consultants.

When she reached out to talk about a potential strategic partner relationship, I booked a call hoping for the best. But that’s when things started to go wrong and eventually I had to ask her to stop sending me referrals.

Here’s what happened:

  • She wanted me to refer every person I came in contact with to her for marketing services in exchange for a referral fee.
  • She promised to send me tons of leads for web design but demanded a referral fee that was pretty hefty.
  • I shared that I don’t blindly refer or mass refer people to one person just for a commission, but always seek to find out what a prospect needs and refer them to the best person, agency, product, or training that fits their needs. I also told her that her large referral fee was an issue as I was doing much smaller projects with much smaller clients back then.
  • She wasn’t happy and told me point blank that she wanted to refer people to me because I was the best, but without a big referral fee, she would just send them to someone else even if that meant her clients would have worse results.

I couldn’t believe that she bases her referrals on commissions, not on what was best for her clients. That behavior so far out of alignment with the way I do business, I just couldn’t agree.

Somehow — and to this day, I don’t know how — we agreed to a trial run and over the next few months, I was inundated with referrals she sent my way.

It sounds like a great problem to have, but in reality, none of the referrals were a good fit and zero converted to paying clients — her approach was based quantity not quality with the hope that some of the referrals would pay off. This resulted in frustrated and irritated prospects who didn’t understand why they were referred to me in the first place and managing loads of referrals that didn’t convert to paying clients was eating up so much of my time that had to ask her to stop sending me referrals.

This experience taught me a lot about building referral relationships, creating brand ambassadors, and developing lucrative referral sources.

Two Things I Learned

The two biggest things I learned about creating lucrative referral sources are…

All Referrals Are Not Created Equal

When building a referral-based business and cultivating lucrative referral partnerships, the goal isn’t to get as many referrals as possible but to get the best quality referrals.

Quality will always win over quantity because:

  • Quality, vetted, strategic referrals will convert to paying clients are a much higher rate.
  • Lots of low-quality referrals will take up a lot of your time without producing any profits.

You Need Brand Clarity

When others aren’t sure what you do best, who you can help the most, and what type of results your clients and customer enjoy, it is virtually impossible for them to refer someone to you. Similarly, when someone doesn’t know exactly what type of clients you want, they’ll end up sending you everyone, even if they’re not a good fit.

When you make a referral, you want to feel confident that your friends and family will get the best, get exactly what they are looking for, and get what they need — and you can’t do that without the right information.

  • When you have clarity about what you do best, how you’re different, why you’re the best choice, and what big results you help others achieve, something magical happens: other people gain the same clarity.
  • When you know exactly who your ideal client is and have a written ideal client profile that you can share with the world, something magical happens: other people discover who would be a perfect fit for what you offer.
  • When your network, audience, and peers know exactly who you are, what you do best, and who would be a perfect client or customer, it becomes very easy for them to identify potential referrals and send them your way.

Create Strategic Partnerships

In addition to cultivating referrals one at a time through your clients and customers, it’s also smart to create strategic referral partnerships with complementary businesses. One good referral partnership can create an entirely new income stream of clients and customers.

The most profitable referral partnerships are between freelancers and businesses that serve the same market, offer complementary services, and operate with the same level of integrity, professionalism, and expertise.

Use A Trial Period

Don’t rush into a referral partnership with a commission structure or affiliate payout too fast. Create a trial period that lasts a certain amount of time or spans a certain number of projects first to make sure the referrals and leads you receive are:

  • High quality and a good fit
  • Clients you enjoy working with
  • Interesting projects aligned with your skill set

It’s also important to use the trial period to review the relationship your referral source has with the person they are referring to you.

For example, I once received several referrals from a copywriter that converted to paying clients. The money was good, the projects were interesting, and the clients were great to work with, but the copywriter kept inserting herself into the design process, making suggestions that were 3-5 years out of date and not in alignment with current website best practices.

Because the clients were her clients first and she felt like she was doing us a favor by making the referral, the copywriter wanted us to blindly implement her suggestions without offering our professional expertise. Unfortunately, that behavior isn’t in line with how we do business and we had to end that referral relationship.

After that, I implemented a referral partner trial period. With this approach, a referral partner needed to make three referrals that resulted in a great experience to become eligible for future commissions or affiliate fees.

Keep Communication Open

The key to a successful referral relationship is regular, open, and honest communication. Help your referral partners stay excited about referring others to you by staying in touch with them and keep them in the loop. Be sure they are the first to know about your new services, products, launches, sales, and business changes. Create special referral opportunities and rewards and provide them with tools to make referring new people a breeze.

Then, when you receive a referral, reach out to the referral source and provide updates during the sales process, so they know you’re taking care of those they send your way, even if they don’t end up becoming clients.

Stand Up For Yourself

If something isn’t working for you, or the referrals you’re receiving aren’t a good fit, you can’t be afraid to stand up for yourself. You have to be the champion of your business and your time.

If someone is sending you low-quality referrals, reach out, thank them for their referrals, and invest time into educating them on the type of clients you work with and want, and what type of clients you don’t want. When they have better clarity about what type of referral is good for you, they will be able to make better referrals.

If a referral relationship isn’t working out, starts to feel out of alignment with your business practices, or reaches a point where integrity is lacking, speak up. Have a conversation with the referral partner about what is no longer working for you and see if you can reach a mutually beneficial solution — and if not, don’t be afraid to walk away.

Grow Your Freelance Business With Referrals

A lucrative referral relationship should benefit everyone involved: the person making the referral, the person being referred, and the person receiving the referral.

When building successful referral relationships in your freelance business, just remember to have as much clarity as possible, be clear, open, honest, and upfront with your referral partners and those referred to you, and don’t be afraid to make changes and have the tough conversations if referrals aren’t working out for you for any reason.

If you can do that, you’ll position yourself as a sought-after referral partner and soon see your business grow through quality referrals.