The Problem With Word-Of-Mouth Marketing And Referral-Based Businesses

Inbound leads and referrals may be awesome, but they're also often used as justification for lackadaisical marketing and lead generation, which leads to being forced to say yes to whatever leads and referrals happen to come your way.

Referral Business Problems

Once you’ve been in business a while, have worked with a number of clients, and built a rock-solid reputation for quality work and great services, something pretty cool starts to happen: People begin referring other people they know to you.

Eventually, new clients and new projects just show up.

They seem to fall in your lap without having to do anything. It’s amazing at first because you barely have time for sales and marketing and this makes business feel easier.

Business owners in this situation can often be heard saying things like:

“I don’t need to do marketing or lead generation because my business is almost entirely referral-based. The clients and the work just come to me, so I don’t really put effort into my lead gen and marketing.”

The problem is that this phenomenon trains you to expect the leads to just show up. It almost feels like you’re being given permission to take marketing and lead gen tasks off your plate because you don’t really have to worry about it as much anymore.

A referral-based business is incredible when you remain in control and do the necessary work to ensure inbound leads align with:

  • The type of clients you want to work with
  • The type of work you want to do
  • The type of problems you want to solve

What usually happens instead, however, is that inbound referrals provide the justification needed to get lazy about lead generation and ignore marketing. So you…

  • Post less and less on social media
  • Pull back on any blogging efforts
  • Go to fewer networking events
  • Stop what email marketing you were doing

Soon, you find those same business owners saying things like:

“I feel like my business is running me instead of me running my business. I feel like I’m on a runaway train and don’t know how to stop… or that I’m chasing my tail — always busy but never making progress on my own goals.”

You can’t ignore lead generation and marketing just because you receive a lot of inbound leads and word-of-mouth referrals, because you can’t guarantee the quality of the leads and referrals you receive. If you leave lead generation up to chance, you’ll be at the mercy of whatever comes your way, which often leads to high maintenance clients with low budgets.

If You Want To Call The Shots, You Have To Do The Work

Business owners who don’t invest time, energy, effort, and resources into lead generation and marketing, rely on whatever leads and referrals happen to show up, regardless of quality. This often puts them in the position of being forced to say yes to less-than-ideal clients, projects, and budgets because:

  • They aren’t confident the next lead or referral that shows up will be any better
  • They’re not sure when the next lead or referral will show up
  • They need to pay themselves, their expenses, and their team members

Don’t let this be you!

Don’t let referrals make you lackadaisical about lead generation and marketing. When you make time for consistent marketing and lead generation, you remain in control of the types of leads and referrals you receive.

If you want to work with a specific type of client, on a specific type of project, solving specific problems, with a minimum budget boundary, YOU have to do the work to make it happen — and that work is done through marketing…

  • Sharing your marketing messages and benefit/risk statements
  • Communicating who you serve, how you can help, what results you get, and what impacts those results have
  • Highlighting how you’re different and why you’re the best choice
  • Squashing objections by showing people what’s possible
  • Sharing client success stories, glowing testimonials, and your own work
  • Reaching out and having and conversations with others in your industry and in complimentary industries so they know who to refer to you and who to send elsewhere
  • Ongoing, consistent marketing that keeps you visible and top of mind

Looking To The Future

I can almost guarantee that there is at least one successful business owner you know that seems to get all the good projects. They get to work with great clients. They are very well compensated for their work. They’re having a blast doing something they enjoy. They get all sorts of cool opportunities. And, well, business just seems easier for them.

You want may have even heard them say something like:

“I feel very fortunate to be in a position with my business that I get to pick and choose the clients I work with and the projects I work on. So I only say yes to things that make me want to get out of bed and come to work every morning.”

And you wonder how to get to that same spot.

Early on in my business, I watched and wondered the exact same thing. Today, I am that person. I get to pick and choose what I want to work on and what I refer elsewhere. It’s a pretty darn fantastic place to be. But I’m not going to sugarcoat anything. It took A LOT of work to get to this point and it takes even more work to sustain it.

People talk a lot about taking charge, driving the train, and being the business owner your business needs. There’s a little bit of talk (not nearly enough) about how much work it takes to get the train up to speed. But few address the fact that once the train is chugging down the track, someone must constantly tend the fire and shovel coal into the boiler’s firebox to keep the train running. It’s exhausting, back-breaking work, but it can’t be ignored because if you stop tending the fire, the train will slow to a halt.

Generating leads and filling your pipeline with quality clients work the same way, which means there isn’t some big magical secret that you don’t yet know.

The only difference between you and that other business owner is action. Business owners who have the flexibility and power to choose the clients they work with and the projects they work on can do so because they have more than enough referrals and inbound leads to keep them busy and they don’t have the capacity to say yes to all of them.

They didn’t get to that point by being lazy about lead generation or ignoring their marketing and they sure as heck don’t sit around waiting for any old lead for referral to show up in their inbox.

They’re in that position because they actively, consistently market their business to:

All so they can:

Having a referral-based business doesn’t mean you get to stop or pull back on your marketing. It means you actively work to not only attract the type of leads and referrals you want but to secure more than you need so you can choose what you say yes to.

As you look to the future, ask yourself, what type of clients you want to work with, what type of projects you want to work on, what type of problems you want to solve, and what budget range you want to work in. Then get to work. Dedicate regular time, energy, effort, and resources to marketing your business and generating the leads and referrals you actually want.

Some links used on this site are “affiliate links.” If you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

About Jennifer Bourn

With 22 years of experience as a graphic designer, 16 as a web designer/creative agency owner, 12 as a blogger, and 5 as a course creator and content strategist, Jennifer helps small businesses build brands, create content, and grow profitable online platforms. Her renowned business systems and automations allow her business to thrive while she travels with her husband of 21 years and two teenagers, squeezes in daily workouts, tries new recipes, speaks at events, facilitates workshops like Content Camp, and leads online courses like Profitable Project Plan.

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