February 10, 2013

Appreciation Marketing – The Failed Referral

Referrals are the backbone of success for any company. We all strive to build our businesses so that others will refer people to us. These referral sources may be friends, neighbors, family, clients, prospects, or just casual acquaintances. This practice of referrals is great for everyone involved, and there are benefits all round. When you refer anyone to someone else, you have placed your reputation on the line with both parties. If the referral does not work well for either party, what responsibility do you have as the referring party?

People do business with, and refer business to, others that they know, like, and trust. This philosophy works well if we really know both parties in the referral process. If you are referring Sally to Fred, and you know both Sally and Fred in depth, you should decide whether you like them and trust them. If the referral goes bad through some fault of the two parties, is the referral your fault for not vetting them first?

What happens when we may not know one, or both, of the parties in the referral? We all have been in a group of people when someone asks if anyone knows someone who provides a specific product or service. If we do know someone, do we immediately pass on the referral information to both parties, or do we attempt to try to qualify the parties to see if we really want to pass their information to each other?

I personally believe that there is a point where the referring party does not qualify the prospect for someone to whom he may be referring this person. In our example, how far do you proceed to qualify Sally and Fred to see if they are a match for the referral. I also believe that the circumstances in each case may make your work more detailed or less, given the situation and the original question that lead up to the referral.

If you are on an electronic bulletin board, and you ask for a plumber, I may give you someone’s name and contact information without getting the details of who you are and how you do business. I believe that the plumber that I give to you should do some qualification of you before proceeding too far in the process. Likewise, you should do the same to qualify the plumber and his business principles.

What happens when the referral has been given, and it failed? One or more of the parties is not happy with the outcome. What responsibility do you have as the referring party to attempt to help the two parties come to a mutually satisfying resolution? Do you have a responsibility at all? I believe that it depends on the people involved, the circumstances of the referral, the background of how you know these two parties, and the follow-up after the referral.

Did you guarantee the work of either party or what each would bring to the table? Did you guarantee the performance or payment of either party? Did you have a controlling part in the process of the transaction? These are all very valid questions, and all of them have different shades of definition depending on the transaction involved.

Have you ever had a referral fail for any reason, and what did you do as a result? How far do you go to qualify each and every referral that you give? Please leave me your comments, or email me at Jim@SOC4Now.com, or call me at 360-314-8691 with your thoughts. While referrals can be the backbone of business success, they may backfire on the parties involved. Remember that nothing is certain, and you should give feedback to those who refer business to you so that their referrals can become slam-dunk clients. Then thank them for the referral.


  1. I find it hard to refer people to anyone I do not know something about. I either need personal experience or a great review from a respected friend. If I do refer...I don't want it to go sideways. It's a bad refection on me. It's a very delicate situation. Best think thru...carefully, all your referrals.Best regards, Bob Bonnell.

  2. This is an interesting issue, and one that I have certainly experienced. I want to provide exceptional service, and since this person was referred to me, I want to go above and beyond and make a good impression. However, it is still my responsibility, and not anyone else's, to qualify all new clients. As small business people, I know we are always looking out for each other and hope to help one another succeed. The bad apple every now and then is just part of that process.