What Do I Do About ‘Bad’ Referrals?

This week's installment of the newsletter is all about trash…or, as they are often called:  bad #referrals.  

There are several ways to approach the subject of bad referrals and I am going to start with the giver.  

Bad referrals, in almost all cases, are a good thing the first time they happen. 

Seriously, I am not kidding.  Referrals are the best way to do #sales and bad referrals are amazing when you understand what they actually represent.

Hear me out:  bad referrals are usually what I call ‘surprise’ referrals.  They happen when a client or associate has a referral conversation (unprompted) with someone and manages to get that person to agree to call you and/or take your call.

Why is this good?  Because it is momentum and it is productive. 

Anyone that gives you a bad referral is trying to help you and they are always coachable to give you more and better referrals.

One thing we seem to forget when it comes to getting predictable referrals (my game) is being able to identify the most likely referral givers.

Now that we understand that almost all bad referrals are initially a good thing, it is time for how to handle them so that we can ‘coach up’ our referral source to give us the type of referrals that we ideally want.  

The first rule of handling bad referrals, no matter the quality, is this:  Show sincere appreciation.

No matter what, you have to thank the person that gave you that referral as soon as possible and you need to mean it.  If you can’t do that…referrals aren’t going to be a predictable strategy for you…might need to buy some advertising.

How to do it?

  1. Call them up and let them know you appreciate the introduction/lead.
  2. Then, explain to them why you weren’t able to help them (why it was bad) and what you did to point them in the right direction even though they weren’t a good prospect for you.
  3. Thank them again for the referral and then gently point out why they (your current client) is a good referral and why the person they referred wasn’t (timing, lack of budget/resources, needed something else more).
  4. Let them know you love referrals and would like to have a discussion about people they know that you could help (ideal referrals).

The steps:  Thank, explain, thank, explain, request

The second rule of handling bad referrals is this:  You are responsible for getting them

This is one of the key things that I teach, coach and remind my clients about all the time:  you are in charge of what kind of referrals you continue to receive.  Often, great referral sources start with a ‘bad’ or ‘lukewarm’ referral introduction. 

How you handle that opportunity, nurturing or killing it, will determine to a great extent whether or not that person becomes a referral gold mine…or wasteland.

You aren’t going to be able to train/coach every client and business associate about how to refer to you perfectly.  There isn’t enough time.  How we make your referral system predictable has two components:  proactive and reactive.

Bad referrals and turning them into great referral sources is one of the mainstays of our reactive strategy.  It works amazing. 

Like any great relationships, referral ones are a factor of thought and deed.  You need to be able to see the larger context and act accordingly.  #Networking is strategic and requires both strategy and the ability to recognize and nurture new/surprise opportunities.

Got a great example of a ‘bad referral’?  I would love to hear from you and see about featuring your story in my upcoming book.  DM me to schedule a quick call so we can explore.

Related: The Hidden Danger of the AUM Model for Financial Advisors: Looking Just Like Everyone Else