For as long as you have been in real estate, you have been taught there are a limited number of ways to generate referrals. Here are a few methods you’ve most likely heard about.
- Ask your clients and contacts — anyone in your database — for referrals and ask often.
- Be promotional and gimmicky by placing “your referral is the greatest compliment you can give me” or “I’m never too busy for your referrals” in your email signature or newsletter.
- Pay a commission to other Realtors when they refer you.
Have you ever thought about why? Why have you only been taught to ask for referrals, to pay for them or to be promotional to receive them? Now, I know some of you can make the argument that those ways work for you. Great, but the reality is you are in the minority.
Most agents want referrals. They just don’t want to ask or be overly gimmicky to get them. So, if you know you deserve them and do not want to follow the decades-old, traditional advice on how to receive them, what are you left with?
Hope — to hope you receive some referrals from time to time because you do a great job. But as the saying goes, hope is not a strategy.
Traditional advice on generating referrals
So where does the traditional advice on generating referrals (asking, paying, being promotional) come from? It comes from how we’ve been taught to deploy an overall sales strategy in our business. What we’ve been told is that a typical sales strategy has two parts — the prospecting plan and the marketing plan.
In a typical prospecting plan, the activities include cold calling, joining leads groups, attending live or virtual networking events, farming a neighborhood and more. The mentality you bring to prospecting is more short term, meaning you hope to participate in that networking event and meet someone who wants to talk about buying or selling their home.
The end user of the prospecting activities is the prospect — your potential new client. When prospecting, you want to reach the prospect. When you make that cold call to the expired listing, you are hoping the prospect answers and is interested in talking with you.
On the other side of the sales strategy is the marketing plan. In the typical marketing plan, the activities include advertising, sponsorships, trying to get earned media (PR), social media, etc. The mentality is a little bit longer term than prospecting, but the end user of your marketing message — the people you’re hoping will see it and respond to it — are your potential clients, the prospects.
Why your sales strategy should include a referral plan
Make no mistake — both prospecting and marketing are important. But your sales strategy is not a two-legged stool. It’s a three-legged stool, and the third leg should be your referral plan. This means you have to pull all referral activities out from your prospecting and marketing.
But that is not what we have been taught; we have not been taught that our sales strategy is a three-legged stool. Instead, for decades, we’ve been told that referrals fit within the prospecting plan. We’ve been taught a short-term mentality of trying to get to the prospect as quickly as possible, which is where the advice to ask or pay for referrals comes from.
Or we’ve been taught that referrals fit within the marketing plan, so the advice we receive is that to generate referrals from a marketing perspective, we need to be promotional or gimmicky. The marketing message is intended for the potential new client, like with prospecting.
But with referrals, the end user of your activity is never the prospect — it’s your referral source. With referrals, you are focused on developing and strengthening relationships with your referral sources which removes the need to ask or be promotional or gimmicky.
What does a referral plan look like?
So, what does this mean? What does it look like, and how do you deepen relationships with your referral sources? Well, let me start with what will not cut it.
You are not strengthening relationships just by emailing your market analysis newsletter every month or mailing your glossy printed magazine every quarter. Dropping by, texting or calling every 62 days because your database reminds you will not produce the results you are looking for either.
When we look at our relationships, we have to focus on being memorable and meaningful. Yes, sending the handwritten thank-you card for each referral received is necessary, but so is connecting with our referral sources differently with an intention to be consistent (not every day or month, but six to eight times a year).
Most agents want to know what this means specifically. They want to know exactly what to do. However, I always advise that this starts with you identifying who your actual referral sources are. Then, you will know how best to serve them while planting referral seeds.
Maybe the best way to connect with your referral sources is recognizing Mother’s Day with a Wonder Woman water bottle or hosting some of your best referral sources for a virtual beer tasting with a knowledgeable brewer (and with you providing the beer).
Perhaps it’s a socially distanced coffee meeting where you can learn who you can connect them to. The opportunities are endless, and agents gain the best clarity of the “what to do” once they know the “who” they are doing it for.
Remember, we should not apply the prospecting or marketing mentality or activities to how we generate referrals. Anything you do to generate referrals is directed at the referral source — the human who will refer a new client to you.
This means everything should be different — what you do, what you say and when you do it. Referrals are ultimately people putting their reputation on the line and recommending someone to you because they trust you. Remember, referrals only come from relationships, so your tactics have to be different.