The Psychology of Referral: Why our clients & friends bet their reputation on us

Photo by Rosa Rafael on Unsplash

Where does your new business come from?

For most businesses, especially service-based ones like mine, referrals are our lifeblood, along with repeat customers.

When it comes to coaching, it’s easy to see why people seek referrals — it’s human nature.

Given the abundance and variety of coaches available, it’s logical to narrow the field by leveraging the experience of others. When looking for a trusted thought partner, seeking social proof and reinforcement from others also makes sense.

OK, so it’s easy to see why people seek referrals — but why do they give them? What motivates people to refer others?

I’ve wanted to dig into this topic for a while but hesitated because of the potential ‘ick’ factor if I didn’t get the question right. The question isn’t, ‘Can you tell me why you refer people to me?’ AKA, ‘Tell me why you think I’m good’ — that feels ick!

The question is, ‘Why do you refer anyone? (What’s it all about for you?)’

I contacted some of the most prolific referrers in my network to answer the question. Here are the most common reasons they shared for why they make referrals:

• Generosity — the most common response is wanting to give to others.

• Utility — helping to solve someone’s problem creates a feeling of usefulness.

• Efficiency — this is a double whammy. It’s about saving each person time searching for the right help. It’s also about being able to help 2 people simultaneously.

• Reputation — being known as having a network of ‘good people’ is reputation-enhancing.

These reasons resonate when I think about the referrals I’ve made recently.

Switching modes and putting my ‘very grateful referral receiver’ hat on also made me think about reducing friction and encouraging more frequent referrals.

Building a Referrer Encouragement System

Here are the components of a Referrer Encouragement System:

SAFETY & TRUST

By delivering consistent, reliable, high-quality outcomes, referrers can feel safe and secure recommending us and confident that their reputation is not at risk.

ASK

If you’re anything like me, asking for help is hard. But we’ve already identified that people like the opportunity to be generous. So why not ask? Let them know you would appreciate introductions if they are comfortable making them.

EASE

It’s our job to make it easy for a referrer to identify the right opportunity. Once they’ve done that, we need to make the process as quick and straightforward as possible for them. Tell them what the ‘ideal referral’ looks like. Give them an introductory blurb or bio to share. Let them know if you prefer a double opt-in (check first) or if you’re happy for them to refer anyone at any time.

CONTRIBUTION

The more referrals we give, the more we are likely to receive. Not in the sense of a transactional ledger. It’s about paying it forward. The more conversations we have about the greatness of others, the more likely it is that others will do the same for us.

RECOGNITION

Let no good deed go unrecognised. A thank you goes a long way. A bottle of wine (or other small gift) goes further. And a handwritten note is particularly compelling when it describes the referral’s impact on us. I’ve included ‘Who can I thank for this introduction?’ as part of my online booking form for potential new clients in case I need clarification on how they found me.

DELIVERY

Receiving the referral is the first step. If we want an initial referral to become a flywheel for others, we must continue to do great work and reinforce the trust and safety to ensure the cycle continues.

What do you think I’ve missed? I’d love to know.