Why Relying On Referrals Is Killing Your Consulting Firm

“What marketing do you do to get new clients?”

“I don’t, all my business comes from word of mouth and referrals.”

When I ask HR Consultants how they get new leads and clients the answer is more often than not referrals.

I worry about the industry for this reason.

I totally understand the attraction of getting clients in this way, it means that you think you don’t have to spend time or money into doing any marketing, but this is short-term thinking.

Don’t get me wrong, referral marketing has its place. But honestly referrals should be the cream on top of your lead generation activities, not the thing you are reliant on to bring you leads.

And there are other challenges with relying on referral only:

Wrong Fit

You have an ideal client, (Hopefully you will know who your ideal client is).

The problem with referrals is you have no control over who you attract to your consulting firm. If you get a referral from a current client, you may find yourself in the position where you have to take them on for fear of jeopardising the relationship with your existing client.

Chances are if they are not a good fit then you have just accepted a bad client. You will not be happy, and quite possibly neither will they.

Referral By Chance

Unless you have set up a proper referral system, referral channels and a referral team the chances are the consistency of new leads will fluctuate.

Odds are that you are only being asked for when there is a difficult conversation to be had. The problem with this is often there are many of these conversations when you are at your busiest.

Your quiet times will not see many referrals as you are not front of mind during the quiet periods.

Running Out Of Referrals

So let’s do the math regarding referrals.

Each person that refers you has a certain number of friends/people they influence.

Eventually the referral well will run dry as people’s sphere of influence crosses over.

The world isn’t large enough to sustain you in the long term, and you will need to reach out to new people that haven’t heard of you before.

Advances In Your Industry

Your industry is changing at a rate of knots. Where one HR Consultant used to be the same as another HR Consultant, and the differentiating factor was relationships, this is no longer the case.

HR Consulting firms need to think of themselves like every other business out there. Which means they need to niche, differentiate themselves and provide huge value to a prospect, before anyone will buy from them.

With changes in the industry, HR Consultants can no longer rely on referrals. Clients will want more than just a good relationship. They will want advice, insights and an HR Consultant that is their trusted advisor.

If you are just having difficult conversations the referrals will dry up, and your client acquisition model will break.

Referred Clients No Longer Just Trust The Referrer

Bob runs a plumbing firm. He has been running his firm for 5 years and his HR Consultant hasn’t been giving him the care and service that he wants. He decides to ask his good friend Abbie, who runs the local florist, if she knows anyone who can help him:

Bob: “Do you know a good HR Consultant?”

Abbie: “Yes, you need to speak with Sam from EFG HR, she will look after you”

Bob calls Sam:

Sam: ”Hello, EFG HR”

Bob: “ Hello Sam? Abbie has recommended I speak to you about having my employment contracts looked at. Are you able to do them for me?”

Sam: “ Yes…..”

That is how it used to work. Now it works like this:

Bob: “Do you know a good HR Consultant?”

Abbie: “Yes, you need to speak with Sam from EFG HR, she will look after you”

Bob runs off and checks out the EFG HR out of date website. He finds no Facebook page, can’t connect to with them on LinkedIn and when he Googles EFG HR he can’t find his website or any social proof online, all that comes up is the Companies House registration details. Bob does not feel secure about using EFG HR even though Abbie recommended them.

Bob then decides to Google “HR Consultants that specialise in plumbing businesses”.

He decides to ask on his LinkedIn profile if his connections can recommend anyone.

He asks in the local Facebook group also.

After a couple of days Bob has nearly a hundred recommendations for HR Consultants, as his friends and connections have shared their advice on his social media. Now he has too much choice and has to start sifting through the options.

Bob is frustrated so starts devouring HR blogs dedicated to his industry. He finds one company that provides lots of information about how Plumbers can make improvements to their people processes. This HR Consultant is called Niche HR UK.

He decides to download their free eBook and he immediately gets a message offering a free 30-minute consultation. This company isn’t local to him, but he decides to book a Skype call and see what they have to say.

And his relationship with Niche HR UK starts.

Bob already knows that they can help him as they specialise in his industry. He already has an idea on how they can help him as he has read their e-book “How to stop the employee leaks in your plumbing business using these three ideas”.

He knows what the person looks like that he is going to speak with as he has seen them on YouTube. Bob understands what working with them will be like as they have given case studies on how they have helped previous plumbers.

Bob is excited about doing business with this company. He confidently signs up with them, even though they are more expensive than his current HR Consultant. He knows that they will look after him.

Bob is happy.

And that is why solely relying on referral marketing to grow your HR Consulting practice is bad for business.

Even if you want to solely rely on referrals you still need to have marketing in place to back up the referral process. People purchase services differently to how they used to. Which means you need to market your business and have a different buyers journey, compared to how you used to.

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