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The Commoditization Of Referrals

by David Brock on May 23rd, 2011

Referral’s are important to sales.  We want people who know us to introduce us to others who might be interested in our products or services.  Referrals are important and valued endorsements of who we are and what we do.

When someone refers me or my company, I am deeply appreciative.  I feel as though the referrer has bestowed something very valuable on me.  It’s something I will not betray, it’s something I’ll do all that I can to live up to their trust in referring our company.  Likewise, I value my relationships–when I refer someone to a colleague, I want to make sure both parties are right for each other.  For the person I am referring, I want to make sure that person has the same values, can do what I am providing the referral for, and will serve the customer as well or better than me.  For the customer or person I am giving the referral to, I want them to continue to trust me–to know that I will only refer people they can trust and who both value them and will provide valuable service.

I don’t believe referrals should be treated lightly, either in giving them or in getting a referral.

I’m disturbed by a trend toward the commoditization of referrals or even creating a “marketplace” for referrals.  Through LinkedIn, over the course of a month, I may get a dozen request for recommendations.  While they are from people that are connected to me, they are from people who I know nothing about other than their LinkedIn profile–we’ve not had any email exchanges, phone calls, nothing.  Somehow, they feel because we are linked, I should be giving them a recommendation.  Or I may get that “canned” thank you, when I accept an invitation that says, “thank you for accepting my invitation, please feel free to contact us to provide you services or refer us to others in your network.”  Does the act of accepting an invitation mean they have earned the right to ask for more in the relationship?

Over the past few months, I’ve gotten invitations to join a variety of “referral networks.”  People who I don’t know, want to refer me and for me to join a network where I might refer them.  In one, apparently if I do enough referrals, I’ll get a box of Omaha Steaks.  I have to admit I’m suspicious of these networks.  Here are people who are trying to gather referrals, offering incentives to do so.  The people providing those referrals, in hopes of earning a set of matched steak knives and a box of Omaha Steaks, must not value their customers very well.

Don’t get me wrong, I’ve sent boxes of Omaha Steaks, I’ve bought lots of dinners, or done other things for people that have given me referrals–it’s always intended as thank you, as a means of showing my appreciation for their trust and confidence.  But the reward was never an expectation the person had in giving the reference.  Likewise, I’ve had people send me gifts (though I much prefer a heartfelt thank you), for referrals I have given.  Again, the expectation of the gift was not the reason for the reference.

The foundation of buying and selling is some level of trusted relationship.  Implicit in any referral is–or should be some level of trust transference.  If we state eliminating that as an element of the referral, then what’s the value of referral?  If we eliminate that as an element of  the referrals we provide, what does it say about how we value our own reputations and relationships with our customers.

The relationships I have with my customers, colleagues, advisers, and friends at too important to me to broker.  Each relationship is treasured and valued.  When I provide a referral, I expect that new relationship to be valued and treasured.  When I receive a referral, I will value and treasure that new relationship.

Social networking is great, but social networking as a tool to the commoditization of relationships and referrals is an abuse of the tools.

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  1. Raymond Quader permalink

    Excellent observations. I often wondered how many people have upwards of 500 connections !

    • Thanks for the comment. To be honest, I have well over a 1000 connections in LinkedIn. I have various lists that run into the tens of thousands. Some of those lists are opt-in where people want to be informed of things that we are doing or writing. I have “personal lists” of a couple of thousand of people I make a concerted effort to stay in touch with and speak to at least once a quarter.

      There is a challenge with the “race” for quantity rather than quality/depth of relationship. It’s an interesting discussion, I tend to weigh in on the quality side.

      However, referrals are slightly different to my mind. I am staking my reputation, and the trust I have with a person I am providing the referral to, on someone else. Before I do that, I want to have great confidence that person has the same values and can at the same level of quality I like to think that I deliver.

      Thanks for joining the discussion. Regards, Dave

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