Leads and Referrals — What’s the Difference?

Leads and Referrals — What’s the Difference?

Early in my freelance journey I joined a business networking group through my chamber of commerce for the purpose of generating leads and referrals. Networking groups consist of members of different industries, with no duplication. There is only one mechanic allowed, only one web designer allowed, only one veterinarian, etc. Passing leads and referrals on to fellow group members was a requirement of group participation, and for this group it meant providing 2-3 leads each week.

I got work from the group members directly, but few leads they gave panned out for me. I also found myself distracted from marketing my own business because of the requirement of seeking leads to give to other businesses. I resigned from the group within a year because I just didn’t feel effective.

A recent conversation with a colleague prompted me to recall my experiences with this networking group, and to consider the differences between a lead and a referral, and which is most effective.

 

What are leads and referrals?

Referrals are pre-qualified. A referral is where someone directs or commends one person who has a particular expertise to another who needs that expertise. There is the idea the the referral has been qualified to some extent, before their information is passed along.

We can think of a referral as a qualified sales opportunity where the two parties are introduced to each other and both have agreed to be introduced. Consent is a prime aspect in successful referrals.

Leads are a type of referral. They are reasons or motives to contact someone. When you’re given a prospect lead, you reach out to make the connection.

A lead is unqualified. It’s a chance opportunity with potential. Leads are not personal introductions made by a third party for the mutual benefit of both. A person who is given a lead has no assurance that things will pan out. The lead had not given permission to be contacted, so it’s a basic cold call.

Unlike leads, referrals are targeted. A referral is someone who needs what you do, who fits your client profile. There is greater potential for work from referrals than from leads. Referrals generally come to you, while leads are something you chase after.

Here are 2 examples from my own experience:

A colleague gave me the name of a portrait and wedding photographer, and passed on my name to her, with the idea that we could do business together. But I do not work with wedding photographers, and she was not in need of design work. There was no basis to connect, despite the good intentions of the referring colleague. For me, it was an unqualified lead.

In another instance, a colleague thought I might be able to advise her friend about starting a freelance business. She asked if her friend could contact me, and I agreed. That was a qualified referral.

The upside of leads is that you can gather a lot of them and build a huge list. But then do some homework to filter out those that don’t fit your ideal client profile. Unsolicited leads may not be a good fit for you, or the person sharing the lead may not have permission from the lead and may not be actually recommending the lead. The other thing I note about leads is that the referring person may have good intentions, but has not done his or her homework.

I find most of my clients through referrals from other clients, colleagues, friends and family. Case in point: When I was starting out, I connected with a substantial freelance client through a friend. The friend’s cousin had a business partner and they were starting an online company. I designed their visual branding and marketing materials. I ended up working with the cousin for several months and then with his business partner for a number of years on other projects. The referral, although casually given, proved to be very lucrative for me.

 

Where can you obtain leads?

There is nothing wrong with following leads, and we do it all the time. The point is that a referral has a greater potential for becoming a working relationship than a cold lead, and you don’t need to work as hard for it. Therefore, referrals are the best of the 2 options for building business.

 

… a referral has a greater potential for becoming a working relationship than a cold lead …

 

But leads are necessary to grow your business. With a little work, these non-qualified contacts can become actual clients:

Purchase a mailing list (that is updated regularly).

Browse online job boards for contact information.

Collect contact information through lead magnets and marketing funnels.

Pull contact information from social media

Research awards annuals

Cull from online and printed business and creative directories.

Cull from professional and industry directories and association membership lists.

Research chambers of commerce membership directories.

 

Recommendations

What you really want are recommendations. Recommendations come with approval and trust. As I described above, a referral is a bona fide (good and faithful) piece of information that the person making the referral has decided is appropriate for you. It will not be a waste of your time to connect. Whether or not the referral has an immediate need for your services, you can establish a basis for continued connection, which keeps you top-of-mind when the prospect is ready to pull the trigger. The person referring his or her colleague to you is a show of good faith in your business and in the prospect’s enterprise.

 

People who recommend you are enthusiastically endorsing you — for good reason.

 

A recommendation is a step up from a referral. The person making the recommendation knows your work and your reputation, either directly — they’ve worked with you — or indirectly — they’ve heard about you from your clients. They are enthusiastically endorsing you for good reason.

How do you obtain recommendations? Ask! Implement the principle of asking results in receiving an answer, doors opening, and relationships created. Therefore, ask your clients, trusted friends and colleagues, trusted fellow soccer parents, etc., if they know of any businesses or organizations that need what you provide. Recommendations are the best means of marketing, and they are organic — even if you ask for them.

After every successful project, ask your client who they know that will also benefit from your creative services. At the same time, ask the client for a written testimony for your web site, to endorse you on LinkedIn, or write a review on your Facebook page.

 

Use this worksheet to discover your best kinds of clients

 

Your marketing mix should include asking for referrals and recommendations from everyone you trust, who has an interest in your professional success. A colleague is someone who has your best interests in mind, and will recommend and refer you to others for whom they also have concern.

Above all, be the kind of creative pro — both in how you conduct business and in creative excellence — that people want to recommend to others. Work on your creative output and on your business so that you can attract and catch the best kinds of clients, whether they come through leads or recommendations.

Related articles:

6 Proven Ways To Get Referrals Without Asking For Them via Clicktime

 

Your turn: What are your best tips for asking for recommendations and referrals? Share your ideas in the comments.

Alvalyn Lundgren

Alvalyn Lundgren is the founder and design director at Alvalyn Creative, an independent practice near Thousand Oaks, California. She creates visual branding, publications and books for business, entrepreneurs and authors. She is the creator of Freelance Road Trip — a business roadmap program for creative freelancers. Contact her for your visual branding, graphic and digital design needs. Join her on Twitter, Facebook, Instagram, and subscribe to her free monthly newsletter.

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