Unpacking the Two Best Kinds of Leads: Referrals and Word-of-Mouth

Have you heard, “Word-of-mouth and referrals are the best possible leads”. Yes. But these aren’t the same thing. At all. Right?

Some coaches and consultants will tell you this much on their podcasts:

  • Word-of-mouth and referrals are the best possible leads
  • But word-of-mouth and referrals are problematic

I completely agree. But I have two bones to pick:

First bone. They will also say never tease out the difference between the two words: referrals and word-of-mouth.

That’s lazy thinking and proof that writing is a better thought-improvement process than podcasting or YouTube-channeling.

Here’s a thought, in fact: any time two words are constantly used together to describe something it’s a sign: one word won’t do.

Instead, two separate words are needed to describe some nuance. For example:

  • crimes and misdemeanors. Two separate meanings.
  • sales and marketing. Two very separate meanings.

So: word-of-mouth and referrals – also different? Yes, and here’s how.

A referral lead is most effective kind of outbound marketing.

A referral reflects a conscious effort, usually on the part of a client, but also a friend of family member, to refer your services. In a sense, it’s sales. It’s very low sell, because the referrer has very little skin in the game of referring you. Other than wanting to help out.

Word-of-mouth, though. Oh-ho. That’s the grand prize.

That’s the  opposite-direction version of the referral; that’s when your name comes up in casual conversation, when you’re asked for, sought out and sought after, (“I really need someone to fix this problem I have, fast. Is that one consultant you were raving about available?”).

In short, a word-of-mouth lead is the most effect kind of inbound marketing.

Which brings us to the second bone: another distinction that often eludes sales and marketing coaches, even the good ones. And I say this having run my own agency.

The problem with word-of-mouth and referrals is not that they don’t provide enough volume.

In theory, if there are enough influential people referring you,  then you’ll never want for your daily lead. You’ll have too many.

So it’s not (necessarily) a volume problem. It’s a consistency problem that is compoundedwith a cash flow problem, not to mention capacity planning, once your agency gets large enough.

Word-of-mouth pours in. You hire up. You have 10 employees.

More word-of-mouth leads, because you’ve haven’t hit The Consultancy 7-Year Mark. You have 20 employees.

By the way, the solution to having too many employees is to build partnerships and cultivate freelance relationships.

Word-of-mouth stops flowing because you’ve exauhsted the word-of-mouth network.

Uh oh.

Because not only don’t you do content marketing, or advertising, or conferences, you don’t even ask for referrals, (which again, is a form of outbound marketing).

So now you have problems that beget problems. Scared employees, job-hunting employees, employees that have lost faith in your leadership. Low-ball offers on work. Hail Mary RFPs and other time wasters.

Because I don’t care if you’re the ex-President of the United States: you can’t control the consistency of referrals. You might create enormous volume but when; how long will you have to wait to make payroll? And what’s the good of a million referral and word-of-mouth leads, or a 1,000, or 10 – if they all come at the same time?

Fortunately, there are ways to manipulate the flow of referral leads, although that’ll have to wait for another post. If you can’t wait that long, head over to Steve Gordon‘s website and learn about his referral kit approach. And speaking of kits as marketing, David C Baker has published a very thorough orientation kit template. It’ll make you look rather important.