Referral Strategies In Your Branding Agency - The Good, And The Ugly
How do you get most of your business in your branding agency?
Do you get most of your business (or all of it) from word of mouth and referrals?
95% of small branding agencies I talk to say word of mouth and referrals.
They tell me that they have a steady flow of referrals and they have a great close rate on those referrals. “I've really never had to market. I've been very lucky," they say.
And it feels good that people are sending you business and that you’re closing most of them.
But…
Can you really rely on word of mouth to keep your business going?
Let’s talk about why referrals are one of the best places to get new business. And also why it can put your branding agency in serious danger.
How referrals work in your branding agency
I talk to a lot of small branding agencies, and one question I always ask people pretty early on is “How do you get your leads?”
About 95% of people I ask say word of mouth and referrals.
And then often they follow it up with “I've really never had to market - I've been very lucky”.
They might even tell me that they have kind of a steady flow, like they can generally expect to get 1 or 2 referrals a week.
And when I asked them how many of those referrals they close, they say, ‘Oh, I close about 100% of them, so I have a really good close rate, when somebody sends me a referral.’
And they say with pride and I get it.
It feels really good that people are sending you business, and then you're closing most of them. After all, a referral from a trusted source is one of the best ways to get business because the trust that person has with the person that sent them to you, is rubbing off on you.
So they have a clear need and they've expressed that need.
And somebody that they trusted said that you are the person that should help them find a solution, it's practically a slam dunk.
Now that may or may not be exactly your situation. Some people I talk to say it's completely word of mouth, but they have no idea how many leads they're gonna get.
Some months, they get no leads and other months, they get a few, some people say that they really only close maybe 50% of the leads that they get.
Wherever you are in this situation, what I want to concentrate on is the idea that your business is reliant completely on other people sending you business.
And when you're busy, and when you've got a lot of work and you've gotten a couple referrals that closed with projects that you like, it probably feels like things are going pretty smoothly.
But I want to dissect what's really going on behind the scenes, and the potential danger that is lurking right around the corner.
The danger of relying too much on referrals
You never know when it's going to hit, and it could be disastrous.
First let's talk about the situation you're in.
When people tell me that word of mouth and referrals are the primary way that they get business, do you know what I hear?
I hear, “I don't have control over the leads that my business gets.”
I hear “My income is completely reliant on waiting for other people to think of me, and I just cross my fingers and hope that they do.”
When people tell me that they close 100% of their leads I hear “I'm willing to sell whatever is necessary to close the lead whatever they need.”
And after talking to many people and understanding what their business looks like, what I usually see is a business that is being run on a ton of piecemeal projects.
Lots of different clients, lots of different timelines, lots of different kinds of projects that they're doing.
So they may have a couple of big holistic projects that they're working on. That's what they believe that they sell.
But 50% or more of their income comes from hourly work - small one off projects here and there, maybe a retainer client or two.
And they piecemeal together the income that they have.
If that sounds like you, or some form of that sounds like you, you're probably spending a good portion of your time responding to emails, estimating hours sending invoices, overworking projects that you're charging hourly for, and you don't feel like you can charge for all the hours you spent, so you’re trying to figure out what's appropriate to charge all things that you're not getting paid for.
You’re not building additional value in your business, and you're not getting paid for them from the client.
When I ask business owners in this specific situation what they want, they usually tell me, “I want bigger projects and I want more of them. I would love to get rid of the smaller one off projects. I would love to get rid of the smaller value clients in general.”
And my next question is, “Well, what's in your way? What's stopping you from getting more high value clients? What's stopping you from getting rid of the smaller value clients, the brochure, the design of the business card?”
What's stopping them is that they feel they need to close everybody. They don't have the confidence or the stability in their business to say no.
Because that's really how you get rid of low value clients. You start saying no to them.
It's not going to happen organically for you.
You have to step into the business owner mindset.
You’re a business that charges a minimum of $3k, $5k, $10k, $20k per project.
Those are the projects you work on.
And when somebody contacts you for a $100-$200 brochure project, you say no, because you know that it's not going to be worth your time.
You’re not going to get paid what you're worth and you’re going to spend a lot of administrative time dealing with this project, and you can't possibly charge enough for it to make sense.
For me, that's the only way to get rid of those lower value projects.
And somebody who relies exclusively on word of mouth and referrals doesn't have the confidence to say no to those projects.
Why? Because they have no control over their leads.
And so they feel like they have to close every single job that comes in the door, because they never know when the next job is going to come through.
Even if they feel like they get a steady flow of referrals, they have no control over it.
So they really don't know. Even if they’ve gotten five referrals a month for the last year, it doesn't mean they're going to get five referrals next month.
And that is the looming danger around the corner that most people are just trying to ignore and push off to the future.
Let me show you what can happen when you get too comfortable in that situation.
I know a small branding agency owner, who, at the end of last year, felt like she was in a pretty stable place and she was doing about an average of $20,000 a month.
It was made up of two general revenue sources.
One was a couple of different kinds of retainer clients.
And then every once in a while she would get a bigger whale client that was worth somewhere between $10,000 and $30,000.
So between her steady income from these - a couple of small retainer clients, one larger retainer client, and then every so often getting these whale projects, she was able to generally make about $20,000 a month.
And she had a couple of full-time employees supporting her that the $20,000 a month really covered.
She was in the exact trap I'm talking about, which is that she felt comfortable, and she was not putting any energy or effort into building her pipeline.
She was reliant solely on word of mouth and referrals.
For the past year or two, it had been going pretty well, because she had the retainer clients, she didn't necessarily need new projects every single month.
And when she did get a referral, she closed it, and she had that project, and it all kind of worked out.
Well, just a couple of months later, 2 of her retainer clients cancelled, one of them being the big retainer client, and her referrals dried up for no clear reason.
And all of a sudden, her cash flow went from $20,000 a month to almost nothing overnight.
And the problem was she didn't have any sort of process of getting new leads. So she started to get really nervous.
And she started to make the effort to go find leads for the first time ever. Now, because of the comfort that she was in for the previous years, she wasn't just looking for any clients, she was looking for clients that were going to pay at least $10,000 or $15,000 for a project, which meant that a lot of the work that she did was initially looking for new leads didn't immediately close.
Remember, she was starting from scratch, and her price point was pretty high.
She didn't have a lot of authority online, so she had a stretch of a few months where she made almost no money.
And she was terrified. I would be too - that's a scary place to be.
Especially when you thought that you were in this really safe space, you thought that everything was going to just kind of work out because the universe was going to send you that business.
And what she learned was that it was a false sense of security, because she had that one retainer client that was giving her the bulk of that monthly income.
And it was a false sense of security because she just happened to get enough referrals over time to feel like they were going to just keep coming.
And when they stopped coming, for whatever reason, she didn't know what to do.
Now she was terrified.
Her mindset went to a pretty dark place and she even started to question if she was even good at this.
Even though she’d been getting paid really well and doing amazing projects for years, all of a sudden she’s doubting her own abilities.
Her confidence was shaken, and she kept putting herself out there, but inside she was scared.
And she shared with me that she was worried that it was never going to happen.
I'm sharing this story because I watch it all the time.
I see people go through this particular dip all the time, and if you are in a position like this client of mine, I want you to heed this as a warning.
Take control and build your pipeline now
If you're comfortable right now, this is the perfect time to start working on your pipeline, because in a couple of months you have no idea what's gonna happen.
You want to be ready, you want to have control, especially because we know that the economy changes, people's tastes for investing changes.
And we don't want to be at the whim of other people thinking about us. It can be as simple as because the economic tides shift, the people who used to send referrals, all of a sudden, are just not thinking about you anymore.
Because they're concerned with their own business - it could be something as simple as that.
And likely, if you're getting steady referrals, it's probably mostly coming from just a couple of key sources.
So what happens if those sources dry up for some reason?
Well, there is a light at the end of the tunnel.
After doing that initial from scratch pipeline build out, and after making that effort through all the fear, through all the insecurities, something amazing happened.
After making no money for a couple of months in a row, this client closed $20,000 in August, and another $53,000 in September.
And right now she's got over $40,000 in contracts out, waiting to be closed.
So, how did she go from this false sense of security last year to a huge dip, and no money for a portion of the earlier this year to then doing 70 grand in two months?
It’s because she put that pipeline in place.
It's because she stopped relying on referrals and word of mouth and started actively playing a role in her leads.
And at her price points, it took a little while for that to take.
If you're somebody who wants to do that now and or you're starting from scratch, and your prices are not at $10-$20,000 a piece, that timeline is going to be greatly shortened.
I have a lot of clients in Launchpad, who will close their first client within a couple of weeks of taking these actions to build their pipeline.
And they're able to do that because they're newer in business, their prices are lower, and when your prices are lower, your sales cycle is going to be shorter.
And that's not a hard and fast rule.
But my experience has been that as you raise prices, people need more trust in you.
You need to have more authority and they need to know you more.
So the sales cycles are a little bit longer.
But the beauty of this and the beauty of this story is this client put that legwork in and now not only is she closing at a higher rate than she was last year, but she has control over the leads that she gets, she has actions she can take every day to keep those leads coming in.
And unlike last year, she has control over her income again.
And all that effort that she made earlier that year, when she felt like nothing was happening - quite the opposite. It was like she was planting seeds, and they're starting to germinate.
The beauty of doing this, taking action and having agency over your own leads is that, especially if you stay consistent, the effects are going to snowball.
The $70,000 project that she closed recently - those are from seeds that she planted months ago.
And some of those seeds she planted months ago were receipts for people that she's known for years.
But as you go forward in time with these efforts, the results are going to get bigger and bigger, because there are only going to be more and more people that are in your farm germinating.
I remember the first time that I had a client tell me, “Hey, I saw you speak two years ago, and I've been on your email list ever since. And now I'm ready to rebrand. And you're the only person that I want to work with.”
That was such a crazy revelation because it made me realise that's not the only person on my email list that's going to come out of the woodwork and tell me they're ready.
There are lots of people who have seen me speak over the years who are on my email list.
And as the years went on, more and more people would come out of the woodwork that's having control over your leads. And it's a huge mindset shift.
It's something that we talk about constantly inside No BS Agency Mastery.
When you take charge of your pipeline, knowing what to do every single day to bring new hot leads in the door, knowing that as long as you continue to take these actions, you will always have new opportunities in front of you.
And when you're in that situation, you can say no to anything that is outside of the kind of business you want to build.
And that's when you can raise your prices because you create space and time for the bigger projects that you actually want and need. I understand nobody can feel comfortable saying no to the one off projects if they have no idea when their next client is coming in the door.
If any of this is resonating with you, I would love to hear from you. You can send me a DM on Instagram (@pialovesyourbiz) or post in our Facebook group - The No BS Agency Owners Facebook Group and tell me what is getting in your way from taking control of your leads and your pipeline.
What do you think is stopping you from taking action in that direction?
Because it's not a matter of if, it's a matter of when those leads and referrals are going to dry up, or there's going to be a lull and then you're going to panic.
They say the best time to start investing was 10 years ago, and the next best time is right now.
And I feel the same way about investing in your pipeline and your leads, and learning how to build that lead funnel.
No time like the present to shift into action, and stop relying on other people to build your business.
If this is resonating with you, if you do not want to be stuck in the situation that this client was stuck in, in a couple of months from now, go to nobsagencies.com/program and check out what No BS Agency Mastery is all about.
You can apply to have a call with my team and they can work out a plan to get you where you want to go faster and get you to a place where you do have complete control over your leads.
And you no longer have to say yes to every client that walks in the door.
Here’s what you need to get…
Relying on referrals can be great - until it isn’t. And when it isn’t, and those referrals dry up and you don’t have anything in place to replace them, things can get real bad, real fast.
So start building your pipeline right now, and you’ll never have to worry about clients again.
P.S. You can always jump on a call with my team if you want to fast-track your pipeline, and learn all my other tools and strategies to scale up your agency - just go here to get started!