Referrals are an undeniable way to grow your business. However, as we move into the post-pandemic “boom,” a strong small business referral network can help you manage an overwhelming workload.

What is a Referral Network?

Before we get into the how and why you need a strong referral network – let’s get into what it is.

A referral network is a curated system of people or companies that join together to provide referrals among one another. Typically, this arrangement contains organizations within the same or related industries and/or your patrons.

You may be wondering, does your business need this? Let me answer your question with another.

Pretend for a minute you own an auto shop. Do these words spark joy? “I’m here because Jane who works at the carwash said you would be the best place to have fix my brakes.” If so, keep reading.

Alternatively, have you ever been stressed out with the idea of not being able to provide a potential customer with 5-star service due to an overwhelming workload? You guessed it — referrals can help here, too.

Types of Referral Networks

You can partner with various types of businesses as you build your network. To get you started, think about what kind of relationships would be good for your organization.

Here are three types of partners, how to get them and how to leverage them to grow and manage your business.

Create a cohort with companies within your niche

It may seem counterintuitive to have companies that compete with you in your network. But believe it or not – this can be a blessing in disguise especially as the post-pandemic rush is putting small businesses in overdrive.

If your goal is to manage your workload or provide alternative solutions to requests slightly outside your niche — this is where you should start. This group enables your business to say “no” while still providing a valuable alternative to your customer.

For example, if you are a contractor and you’re booked up for the next six months, rather than telling a customer you can’t take on their work, you can refer them to a business that may have a more flexible schedule.

Say, “I’m sorry we are over capacity for the next few months. We would be more than happy to add you to the queue if you don’t mind waiting. Otherwise, I can refer you to another contractor who I know will do a great job on your project.”

This honesty will get you far, people will remember that you were willing to help them find a solution and will likely come back to your business in the future.

Plus, being too busy isn’t the only reason you would want to say “no” to a potential customer. For instance, the job may not be profitable for your business or you don’t feel you can meet the customer’s expectations. Check out this blog on when turning down work could be a good idea.

Band together with complementary businesses

Consider what benefit you’re looking for. If growth is your goal – a network built up of businesses in complementary fields could be the right move.

Here are a few examples, if you’re a:

  • Pet groomer – partner with a dog training business
  • Hairstylist – partner with a wedding photographer
  • Contractor – partner with an electrician

By identifying other complementary services that your customers may be seeking, you’re able to provide value beyond your own products or services. As a bonus, this makes for a great customer experience. Plus, these relationships are win-win, as you and your partner are increasing your potential reach.

So, how do you find these businesses?

Now that you understand what businesses to partner with, let’s discuss the how.

  • Attend industry tradeshows or conferences. Networking at industry events is a great way to meet like-minded businesses.
  • Reach out to your local chamber of commerce or small business associations. These types of organizations often provide resources for small businesses including networking and mentorship.
  • Peruse online listing sites like Yelp or Nextdoor. See which businesses in your area have strong reputations and reach out to introduce yourself.
  • Ask trusted friends, family or businesses for referrals. If you’re looking for reliable partners, asking the people you trust is a great place to start.

Lastly, leverage your existing customers

We’ve discussed the importance of creating fanatical fans for your business. While we love an impromptu rave review they aren’t a guarantee. But, with a little nudge, you can increase the chances of a referral. How? Incentives.

You can offer existing clients discounts on products or services for each referral they bring in. Alternatively, you can offer them tokens of your appreciation. Think, gift cards to a local coffee shop.

To do this correctly, you need to ensure that you have a system set up for tracking these recommendations. The easiest way is to simply ask new customers where they heard about your business or have them fill out a survey.

Leveraging customers to grow your business should not be overlooked. Especially since most people trust word of mouth more than any other marketing tactic. The best part about this group of people is that you don’t need to look for them. They are already your customers, which means they already like you.

Remember, Always Provide Value

Having a referral network is a powerful tool in both growing and managing your business. Although, you should avoid adding anyone and everyone to your network.

You need to carefully select the companies you work with, be genuine in your relationship with them and ensure that any company you refer is going to provide value to your customer. The last thing you want is a patron upset with your business because you sent them to a company that fell short.