Why Referrals Are So Misunderstood

I don’t mean referrals are misunderstood in terms of why we want them or understanding how powerful referrals are.

Most people get that part.

Most understand referrals are powerful because the referral is “dropped in our laps” already trusting us (a key in deciding to buy) which means they are quicker and easier to close.  A referral is also less price sensitive because our value has already been established by the person referring us before we even meet. Because we understand the power of a referral, we know why we want them.

We understand the WHY.

But we are fuzzy on the WHAT.

And completely confused with the HOW.

First, let’s look at why we are unclear on the what.

[After reading this article, check out the Stacey Brown Randall Live Show (Episode 22) where I look closer at why referrals are so misunderstood.]

The WHAT of a Referral

For decades the definition of a referral – a true referral – has been diluted. The definition has been made murky because we have broadly applied the definitions of other sales terms as referrals.  Sales lingo terms like the “word of mouth referral” and “referral marketing.” It seems we will slap the “referral label” on just about anything that isn’t a true cold lead. It seems that if the prospect has any level of “warmth” we say it is a referral when nothing could be further from the truth. When I hear people describe a warm lead as a referral (or even an introduction or word-of-mouth buzz), it is clear why they are fuzzy on what a referral is. Because thinking a warm lead is a referral sets us up for disappointment.

  • A warm lead is just a name and contact information given to you by someone else who may not have identified a real need and didn’t connect you.
  • An introduction is just a connection made with no real need identified.
  • And word-of-mouth buzz lacks the connection even though a need has been established.

To be a referral you need both – a need identified in the prospect through a conversation and you were the suggested solution. Then the connection is made because the referral source connects – typically over email – you with the prospect letting you know the prospect has a need that you can solve.

[Read more about the definition of the sales term in All Referrals Aren’t Referrals]

When we apply the wrong definitions (like calling an introduction a referral), we give the wrong impression of what a referral actually is which dilutes its power.  The same goes for the over-use of the term referrals.  Like “referral marketing.”

Truth is, even I have used it…referring to the idea of generating referrals as “referral marketing” because the business world has defined it that way for so long. When we think of generating referrals as one of our “marketing tactics” we approach the process differently.  Like thinking if I stay in touch – with those postcard mailers or emailed newsletters – then I have done the work to generate referrals.  But referrals don’t happen, especially in a consistent way, because you stayed in touch.  It takes much more than that. A referral is putting our reputation on the line for someone we care about, the prospect we are referring to you as the solution provider.

Referrals need their own plan in your business, separate from your prospecting plan and separate from your marketing plan. You need to follow different “activities” with a different mindset when it comes to generating referrals.

[Read more about the 3 business development plans in Where Referrals Fit in Your Sales Strategy]

Okay, so now that we are clear on the WHAT of referrals – the true definition of what makes a referral a referral – let’s focus on the other part of referrals that truly confuses people.  The HOW.

The HOW of a Referral

For years now, I have been teaching business owners and professionals how to generate referrals. And there is one question that I love to ask and over the years have received hundreds of responses to this question.

“What is the one thing that holds you back from generating referrals consistently?”

From those hundreds of responses, I receive two major answers.

Fear and Time.

Let’s look a little deeper at both.


It seems that fear has a stranglehold on people’s ability to generate referrals. But what kind of fear?

Here’s exactly what is shared:

“Fear of calling and meeting with people.”
“Afraid of putting myself out there.”
“Feeling pushy about it. Also, what if they don’t really like me to refer me?”
“Putting myself out there.”
“Hiding in my office.”
“Networking isn’t one of my favorite things.”
“I feel like I will annoy people.”
“Not knowing how to ask for referrals without feeling sleazy.”
“I hate calling referrals sources and asking them for referrals.”
“Asking the right people at the right time, I don’t want to alienate friends.”
“Lack of confidence.”

 Their fear – represented of hundreds of answers – comes from the misconception of how you should generate referrals.

There are two major pre-conceived notions that to generate referrals you have to

  1. Be “out there” with calling and networking and knowing lots and lots of people
  2. That you have to ask to generate referrals

And believing that you have to ask to generate referrals brings up a lot of issues like dreading having to ask the people we know – like friends, associates and other business professionals – and feeling sleazy about asking.

The good news is that you don’t have to ask to generate referrals, in fact if you are asking you are going about generating referrals all wrong.

The other belief (also incorrect I might add) is that generating referrals takes a lot of time.


There is also a belief that generating referrals takes a lot of time. Here is what I hear when I ask what is the one thing holding you back from generating referrals consistently?:

“Time to do marketing”
“Lack of networking”
“Time to network”
“I tell myself that I am always so busy with actual work (often non-paying) that I don’t have time to attend marketing events, etc.”
“Not honoring the time I block for it each week.”
“Time and focus.”
“Time to network.”

If we feel that generating referrals takes a lot of time to network and to meet with people to ask for referrals, it makes sense that we would assume those activities take a lot of time and we have reason to dread them.

Why do we feel this way?

Why do we fear referrals and believe to generate them it takes a lot of time or work.

Because that is what we have been told.

Let’s Review the Evidence

Most referral articles and books are on “how to ask” and “how to network to receive referrals.”

It seems that the majority – like 90% – of the articles we can find online speak directly to asking for referrals.  Like here, here, here, here, here, here and here.  (I could go on, but you get the point.)

And consider some of the most popular books on referrals – they discuss how to ask, how to network or how to use some other gimmick to generate referrals.

The asking advice – which drives a lot fear – is on how to ask, when to ask, who to ask, different scripts for different situations for asking…no wonder we believe we have to ask to generate referrals.

Our fear of generating referrals has been driven by the advice that has been given for the last two-to-three decades.  For most of us – this asking advice is all we know and so we believe it.  But we don’t like the advice, it breeds fear and makes us uncomfortable so we don’t take the advice because it doesn’t fit who we are or how we want to do business.

And we believe – incorrectly – that generating referrals takes a lot of work and time to generate referrals because the tactics and tools we are taught are a lot of work.

From this “how to do this” advice out there, we assume to generate referrals we have to know a ton of people, spend time networking or joining “leads” groups cleverly disguised as “referral” groups.  There goes slapping on that referral label again.

I listened to an episode on a podcast where the guest being interviewed discussed these “rings” or “groups” of people we need to have to generate referrals. His strategy was to have many rings or groups and work with them weekly and monthly to send you referrals.  I was so exhausted and stressed just listening to him talk about the all the groups needed to be established and the work that would go into managing them…and that was just from listening to him describe his process and not actually doing the work.

Luckily, you have nothing to fear when it comes to generating referrals and rest assured generating referrals is not the time suck it is portrayed to be.

So, set aside what you know or think you know about generating referrals, and over the next few articles, let’s get our facts straight.  We will unpack the fear myth and the time myth (yes, they are both myths) plus a few other myths.

Can’t wait to dive in with you.

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