Not All Leads Are Created Equal. Surprise, Surprise

Not All Leads Are Created Equal: The Difference Between a Lead, a Referral, and a Qualified Referral

You don't need me to tell you, it's very competitive out there. Generating new leads is vital for sustainable growth. However, not all leads are created equal and many business owners can get very frustrated attending networking events.

However, the fact is that for small business owners perhaps the most powerful avenue for attracting potential customers lies in word-of-mouth recommendations. But capitalising on the power of these recommendations requires an understanding of the nuances between a business lead, a referral, and a qualified referral.?Let me give you my view.?

#wordofmouth #recommendations

Understanding Word-of-Mouth Recommendations:

Word-of-mouth recommendations have long been recognised as one of the most powerful marketing tools available. When someone recommends your business to their network, it carries a sense of trust and credibility that traditional advertising often struggles to achieve. However, not all word-of-mouth recommendations are created equal. Let's break down the three distinct categories: business leads, referrals, and qualified referrals.

1. Business Leads:

A business lead typically refers to an individual who has shown some level of interest in your products or services. This could be someone who visited your website, clicked on an ad, or filled out a contact form. While business leads are valuable, they are at the earliest stage of the customer journey and may not have a strong connection or personal experience with your brand. As such, they require further nurturing and follow-up to convert them into paying customers.

At networking meetings people generally pass on contact details disguised as a lead and you have then to do all the work and it can be almost as hard as cold calling. ?

#businessleads

2. Referrals:

Referrals occur when an existing customer or contact recommends your business to someone they know. Note, they else has done some of the work for you. Provided you follow up in the right way you can reach the qualification stage with your reputation partly established.

These referrals may be based on positive experiences and satisfaction with your products or services. When an individual receives a referral, they are more likely to be receptive and view your business favourably.?

Referrals carry a higher level of trust and credibility, making it easier to establish a connection and move prospects closer to making a purchase.

#businessreferrals #referralmarketing

3. Qualified Referrals:

Qualified referrals take word-of-mouth recommendations to the next level. A qualified referral occurs when someone, typically a satisfied customer (not always) not only recommends your business but also pre-qualifies the prospect as someone who is likely to have a genuine interest in your offerings.?

This goes way beyond a simple referral and ensures that the recommended individual aligns with your target market and has a higher probability of converting into a paying customer. Qualified referrals significantly increase the chances of closing a sale and can save valuable time and resources in the sales process. BNI's referral program focuses more on referral generation than ordinary networking and their 'close rates' are shown to be in excess of 64%.?

#qualifiedleads #bni #referralpartners #referralprogram

The Incremental Value of Each Recommendation Type:

While all word-of-mouth recommendations hold value, the incremental value increases as we move from business leads to referrals and, finally, to qualified referrals.? Here's a summary breakdown of the benefits each type offers:

– Business Leads: These leads provide a starting point for engagement and serve as an opportunity to introduce your offerings. However, they require additional effort to establish trust and build a relationship, which can lengthen the sales cycle.

– Referrals: Referrals come with a built-in trust factor, making it easier to connect with potential customers. These recommendations often result in higher conversion rates, reduced acquisition costs, and a shorter sales cycle, as prospects are more likely to be receptive to your message.

– Qualified Referrals: The crème de la crème of word-of-mouth recommendations, qualified referrals bring numerous benefits. By targeting individuals who are likely to be a good fit for your business, you significantly increase the chances of converting them into paying customers. Qualified referrals lead to higher conversion rates, increased customer lifetime value, and more efficient use of resources by focusing efforts on promising prospects.?

What to do Next?

If you value your time and decide to build your business on Qualified Referrals rather than spending your time chasing leads, you must lay down a strategy and work it. Sitting back and waiting for people to recommend you can be a 'long wait'

I have considerable experience in referral marketing strategies, so I invite you to reach out to me (maybe drop a YES in the comment block below) and let’s see where we can tweak your approach to generate a lot more business.?