Referral is basically a recommendation, and a high quality lead with a high chance of success. Referral business is great but the number of referrals would be significant only if you have a large client base in the first place. Building a referral based business is really a long term strategy rather than a quick fix tactic.
Salespersons love referrals because this is the most cost effective route to new business, besides it comes with the goodwill of a client who has already benefited from your service.
Negatives of referral business
- Over reliance on referrals results in slow growth simply because early in the agents’ careers they don’t have a large enough database of existing clients and contacts to draw from
- Relying entirely on referrals for client development is a narrow, exclusive, and unbalanced approach. Mostly referrals would come for buying services rather than seller prospects.