Referrals are great. There is nothing better than a happy customer passing your name on as a quality resource.

But if you are relying only on referrals to power your business, you don't really have a business that you can scale.

That's a heavy statement to make. Especially because we hear the phrase: "Word of Mouth is the best way to grow a business" all the time.

The reality is that as important as referrals are for a business, an overreliance on word of mouth as your revenue generator leaves you very vulnerable.

Here's why:

You can't scale referrals.

  • If you need to double your sales this quarter. Short of begging people to refer you, you can't do that.
  • If you started your business over in another city, or opened a second office, Word of mouth isn't going to help you.
  • Referrals are usually based on a person. If you or that person leaves the company, usually the referrals do too.

You can't control the types of clients you receive

Relying on referrals alone casts a wide net. You have no control over the people you receive and they may not be the type of customers that can truly benefit from your services. Having a concrete marketing strategy allows you to target your ideal customer, ensuring that you enter into a relationship that is beneficial for both parties.

Referrals are not a sure thing

Whether or not you get a referral from a customer is largely out of your control. You could be providing excellent service but that doesn't mean that the customer will pass your name on to their network. They are also inconsistent and will most likely go through peaks and valleys throughout the year. Marketing allows you to be in the driver's seat, ensuring that your message gets out there consistently and is directed towards people that need and value your services.

Customers will only refer to those in their network

It is difficult to branch out and reach a new target market if you are basing your business on referrals. People will only refer you to others in their network who are usually in the same snack bracket as themselves. For example, if you are looking at going after some higher-paying clients it would be difficult to do so if all your customers are in the low to mid-income range.

Marketing allows you to go after the larger clients in a way that is targeted and effective, helping you grow your business' client base in a meaningful way.

People do judge a book by it's cover

Even if they have received a referral over 70% of people will research a business online before they make first contact. This means that if you don't have a good online presence you may be losing the business of many of the referrals you are receiving. Having a professional website, blog and social media presence can go a long way in creating credibility for your business and brand. All these elements are part of your overall marketing strategy and are essential if you want the referrals you do get to translate into paying customers.

Overall having a good marketing strategy that pairs well with referrals is the best concoction to create a healthy and sustainable business.

A final advantage. There is a lot of peace of mind that can be had when you know exactly how much you need to spend to increase your business.

When you've invested in your marketing, it helps you rest easier when you know that even if things slow down, that you have a few levers that you can pull to change your situation.

Have any of you gone from growing from word of mouth alone to growing it with marketing? We would love to hear your story!