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  • dennistubbs

Small Business Owner Strategy - Join a local referral group?

Updated: Nov 24, 2021

I recently decided to join a local business referral group for my Business Coaching and Consulting business. It was not an easy decision to make as time is my most valued resource. In my business, I have a finite amount of time which directly relates to my level of income. In my experience, most small business owners are in the same boat as me. Time is usually the one thing that is in short supply.

I will describe my decision process in the hopes that it may help you weigh the pros and cons of joining a referral group in your local community.

In 10+ years of running my Small Business Coaching business, I have always relied on word of mouth referrals to find new clients. Qualified referrals continue to be the single most effective way to find new clients for the vast majority of businesses.

So do local referral groups work and are they worth your investment in time, money and energy?

Small Business Referrals

The simple answer is maybe....ask yourself the following questions first...

  1. Do you feel comfortable with the general culture of the group? The only way to find this out is to get invited to a few meetings and see how the group interacts with each other. At one end of the spectrum, there are groups that are very formal. These groups use timers for every section of the agenda and quotas for referrals that have to be met or the member could face expulsion from the group. At the other end of the spectrum are groups that are more of a social club and actual business referrals are low on the priority list. There are also many groups out there that endeavour to strike a balance between formal and informal. You need to find a group with a culture that you are comfortable with.

  2. Do you have the time to make your membership as effective as possible? To be an effective member of the group and to get a return on your time investment, you need to spend time getting to know the other members of the group. It is crucial that you gain an understanding and comfort level with the other businesses before you put your credibility on the line and refer business to them. It is also crucial that you give other members a deeper understanding of what benefits you and your business can bring to people and businesses in their network. Mutual trust is the critical success factor for successful referral groups!

  3. Will your commitment to the group be consistent over time? I believe that the more you endeavour to build long term relationships with other members, the more qualified referrals you will get and the higher your return on investment in fees and time. Joining a local referral group for short term gains in referrals will not typically work and could damage your local reputation.

If you answered yes to all three questions, you may be ready to join a local business referral group.

A few other considerations for being an effective member of your referral group and maximizing your investment...

  • Proactively set up meetings (Zoom Meetings) with your fellow members. Don't passively wait for others to contact you and don't assume that just being a member of the group entitles you to qualified referrals

  • Make sure you set up a web link from the referral group website to your website and visa versa. Backlinks from reputable sources are the highest weighted component in Google's ranking algorithm

  • Be honest with your fellow members if you are not comfortable referring them and let them know why and what could be done to change your perception

  • Make sure that your referrals are properly qualified with a warm introduction prior to contact.

  • Personally purchase or utilize the products and services from other members wherever possible and write positive reviews of your experience

  • Go out of your way to thank other members for qualified reviews both privately and publicly in the group

The referral group I joined in my home town of West Kelowna, BC is Okanagan Business Excellence. The group has been in existence for 22 years, have important ties to our community and have approximately 38 members. I was welcomed by the group leadership and feel that the culture is a good fit for me. The group process seems to strike a balance between formal and informal, which I like. I was inducted last week so we will see how it goes. I look forward to meeting all of them and learning about their businesses. I also look forward to helping them with their business whenever possible.

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