How to Use Referral Marketing to Address Your Firm’s Biggest Business Challenges

How to Use Referral Marketing to Address Your Firm’s Biggest Business Challenges 640 427 C-Suite Network

by Lee Frederiksen

via Matylda Czarnecka

via Matylda Czarnecka

Professional services firms face a wide range of unique business challenges. But in our latest research, we found one challenge to be considerably more prevalent than others. We surveyed 530 professional services firms from a broad range of industries and asked which business challenges they were facing in the New Year. The number one response — identified by more than 70 percent of firms — was “Attracting and Developing New Business.” This response was more than twice as common as the next most common answer: “Finding and Keeping Good People,” at 35.9 percent.

So, if the difficulty of generating new business is a pervasive struggle, how can professional services firms rise to the challenge?

Why Generating More Referrals Is Key to Attracting New Business

Referrals have always been an important aspect of attracting new business for professional services firms. This was also made clear by our results: Nearly 62 percent of our survey respondents said generating more referrals was their top marketing initiative for 2015. However, firms have traditionally focused on client-generated referrals. While client referrals are certainly important, they don’t make up a balanced referral marketing approach on their own.

In fact, there are actually three types of referrals that can help generate new business for your firm – and only one type is based on direct experience. In addition to referrals from clients (experience-based referrals), firms can also seek out reputation-based referrals and expertise-based referrals.

Reputation-based referrals occur when individuals recommend your firm based solely on your positive reputation. Even though they have no direct experience with your firm and aren’t necessarily aware of your particular expertise, they feel comfortable making a referral for your firm based on reputation alone.

Expertise-based referrals occur when someone doesn’t have personal experience with your firm, but he or she is aware that you specialize in a given problem. They recommend you based solely on your perceived expertise.

In our research, we found that a startling 81.5 percent of professional services providers report receiving a referral from someone who wasn’t a client. This means that focusing your firm’s referral marketing strategy on non-client referrals can be instrumental in attracting new business. But in order to generate more of these non-client referrals, firms need to place a stronger emphasis on brand building.

Why Building Your Brand is Essential to Generating Non-Client Referrals

Your brand is the combination of your reputation and visibility. By strengthening your brand and improving these two qualities, you can increase your firm’s chances of attracting more non-client referrals.

Obviously, when your firm has a better reputation, you become more likely to receive reputation-based referrals. Likewise, increasing marketplace visibility can bring awareness to your firm’s particular expertise. What’s the best way to improve your reputation and increase your visibility? Content marketing.

Producing relevant and educational content that establishes your firm’s authority can help to lend credibility within your industry and improve your firm’s online presence. Prospective buyers who are looking for an answer to their problems will not only be more likely to find your firm, but they’ll also be more likely to trust your services.

However, it’s more important than ever to have your marketing and branding work together to not just generate referrals, but also turn those referrals into new business. We discovered that 51.9 percent of respondents ruled out referred firms before even speaking with them. The main reason this occurred was a lack of understanding about how the provider could help solve the problem.

Figure 1. Why Buyers Rule Out Referrals


Poor marketing and a lackluster website can have major consequences for firms that want to attract more new business. With clear branding, a strong online presence and comprehensive marketing materials, your firm can avoid being ruled out by referrals before they even have a chance to speak with you. In this sense, building a better brand can both generate more non-client referrals and translate those referrals into new business.

leefLee W. Frederiksen, Ph.D., is Managing Partner at Hinge, a marketing firm that specializes in branding and marketing for professional services. Hinge is a leader in rebranding firms to help them grow faster and maximize value. Lee can be reached at or 703-391-8870.
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