…and why COVID-19 is slowly killing their business
For many small businesses, referrals have long been the source of all new leads. According to a 2017 study conducted by Entrepreneur, 85% of all small business owners surveyed rely on referrals to acquire new customers. Undoubtedly, this tried and tested method of business development has many benefits – which you can read more about in a recent article published by Forbes here.
Few will argue, referrals have always been a spectacular, low cost way to generate leads – that was until COVID-19 of course. Whilst it is easy to cast COVID-19 as the root of all evil, the impacts of the pandemic have only highlighted the flaws that already existed with relying on referrals to generate new leads.
Ask any great advice business who can generate new leads on demand, and they will tell you their motivations for shifting from the referral model to the new way of generating leads (which we’ll share with you later in this article) are typically linked to 3 major frustrations:
- Lack of control: When the only way you generate new business is via referrals you have become dependent on others to send new work your way. Unfortunately, the frequency and quantity of those referrals is completely out of your control.
- Lack of quality: As we know, referrals can be a powerful way of generating new business. But one thing is for sure, precision beats power and referrals are rarely precise. Whilst referral partners and clients do their best to send new work your way, they will rarely send ‘dream’ clients. If you are happy to accept any old client, this method can be completely fine, but if you’ve identified the kind of clients you can serve best and most profitably (your dream clients), the referral method leaves a lot to be desired.
- Your business is worth less if you rely on referrals – referrals come most often due to strong personal relationships established over time; relationships held by key personnel within the business (typically the business owners) and with those external to the business – clients and referral partners.
When the time comes to sell your business in the future, assuming you have built something saleable – more on that here – the future owner does not want to buy a business that relies solely on the relationships built by those selling the business. Quite simply, businesses which have ‘key-personnel-risk’ are worth less.
Compounding the issues above are the effects of COVID-19, which have seen direct referrals decline across the board primarily due to:
- Referrals partners being in self-preservation mode – otherwise known as being internally focused, and
- An inability for businesses to ‘network’ in the traditional sense.
All the above has seen the once rock-solid method of lead generation slowly turn into the proverbial ‘dead-horse’.
So, what are the great advice businesses we mentioned earlier doing differently?
Those advice businesses have adopted a new way of generating leads that overcomes each and every one of the frustrations listed above. The new way – known most commonly as content marketing – is not only allowing those businesses to take back control of the growth of their business, it is also allowing them to generate leads on demand.
In our next article, we will discuss simple and effective tips on how to use content marketing to generate new leads for your advice business.
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