How the Power of Referrals Can Build Your Business

By Karen Axelton

Do you use referrals to build your business? If not, you’re missing out. A new study by small business community Manta.com found referrals are the number-one way small business owners find and form beneficial relationships that grow their businesses.

The survey of over 1,000 entrepreneurs asked how they find connections and grow their referral network—and the answers might surprise you. Just 1 percent of respondents got their biggest business boost from connections on LinkedIn, and only 4 percent from Facebook. Even networking events yielded profitable connections for just 11 percent of respondents. More effective? Relationships with family and friends led to profitable connections for 17 percent of the entrepreneurs surveyed.

In fact, when it comes to looking for partners or vendors to do business with, 56 percent of small business owners said they make connections by asking people they know. Forty percent said they specifically seek out local firms, and 34 percent stick with companies they’ve worked with before.

But small business owners don’t only talk to people they know when looking for new vendors or partners. The Internet is gaining ground: 32 percent of entrepreneurs said they find new vendors by looking online for good reviews. And more than half (59 percent) have rated or reviewed another business online.

What do these results mean for your business? Sometimes, the tried-and-true methods are the best. If you’re not getting the results you’d hoped from networking on LinkedIn or Facebook, maybe it’s time to dial it back and focus on people you know in the real world. They don’t have to be business owners, either—your Uncle Sol, your son’s college roommate or your dentist could be equally valuable sources of leads and new business.

In fact, small business owners made valuable contacts in some surprising places, as well. Fifteen percent said they’d made connections that helped grow their business in a bar, 11 percent on an airplane, 10 percent at a wedding and 4 percent in an elevator. Maybe the term “elevator pitch” isn’t just a figure of speech, after all.

The lesson? You never know where you’ll get referred to new business—so always be on your best behavior, and bring business cards everywhere you go.

Image by Flickr user Alex Eylar (Creative Commons)

This entry was posted on Thursday, March 29th, 2012 at 6:00 am and is filed under Business Development, Sales Process, sales process, Small Business, small business. You can follow any responses to this entry through the RSS 2.0 feed.


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