Business Coach Tip: What is the Difference Between a Lead and a Referral?
I would like to clarify the difference between a lead and a referral in businss, a common question that arises in our networking and education events.
What is a Lead?
A lead is a potential client or customer whose contact information you have obtained without necessarily having a personal endorsement. For example, if Linda owns a beauty salon and is expanding her business, I might suggest she contact Natasha, an interior designer specialising in commercial design. I provide Linda with Natasha's contact details, but Natasha isn't expecting Linda to reach out. This is a lead because there hasn't been a prior introduction or consent from Natasha.
What is a Referral?
A referral, on the other hand, involves a personal introduction and consent. Using the same scenario, if I know Natasha personally and believe she would be a perfect fit for Linda's needs, I would ask Natasha for permission to share her contact details with Linda. This way, when Linda reaches out, Natasha is already aware and expects the contact. A referral often carries more weight because it comes with a personal endorsement and an element of trust.
The Key Difference: Permission and Personal Connection
The key difference between a lead and a referral lies in the permission and personal connection. A lead is merely contact information without prior consent or introduction, while a referral includes a recommendation and the consent of both parties to connect.
Practical Networking Exercise
In all our education, we emphasise practical application. Here's an exercise to help you find a lead or referral at the next networking event you attend:
- Elevator Pitch: Spend a few minutes sharing what you do and your current business needs with others. Listen to their pitches and needs in return.
- Identify Connections: Think about how you can help each other by connecting leads or making referrals based on the information shared.
- Engage and Connect: Approach another person in the room, describe what you do, and discuss your primary business needs. Then, identify if you can provide them with a lead or a referral.
An Example Scenario
Let's say we're focusing on the theme of finance. Your task is to find someone in the room who needs financial assistance. You might approach Michelle, who is seeking financial advice for her business. If you know an expert in finance and have their consent to share their contact details, you can provide Michelle with a referral.
Remember, networking is not just about exchanging business cards; it's about building meaningful connections and offering genuine assistance. By understanding the difference between a lead and a referral, you can enhance the quality of your efforts and foster stronger business relationships.
I hope this clarifies the distinction for you, please reach out and let m know. I encourage you to put this into practice and see how we can support each other on our business journeys.
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