Good morning!

-TCoL

Missed our last feature article? The Raise Request You Can See Coming

Small teams don't have time to stitch together five tools and hope it works.

Apollo gives you everything you need to find leads, reach them, and close deals — all in one place:

Stop juggling tools and start building pipeline that scales.

With Apollo, the AI revenue engine powering 4M+ users.

Sign up for free

You already know several people who could send you work and never have. The accountant who prepares your return, the contractor you sub for, the supplier whose rep comes by every month, the owner two doors down. You've thought about asking them. Something stops you, and it should, because an ask out of nowhere reads as a request for a favor from someone who has no reason to do you one.

There is a step that comes before the ask. Send them a customer, and say nothing about what you want back.

In 1971 a Cornell psychologist named Dennis Regan ran an experiment on why people say yes. Participants rated paintings alongside a man they believed was another volunteer. In some sessions he stepped out and came back with a soft drink for each of them. Later he asked whether they would buy raffle tickets. The ones who got a drink bought about twice as many.

Regan also varied how likable the man was, letting participants overhear him being either courteous or rude on a phone call. With no drink, likability drove ticket sales. With a drink, it barely registered. The obligation carried the request on its own, at the price of a soda.

So, you don't need to be anyone's favorite vendor to get referred. You need to be the one who did something for them first.

Most owners hear "give a referral" and picture telling a friend about a good roofer. That version costs you nothing and is worth about that much, because the recipient gets a name that may or may not ever call.

Send a buyer instead. Someone with a real need, a budget, and a reason to act. When one of your customers mentions a problem you don't solve, you're holding something the right business would pay a lead broker for, and you can hand it over in minutes. Researchers who tracked roughly ten thousand customers of a German bank for almost three years found that the ones who arrived by referral carried higher margins, were about eighteen percent less likely to leave, and were worth at least sixteen percent more over the life of the relationship than comparable customers acquired other ways. What you're handing over is better than a lead.

You'll only hear about those problems if you're still talking to the customers you already have, which is the work our earlier piece, Retention First: Build the System That Keeps Good Customers, lays out.

Send only businesses you've paid yourself or watched work up close. Every referral you make lends out your own judgment, and if the roofer misses three appointments, your customer remembers who told them to call.

Putting two names on one email and hoping creates work for everyone. Your customer has to evaluate a stranger, and the stranger has to chase someone who never agreed to talk. Both of them can feel the obligation you just handed them, and neither one asked for it.

Write to each side separately first. To your customer: “here's someone who does this well, would an introduction help?” To the business owner: “I have a customer with this problem, this budget, this timeline, is that something you have time for right now?”

That second note is important. Name the problem, the timing, and why you thought of them. A referral with detail in it arrives as a qualified opportunity. A referral without detail arrives as homework. And end it with the question that lets them decline at no cost, because the ones who say no this month are the ones who might say yes in a few months.

The temptation is to add a line about how you'd love to find a way to work together sometime. Cut it. That sentence turns a gift into an invoice, and the person reading it will price it accordingly.

Timing matters more than most owners expect. Francis Flynn, a management researcher, published two studies in 2003 comparing how givers and receivers value the same favor. Right after it happens, the receiver values it more than the giver does. As the months pass, the two estimates cross: the giver's sense of what they did grows, and the receiver's sense of what they got shrinks.

So, don't bank favors. The balance you think you're carrying is not the balance the other person sees. Send several small ones through the year rather than saving up for one large one. Flynn's later work found that people who traded favors often stood higher with their peers and got more done than people who traded rarely but generously.

When the time does come to ask, ask well. Our earlier piece, Your Customers Want to Refer You, covers the wording and the timing of the ask itself.

Referrals cost nothing but a few minutes of time after one comes to mind. Pick one business you'd like work from and find them a customer this month. Then leave it alone. The more you do it, the more it will pay you back. One good turn deserves another.

The Co. Letter provides general business information. It is not legal, tax, or financial advice. Rules governing referral arrangements vary by industry and by state, and some penalties in regulated fields are severe. Consult a licensed professional about your specific situation.

Have an interesting business question and need a free bit of advice? Send your question to [email protected]. No confidential info, please!