Referrals as a Source of New Business: A Practitioner Perspective

It is widely assumed among providers of professional services that conventional marketing methods are largely ineffective and that client referrals are the key to business growth. Furthermore, it is supposed that firms can take steps to generate referrals and that referrals can be actively managed. This paper presents a contrary point of view, arguing that referrals largely arise through processes that lie outside the control of the firm. The actions that firms may take to generate and manage referrals have very little effect on client referral behaviour. In addition, there is confusion and conflation in connection with the concepts of word-of-mouth, recommendation and referral. The article argues that referrals are best conceptualised as a process rather than as a discrete action, and a framework for the referral process is proposed.