Successful Business Development Hinges on Simple Follow-up
In January, I participated in a start-up event panel for the Chicago tech community. The other panelists were terrific, and a potentially benign event spawned great conversation, business card swapping, and some nascent relationships.
A week later, a sales person (in his mid 30s) for a vendor targeting mostly high growth start-ups tracked me down, and we had lunch. Not long into the ninety minute lunch, we discovered that only about a half of a degree separated our wives.
An Opportunity for Referrals
When the conversation waned, I said, “My firm is not a candidate for your platform, but we are working with two start-ups, one in asset management and the other in behavioral health, that I’d be glad to refer you to.”
I expected an email by the time I returned to the office. But he never followed up. I wondered whether he thought that since my firm wasn’t a prospect, I was not worth the energy. Or maybe the two prospects were truly not appealing. Either way, I tossed him two softballs, but the bat never left his shoulder.
Any post about the importance of referrals covers old ground. And rehashes the patently obvious: referrals are the heart of new business. But many sales folk still think quotas, the transactions, and only about the here and now. That’s certainly important if your supervisor cares only about the end of the quarter.
Sales is not synonymous with business development, though the latter should lead to the former. In business development, much more is at stake than a simple transaction. The lunch reminded me of an old saw: the relationship trumps the transaction.
Business Development Truths
Just recently, I conducted a modicum of analysis of my business the past 14 years, connecting revenue to referral sources. In short, I tracked revenue to people for only human beings give referrals. In consulting and agency work, referrals (of some form, and there are many types) comprise at least 80% or more of new business.
In my analysis, I created what I call, cryptically, a “referral genogram.” A Referral Genogram™ is embarrassingly simple. There’s no algorithm or science behind it. But I had 14 years worth of relationships and revenues to track, a bit of data. So I put together a poorly designed diagram, and I’ve come up with seven insights.
- This one person (The Godfather) at the top of the diagram is responsible for, literally, millions in new business—over multiple referral generations. Like Abraham of the Old Testament (ergo, the “father of many nations”), this referral source is one of only handful in my database with this many progeny.
- My firm never did any business with him or the firm he is with. He just liked to refer, and he understood our business. Not all of his referrals are listed here, just the ones that produced either revenue or another referral.
- My firm is still landing new business from the offspring of this one person—fourteen years later.
- He hasn’t referred any relationships to us in a few years, even though some of his offspring continue the tradition (I haven’t stopped paying attention to the relationship; we still catch breakfast every four or five months.).
- Some of his offspring were sterile (Mark, a.k.a., the “Sterile Client”). The referral resulted in a client, but no referrals from that client. It was one and done.
- One person in the middle of this diagram (the Silent Ninja) connected us into an entirely new family, which is continuing to reproduce.
- My firm did not conduct any business with the Silent Ninja. He liked to refer and understood our business. And we, too, grab drinks or lunch every half-year.
Lunch with Abraham
The big idea: I can track 70% of our revenue the past 14 years to five or six people. That was a bit of a shocker. A handful of people, in essence, are responsible for the health of my business.
Every business is different, of course, whether a consulting firm, agency, or hybrid. My painfully obvious point is that the next time the person at lunch offers to refer you, take him/her up on it. And follow up. You may be having lunch with Abraham.