Rampant Referrals for MSPs – Part 2

Rampant Referrals

Okay, so as a quick recap from last time, we looked at some statistics which showed why getting new business from referrals rather than other forms or marketing is so important for B2B owners and especially MSP owners.

We briefly looked at how coincidences are not really coincidences at all and how the vast majority of referrals that could ever be gained are simply missed. In this session, I’d like to quickly finish-off the reasons of why referrals are so vital before proceeding to identifying common barriers that companies have to referrals and then how to remove them to increase referral flow.

So, let’s quickly look at some of the main reasons for maximising referrals that weren’t necessarily covered by the compelling statistics we reviewed last time.


The first is obviously cost – or lack of it. Getting referrals can (and should) be far cheaper than, say, paying for an outbound marketing campaign or advertising or SEO or indeed any of the other channels that leads come from.

The process of getting referrals creates good feedback. And when I say good feedback, doing this as part of a process that I’ll shortly suggest should elicit more external feedback, such as case studies and Google reviews and testimonials in general  for your website and other collateral  which can help your sales conversions and SEO. But not only that, your internal feedback can be improved as well.

Once you’ve got a system in place, you can keep a note of your key performance indicators such as Customer Satisfaction Score and Net Promoter Score and your referral rate. If these KPI’s ever drop then your feedback loop should include identifying any issues that need to be addressed and then taking any corrective action necessary. So, in short, referrals are good for your customer feedback, both external and internal.

Having lots of referrals is a virtuous cycle in that it shows that people trust you, which leads more people to use your services and alternatively some people can recommend your services even if they don’t use your services. These people can be easily overlooked.

If you think about it, you’ve probably had the situation yourself whereby you’ve known someone who has been looking for help or advice for a product or service and they’ve asked you for help and whether you know a good place to get it. It could be anything from a garage for their car to get serviced to music lessons for their kids.

There will doubtless be instances when you’ve not necessarily used a supplier’s service yourself but you’ve heard good things about someone and so you’ll suggest to your colleague that you’ve heard good things about them. This is a referral just based on reputation and not direct experience. This happens a lot in instances when people don’t have easy access to social proof themselves, such as might be the case when elderly people ask your advice about something and they might not be digital natives so they wouldn’t necessarily Google it for themselves or perhaps if friends from out of your area ask you something about a local resource where you have more ears to the ground about who the good hotels or restaurants are perhaps, even if you’ve never used them directly yourself.  

As a quick departure, this can be a good thing and a bad thing. Whilst not strictly talking about referrals but instead reviews – which I’m going to cover as part of this overall process – the fact is that products and services with the most reviews and referrals get disproportionally more sales than the others. It also reinforces their position in various rankings, whether that’s on Amazon or Ebay or Trustpilot or similar.

That’s because people tend to buy those products and services which have the highest numbers of sales and reviews and feedback. This, in turn, tends to make them appear higher up search results in various search engines and platforms and portals and whatnot which then creates more sales and referrals. This is of course fabulous if you’re in the top position but on the flipside, it can be a barrier for those providers of products and services trying to establish themselves in a marketplace.

I’ve seen that a lot over the years on portals like hotscripts.com whenever I used to look for a bit of javascript or PHP code. It also explains why one platform such as WordPress gets such a disproportionally massive market-share because once a critical mass of people start using it then it becomes the dominant Content Management System of Choice which then means people build plugins for it and it becomes ubiquitous and develops it’s own ecosphere.

In short, having the most reviews and trust in any area can help you dominate that area because of the implicit trust created by the reputation and social proof.

Lastly, I’d like to repeat that trust doesn’t just extend to people making their first purchase as part of an increased conversion rate from leads to sales for referrals. As was briefly covered in the section last time where I recited a few purchase statistics, those consumers that were referred tend a provider to spend significantly more than non-referred consumers and they tend to stay for a lot longer which means their lifetime value is significantly higher and on top of that, they tend to refer more people themselves.

All of this value from conversion to higher-spending to loyalty to advocacy means that these referred clients are significantly more valuable to your business, all along the “Trust-Train”  from referrer to client to advocate.


Giving a referral can be an emotive process involving more than just the two stakeholders you’d expect. Firstly, the person giving the referral can feel good about giving a referral and in a world of business where everything seems cut-throat and all about greed and profit, giving a referral can be seen as a green-shoot of virtue in a dog-eat-dog business world.

Of course, as well as the person giving the referral getting a warm glow from doing their good deed, the person receiving it also feels good because there’s a sharing of trust and value and hopefully of course the process will save them a lot of time, effort and anxiety in having to otherwise source a provider that would be complete a complete unknown and therefore a higher risk.

Further to that, there’s the person that’s been referred  and naturally they’ll be happy that they’ve been referred. Assuming they don’t drop the ball, this should help cement the trust between the referrer and the person being referred.

In fact, when someone has given a referral, it can help to retain them as a client for longer because the very act of giving a testimonial or referral helps to remind them about the value they place in you.

If you think about it, it’s less likely that one of your clients will jump ship to another provider if they’ve just given you a referral or a glowing testimonial because that action of going elsewhere would not be congruent with their other action of providing a testimonial and if there’s anything we know from psychology, it’s that people’s ego’s like them to behave consistently. Not that you can 100% rely on it, just that you should be aware of it possibly harness the effect.

Lastly, let’s not forget the effect on staff morale of having lots of reviews and testimonials and referrals. Arguably, the biggest asset you have is your talent and hiring good talent and retaining them is not trivial. When potential candidates can see that you have lots of Google reviews and other social proof, it will help you attract better staff.

As an aside, this is also why it’s such a good idea to have social proof about your company from your own staff as well and having a section on your website dedicated to what the team say about working for you can be so powerful and it’s why websites such as Glassdoor.com exist so that people can see what your current employees and ex-employees are saying about you.

When you have lots of referrals, it reassures your staff and helps retain them. Look at the opposite, I mean, can you imagine what it does to team-morale when you have a company that has loads of negative reviews and customer complaints and clients are leaving in their droves … class ‘A’ staff-members aren’t going to stick around and the company gets left with the dregs.

So, in a nutshell, reviews and testimonials and referrals and all forms of social-proof are very, very important to a managed service provider’s business, probably a lot more important than the vast majority of them give credit for.

However, most companies self-sabotage referrals, which is what we’ll cover next time.


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Mike Knight