Rampant Referrals For MSPs – Part 5


If you’ll recall, last time we finished looking at some reasons why some MSPs limit their referral flow in terms of sabotaging their service. To recap, we looked at :

– Overconfidence in Unique Selling Propositions (USPs)
– Overvaluing Product Over Service
– Assuming One-Size-Fits-All
– Believing Low Price Equals High Value
– Overreliance on Technology
– Misjudging the Impact of Third-party Partners
– Service Is ‘Okay’ – Yet There’s No ‘Wow!’ Factor

In this section, we’ll be looking at how clients’ referral motivation can be sabotaged.

When I talk about the motivation to refer a potential client, this applies both internally and externally. Internally, the MSP and its staff need to have the motivation to ask people for referrals and do what it takes to get referrals. I’m going to cover this kind of internal motivation within the section about communication and communication-sabotage. The other area where motivation occurs is the motivation for one of your clients (or even one of your prospects) to refer you, which is what we’ll be covering here.

This might become a bit of a distraction, but rightly or wrongly, I’m going to review some schoolboy physics here, in terms of Newton’s 3 laws of motion :

1 – First Law (Law of Inertia): An object will remain at rest or in uniform motion in a straight line unless acted upon by an external force. This law describes inertia, the tendency of objects to resist changes in their state of motion.

2 – Second Law (Law of Acceleration): The acceleration of an object is directly proportional to the net force acting on it and inversely proportional to its mass. You’ll recall that the equation is F=MA.

3 – Third Law (Law of Action and Reaction): For every action, there is an equal and opposite reaction. This means that whenever one object exerts a force on a second object, the second object exerts a force of equal magnitude and opposite direction on the first object.

In terms of marketing and behavioral psychology, motivation is pretty much at the heart of everything we do. Likening this to Newton’s First Law, someone will only do something if they’re motivated to do so!

Without a motive force of some kind, people will take no action. Or, to extend this further if they’re already doing something (such as smoking or gambling) then it will typically require a motivation to make them stop – which of course could be a heart-attack or a divorce or bankruptcy or whatever.

And if there is a motive force, the greater it is, the greater the resulting action, by and large. Of course, the resultant force has to be a net force, because we can have different forces pulling in different directions.

For example, like an aeroplane accelerating into the sky, the forces pushing on it include thrust to go forwards, friction and drag pushing backwards, gravity pulling downwards and the lift of the wings pulling upwards. The net sum of these forces decides if the plane will soar away or stall and drop. The bigger the net force, the quicker the acceleration or rate of change of velocity.

For humans, a small motive force could be a child asking their parents for an ice-cream. The analogous ‘friction’ needed to be overcome could be the cost of the ice-cream or the length of the queue. A strong motive force could be holding a knife to someone’s throat and demanding their wallet. Alternatively, if you put your hand into something very hot like a fire or scalding water, the net force would be very strong indeed!

As seen from these examples, motivation can come from persuasion or coercion. In other words, people will do something either because they want to or because they have to. The law of action and reaction is also loosely applicable. If you point a gun at someone’s head to steal their property, then there will be a pretty significant reaction to this action, somewhere along the line. I think this is as far as I’m going to stretch this particular metaphor but hopefully it gves a useful framework to work around. So, in terms of prospects and clients feeling motivated to recommend your managed services, let’s look at some of the forces and frictions involved.

Ill-Considered Incentives

Firstly, we’ll start with incentives. To be clear, I’ll be looking at incentivising referrals in a later section because it’s not simple or clear-cut and deserves a section on its own. For the purposes of mentioning it here though, we can posit that either there may be sabotage if are no incentives at all or that any incentives that are in place are insufficient or inappropriate. I’ll leave it there for now because some people can become offended by incentives and, in fact, if incentives aren’t handed properly, they can become toxic and actually demotivating – more on this in another section.

If you have a referral system in place but it is onerous, then this can disincentivise people to make referrals. This is probably less likely for a managed service provider, nonetheless I have seen plenty of “refer-a-friend” type emails and follow-ups which lead to specialised contact forms on websites that ask too many questions and which become bogged down with irrelevant and annoying criteria that people simply don’t want to fill in.

Remembering Newton’s laws of motion, it’s important to reduce friction as much as possible, so make your referral process take just a few seconds and nothing more. At the very least, make it a multiple-step process that captures the basics, so even if the referrer abandons the process halfway through, at least you’ve captured the basic information, upon which you can action.

Clients Don’t Want to Lose a ‘Secret’ Resource

This is an interesting issue because it sometimes happens to businesses where their clients perceive that their supplier has constrained resources, meaning they may be disinclined to pass more clients across to them.

This has happened to me back in a different life regarding some coding work we were involved with. The coder had some high-net-worth individuals as clients who were clearly very happy with his work but became very upset with me when I recommended his services to other businesses. I got into a lot of trouble over that. I had thought I was doing someone a favour! However, from the clients’ perspective, they thought that their supply was being jeopardised because the coder could start changing higher fees, or be less available or less responsive and basically they felt their hold over him would be diminished. It’s quite toxic really, however, it is definitely a factor you might wish to consider and mitigate in terms of communicating your capacity and reassuring clients of scalability and honouring any relationships you have. Again, we’ll have to go deeper here in another session.

Social Risk

Obviously, when someone refers a supplier to someone, they carry the social risk that if the referral goes bad, it will reflect poorly on them. Now, this concern may be because they’ve had problems with other suppliers in the past. Or they might have had problems with you. Or they might have had great service from you but seen some negative reviews, which demotivates them to pass referrals. Social risks need to be mitigated – again with reassurances such as appropriate allocation of resources and risk-reversal such as guarantees.

To be effective, these measures must be communicated comprehensively so that anyone would feel reassured to refer you.

Lack of Trust

Once again, someone might get a good service from you but perhaps there’s a lack of trust. Not that you’re doing anything wrong or are untrustworthy but it’s just that they simply don’t know you and any lack of connection or transparency can translate to making things harder to build up trust.

Remember what I said about being in the people business. You might deliver a good service but that alone isn’t enough. You need to ensure your clients like, know and trust you … and that requires investing time and energy into humanising your relationships and forging bonds with your clients.

Lack Of ‘Wow!’

I’m going to say once again in this section about motivation in that people might not feel excited enough to discuss your services to become motivated to refer you. One way around this is to make people look good and feel good. Let’s return to what I said about ensuring you have appropriate incentives in place. For one MSP I worked with, their main referrer said they’d be completely unimpressed with a proposed £100 payment for a referral.

That was because they’re the business-owner and £100 would be seen as a little derisory in the first place but their main concern was that they did;t want their own clients to have any grounds for thinking that any advice they were given about suppliers given were due to any financial incentives. So, incentivising his so would very easily damage their trust. However, the staff of that particular company were completely different. To them, an extra £100 for each referral at the end of the month was very welcome indeed and was very motivational for them.

The business owner was much, much more motivated by personalised gratuities such as flowers and chocolates and even wine that he could share with his clients. And when you think about it, people in general are unlikely to mention to their clients that they’ve just had a backhander of some money. However, if there’s a beautiful bunch of flowers suddenly adorning their office, people are going to notice it and likely comment on it and those little discussions are what you want. Remember, half the battle is to make people look good and feel good.

As a reminder, we’ll cover Wow Moments and Incentives in another session but for next time, we’ll cover how MSPs can sabotage referral flow with poor personality sabotage.


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Mike Knight