Continuing my blog series on collaborative advice, this week I look at how to select your JV partners, and provide some suggested structures and ground rules for the relationship.
The right referral partners
To my mind, this part is simple. For someone to be a good referral partner for your business, only two criteria must be fulfilled:
- They must be capable of cross-referring best fit clients to you.
- They must be capable of treating your cross-referred clients like gold.
And, of course, vice versa.
If these two factors exist, everything else will take care of itself. Of critical importance is that the referrer must be capable of referring you not just “any old” client, but a reasonable proportion of “best fit” clients (whatever that means to you).
Otherwise, you will invest time in a relationship that may work in the short term, but that will ultimately be non-strategic.
My secondary guiding principles for referral partnerships are as follows:
- Aim for fewer, deeper relationships rather than lots of shallow ones. Your marketing time is extremely precious. Trying to juggle a large number of relationships simply doesn’t work, and you will not be able meaningfully to give back to all of them. Instead, choose a handful of best fit referral partners and then invest appropriate time with each of them.
- That said, exclusivity rarely works. A small number of non-exclusive “better friends” is generally the way to go.
- In addition to respecting their skills, you need to genuinely like and enjoy spending time with your referral partners. And anyway, who said that business can’t also be fun?!
- Start off with an informal referral relationship. Only consider fomalising things once you have worked well together for at least 12 months.
- At the start, be upfront and honest about what you expect, and what you will and won’t do as part of the referral relationship. For example, are you looking for a quantifiable number of referrals back and forth per year? Are you prepared (or not prepared) to undertake joint seminars or other joint marketing activities? Is co-branding required, or off limits? How will you deal with any overlap between, or competing aspects of, your respective service offers?
- Be generous with the time that you invest with your referrers and their clients. A person who is referred to you has high expectations. It is your job not only to meet those expectations, but to turn the referred client into a huge fan.
Martin Checketts leads the Private Advisory team at Mills Oakley Lawyers. He also sits on Mills Oakley’s management board.
Martin is an expert in private and family business, co-ownership, corporate structures, corporate law, business succession planning, and business exits.
Martin is the author of The Strategic Exit, a user-friendly guide on how to maximise value on the sale or transition of private businesses.
