When I ask consulting firm CEOs where their best business opportunities come from, they inevitably tell me "relationships." Most often it's clients and employees past and present, or technology partners.

But when I ask them how predictable these referral sources are, they generally respond with some combination of the following:

1. They aren't consistent
2. The quality has decreased as the company has grown

These conversations usually happen in the context of shrinking pipeline and unsuccessful marketing efforts. Each situation definitely has it's nuances, but the macro is almost always the same - the firm has grown successfully over the years on the backs of the founder and their relationships, along with the relationships of a few partners or key leadership team members. They have done great work, built a solid reputation, and clients and industry peers have rewarded them with referrals in return. But that growth has stalled, so they have pursued marketing to fill up the "top of the funnel", and those efforts have seen mixed results at best. This usually happens between $5 million and $20 million in revenue.

These founders and CEOs feel stuck.

They need to grow their firms to grow and retain talent, or to improve the chances of a successful exit, but their networks seem stale - like they have forgotten about them and the great work their firm has done in the industry.

So what's a firm founder or CEO to do? They need to change their mindset about referrals, networks, and relationships.

It's all about the ecosystem

Consulting firms have traditionally operated with the mindset that their people are their secret sauce, their competitors aren't as good, and their clients and prospective clients will surely see that once they see the work product.

This may have been partially true in the more disconnected market environment of the 2000s and early 2010s, though I would argue it was simply easier to get away with this thinking back then rather than it actually being true, but it's definitely not possible anymore. Every prospective client has access to their peers at their fingertips, promotional noise across every industry has reached a fever pitch, and trust and credibility is hard to come by traditional means.

Consulting firm founders need to change their mindsets about how referrals actually happen, and their potential sources.

First things first, you need to remember that referrals are based on an exchange of value, and they have a cost to the referring party. The assumption that many consulting firm founders and partners make is that all they need to do is deliver great work and a great experience and their clients will want to refer business to them. But there is a major flaw in that thinking.

The value exchange for the work has already happened - your client has already quite literally paid you for it. And that technology partner you work with? They have already given you access to their network. And now we have to consider the cost of a referral - social capital. There is an interesting and counterintuitive relationship that exists between the strength of the relationship and the amount of social capital required for that person to provide a referral.

If you and I barely know each other, but I have heard great things about your firm through the grapevine, I can safely and easily throw your name out there when something relevant comes up in conversation - "I've heard great things about XYZ firm; never worked with them personally, but you should check them out". Very unlikely this can blow back on me. But if I am a client of XYZ firm, now my personal reputation is more on the line if things go south - I potentially look stupid for working with an inadequate partner.

Put these two things together, and it's no surprise that relying on clients to continuously throw referrals in our laps isn't realistic, at least not without a change in thinking about ecosystems.

Identify the ecosystem

Do you understand the ecosystem of influence for the accounts you are trying to break into? Do you understand how your personal network and influence fit into that ecosystem?

Before you can leverage and influence the ecosystem, you need to understand it and map it out. You need to identify the key points of influence:

• Key Opinion Leaders (KOLs)
• Trend setters/first movers
• Internal influencers within your target accounts
• External influencers (e.g. fractional consultants) within your target accounts
• Information sources for the industry
• Sources of conversation and engagement for the industry
• Existing referral sources (this one is the most important, but I left it for last because it's also the most obvious and often where most will stop without identifying any of the others.)

Once you have identified as many of these as you can, you need to cross-reference this against your firm's network, to understand how much influence you can exert on this ecosystem.

Track the ecosystem

Now comes the other hard part - track what all these potential sources of referrals are doing. More often than not, when I ask consulting firm founders and CEOs whether they have visibility to what relationships exist across their entire employee base, or whether they track when their client contacts move to another company or are speaking at an event, or when a past employee joins a company in their ICP, they say "no".

Remember that referrals are a value exchange, so tracking what these people are doing gives you the opportunity to engage and provide some level of value that can help drive reciprocity in the form of a referral. This can be anything from sending a simple congratulatory message, to something more involved like making an introduction or sending a gift.

Operationalize the ecosystem

Now comes the fun part - creating a system to can help you scale referrals by building and activating strategic relationships.

We've all heard about the magic triangle of People, Process, Technology, and we need to remember that the first step is our people and their mindsets. Inside consulting firms, it's common for individuals to be very protective of their relationships - often to the point of not allowing anyone else to talk to them. This is the first hurdle that needs to be addressed. Often, this means you have to give (make an intro), before you take (ask for an intro).

Next, you can address process. Changing a culture of relationship silos and protectionism isn't easy, but often creating appropriate incentives and the right amount of visibility will do the trick. Ensure that you track the number of deals and amount of revenue that comes from internal referrals, and also track which partners or managing directors are providing these referrals. Creating visible and shared dashboards for this information will help others understand the value of this activity and want to participate, especially if they can see how they personally benefit.

Last, but not least, you can leverage tools to increase visibility, improve tracking, and automate certain processes and activity. Here are a few examples, but please focus on People and process first:

• SmallWorld.ai for bringing existing relationships across the firm (and even your firm's external partners/fans) to the forefront and improve the process of asking for warm intros.
• LinkedIn Sales Navigator for keeping track of people in your ecosystem (career moves, media mentions, speaking engagements, etc.)
• Aware for streamlining your engagement with influencers on LinkedIn
• SalesReach for creating more personalized and tailored content experiences for the people in your network you are trying to engage. It's an amazing all around sales enablement tool in general, and has many other great use case as well.
• LinkedIn Ads (thought leadership ads in particular) to create more opportunities for engagement with your ecosystem influencers.

Many of these tools have a focus on LinkedIn, and that's because LinkedIn is often the glue that can hold ecosystems together and it can - and should - be used to amplify and activate other channels like conferences/events and email.

The Takeaway

There are several core misconceptions about referrals that need to be overcome, to make referrals a scalable and reliable growth channel:

1. Doing great work is not enough. You need to consistently provide value to your clients, employees, and industry influencers in the form of introductions and thought leadership content.
2. Simply hiring people with large, active networks isn't enough. You need to create a culture of referrals within your organization.
3. Having great relationships isn't enough. You need to create systems and processes to bring those relationships to the forefront within your organization.

Go get 'em!