Why referrals suck

Often our discussion with designers is around getting more work. Gaining and retaining a loyal stable of the ‘right’ clients is a common challenge. But many designers don’t have a new business procedure – they rely on, and say they’ve built a business on, referrals. Once I would have thought that’s great, now I know it’s problematic.

Referrals aren’t all they’re cracked up to be. In fact, often they suck.

Here’s why

Referrals suck because they take control away from the design studio owner or manager. I’m not the only thinking that. Emily Cohen (a New Yorker whose business if very similar to the Design Business Council except she works from New York — so she obviously wins) thinks it too. She said so on S2E13 Never Not Creative podcast in a discussion with Andy Wright and Sarah Nguyen.

It’s an interesting podcast and well worth a listen. I was struck by the difference between our experiences talking to Australian design studios and what Emily hears in NY. There are similarities but our industry certainly differs in key aspects.

Building a studio on referrals can mean the business growth trajectory – instead of being a straight upward line – looks more like a zigzag. Instead of a steady stream of work strategically built around two or three pillars of expertise, there’s little mounds of brilliance scattered far and wide. Wherever the referral are, the studio goes.

The result can be a folio of work without focus.

That’s the first problem.

The second problem is that by the time a client is referred, a third party has often helpfully explained what you did for them, how you did it, and how much you billed. This is problematic on many fronts. At the very least you’ve lost the opportunity to increase prices, at worst you end up specialising in a client sector in which you have no interest or empathy. Much like an actor being typecast.

Take away

Of course, referrals don’t always suck. Sometimes they lead to a dream project perfectly suited to your studio and optimally costed. Problem is, it happens by chance. The right person being in the right space at the right time.

Studios relying on referrals can slowly lose control of their business. Much better to have a strategic plan for growth, targeted industry sectors and a new business process.

 

Want to discuss any of the above? Email Carol or Greg.

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Carol Mackay


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The Design Business Review is Australia’s only online design management magazine. It’s professional development information written specifically for Australian designers by Australian designers. Best of all, it’s free.

After 30+ years running a graphic design firm, Carol pivoted from client-focused projects to consult to the design industry. Now with the Design Business Council she uses her experience, and research, to help designers build robust, sustainable businesses, and help businesses integrate, and profit from, design.

The core of the DBC is the building a design community – over 85% of designers work in businesses with less than 5 employees, many less than 3. That means designers don’t have the same support network of other professionals. The DBC’s solution is supplement  paid gigs with mentoring breakfast meet-ups, informative UNseminars and practical workshops in Melbourne, Perth and Sydney.

In 2018 Carol co-founded the Clear Communication Awards, and the Business of Design Week. Both will be run in 2019

An archive of her design work at mbdesign.com.au.
Her current work can be viewed at designbusinesscouncil.com and designbusinessschool.com.au.

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