When we refer a business to another person and suggest that they use a product or a service or another service provider like another real estate agent, we usually call this a referral. And this is based on the idea that if someone I know trusts this person, then I can trust this person. It’s all about building a trust factor in order to feel like the business is going to do for me the service that I want at the quality that I want them to do it at.
Giving Referrals, and Trust
And so generally, when we give referrals, we’re trying to infer the trust that we have for a company in order to share that with a new client. Although a lot of times I find that referrals, especially when there’s money on the line, it creates a conflict of interest. And so if there’s a payback for a referral, that maybe those referrals aren’t as genuine or as trustworthy as we want them to be.
And this is a difficult issue because of that disclosure of the full knowledge of where this referral is coming from and why we’re receiving this referral. You know, it’s like on Facebook, when you like another Facebook page, the Facebook algorithm now shows other people, your friends, that you like that page. And so if you liked a page without ever using their service or without ever taking advantage of their product or reading what they post, then when the Facebook algorithm tells your friends that you liked that post, it’s possibly a little bit deceptive in making other people think that you like that or trust that product or business more than you do.
And so it’s kind of difficult when you have people liking things without thought to be able to trust the likes that are there. But even when you’re aware of that, just seeing the names of the people that it says that have liked the product creates that kind of instant trust factor psychologically. And so that’s something to be aware of and something we need to watch out for when it comes to who we decide to trust and who we don’t decide to trust.
Social Media Likes and Shares
One example of that also is there’s a person that I’m friends with on Facebook who was doing live videos and the algorithm was giving me notifications and saying, hey, this friend of yours, their friends like this post. And now that’s a real stretch, don’t you think, for me to trust that based on like a three-point difference between me and the people who trust this thing? And so it was interesting that they would do that. And I find that maybe a little deceptive, maybe a little dishonest for a software to give me that recommendation because just by inserting my friend’s name who doesn’t like that, it implies to me the trust factor that I have for that friend.
So that introduces an interesting complication. When we give business referrals, especially if there is something we have to gain from it. So for example, if it is my friend’s business and so I want to help them, then I might refer the business even though I’ve never used their product before.
But if I do that, if I refer the business that I’ve never used before and I don’t tell them that I’ve never used it before, then that implies things that might not be true. And so if I’m going to refer a business that my friend owns or that my friend provides their service, I should be a little more transparent about this is a friend of mine, it’s their service, I know them, I like them, I trust them, but I’ve never used their service so that the referral is more honest so that people know that I have not seen their work, but I do trust the person because that’s a different kind of referral. So for example, if you had someone come and do physical labor on your property, like say a plumber, and they did excellent work, even if they might be an abrasive personality, like maybe I don’t like the person, but I love the work they did, right.
And when I refer a business, it’s usually for the work that they did, that we want to receive that actual referral, not necessarily a trust factor for the person. Now, of course, we want to trust the person so that they’re honest and trustworthy as far as not taking advantage of us. But ultimately, we want the product or the service to be a level that we desire.
Trusting the Service
And so any referral we give where we have not experienced what the product or the service output is, kind of is a little bit of a deception or a misdirection. And so if we are giving referrals for products that we have not used, we ought to be very transparent about what we know, what we don’t know, and how much we trust that person and whether we trust the character or the product or the service so that we know, well, so that the people we’re talking to know what we are actually referring. Now, in many industries, and specifically in real estate, there are laws about who can give referrals because there are laws about who can receive a referral fee.
So when this is kind of a sales business where people are offering a service, and if you are both real estate licensed professionals, I could, for example, give a referral to a partner of mine. And if you sign up for their services, I could get a kickback, right? And now you’ve seen those kind of things with like referral links and things where somebody gets a kickback by sharing the link. If someone’s getting a kickback and they don’t disclose that, that is highly suspicious because now we don’t know if they actually think the service is worthwhile or if they’re just doing something for themselves.
Referrals in Real Estate
And similarly, as a real estate professional, if I refer another real estate professional and I haven’t used their service and I haven’t seen their result and I haven’t talked to their clients, then am I doing it to help the client that I’m talking to? Or am I doing it to help myself and receive that referral fee? I often see in realtor forums, people ask, hey, does anybody know a realtor in this state or that, you know, that state or that city somewhere where I’ve never been? And almost always we know that what they’re asking for is a name that they can give in order to get a referral fee back. And so that always feels kind of self-serving, you know, I can see obviously why someone would want to do it. And I can see why someone would ask for a referral because you want to gain that trust factor.
But if I ask for a referral of an agent that I can work with in my state and the person who’s giving me the referral lives in a different state and got that referral from another person whom they just asked for online and then passed that all back to me, are they really deserving of some kind of referral fee for a trust factor that’s three points removed? That’s something to consider. And if even if I do know the person, even if I’m the first point of contact and I know very well this other real estate professional, if I give a referral to that person, how much compensation am I entitled to? That is a big open question. What is the value that I provided? You know, I have connected a client and a service provider together and there is a value there, there is, but how much is it? This, especially in real estate where the numbers are so large and sometimes really exaggerated and out of proportion with the amount of hours worked, it really opens up a question of what is the value of a referral? And I would suggest that the value of a referral is directly tied to how trustworthy it is, whether I’ve actually tried the service or product that I’m referring, and secondary to that, whether I trust or have confidence in the service provider, the person that is providing that service.
Timely Referrals
And so if I know the service, that’s a good referral. And how recently did it happen? Like I’ve had people give me a referral for a program or a service that they used 10 years ago and referring that to me now, that is kind of ridiculous. That’s ludicrous for them to assume that the service 10 years ago is going to be the same as it is today.
People turnover, products turnover, the economy changes, you know, service changes over time. Anything that you haven’t done recently is probably not going to be an excellent referral. So it needs to be a product that I’ve received directly, that I’ve experienced, and that has been in a reasonable amount of time to assume that the same level of service and quality will be received again.
Ethical Referrals
And then the trust factor for these individuals is a bonus on top of that. So I would suggest that each of us, when we’re giving referrals, that we hold back on giving referrals just for friendship’s sake, or especially for a kickback, and instead give referrals for things that we’ve actually experienced, that we can attest to firsthand, and that we can show at a real value for us, and therefore we can share that real value with someone else.