Fraser j Hay
Fraser j Hay 22 January 2015

Is Referral Marketing Really Free?

If you take a look at the effort, time and money you are putting into getting referral business, can you really say that it is ’free’?

As we settle in to the start of a new year, ready to embrace it with enthusiasm and confidence at the start of 2015 the following wee tale may just resonate and strike a chord with you. It might just remind you that this year, you’re going to get better organised and much more effective with your business "marketing" than Amanda is.

So, let me tell you about Amanda, and hopefully you’re not going to make the same mistakes as she did in 2014. And once you’ve finished reading let me know your thoughts.

Amanda was a confident, assertive, professional woman. She was “well spoken” and she ran her own business and was a life coach.

“I don’t need any marketing help thank you” she said.

“I get all my business from referrals.” She said.

“I don’t spend ANY money on marketing”. She exclaimed.

“Fascinating” thought the pragmatic Scotsman standing before her. (moi.)

She went on to tell me, that she stayed in Southampton, and networked 3 times a week in London – she belongs to a breakfast and lunch networking group and she go to an evening event on a Wednesday.


I asked her if it was working.

“Of Course”. She said. “Last month I generated 60 business cards.” So your leads are costing you about £10 each then? She questioned my thinking.

Then she said that it actually cost £58 to go from Southampton to London on the train and that it takes approximately 1hr+ each way. I asked her how much she would charge me if I were to use her services as a life coach as I was interested. Very quickly (and in a very animated and confident way) she told me she charged £100 an hour.

She told me that on those 3 occasions each week she would spend 4 – 6 hours out of the office in London. (9 hrs a week of that was just sitting on a train!)

“So you’re losing up to £1800 a week in opportunity cost with all this ’free’ marketing that’s costing you over £600 a month just in train fares. Then you’ve got the cost of your breakfasts, lunches, meals, coffees, juices, tube fares over that month as well.”

“I hadn’t really thought of it like that” she said. (Indeed.)

So all this FREE marketing that she was doing was in fact, it turned out, costing her £1440 a month in physical expenditure. (And that was before we talked about the opportunity cost in generating no sales while her time was spent boring others talking about herself and how wonderful she was, and how great things were going.)

I then asked her what she did with her 60 business cards that she collected, “oh they’re in my leather wallet thingie.”

“Forgive me madam, but let me get this right….You spend £600 a month in train fares travelling another £400 entry fees to these events, and we’ve just worked out another £400 on incidentals a month. You’ve generated 60 leads costing you about £23 each, and you haven’t followed them up.

Can I ask….…Why?”

Her answer left me speechless. You ready for this….

“I don’t like to impose!!!!!!!!”


"Can I ask you something, without you getting upset?" I enquired.

"Yes, of course." she said.

…What’s the weather like on your planet?” I asked.

I then asked her when was the last time she won an ideal client who she didn’t have to lower her price to get the gig, work twice as hard for her money or have to wait twice as long to get paid.


With some people, you just can’t help them. And here was a life coach, who couldn’t even help herself. 

Hope that gets you thinking...


With Grow Your Business Club we help small business owners to grow with the results of their marketing efforts. Contact Author

This Article Was First Published Here.

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