A referral is the biggest compliment you can pay to a colleague, client or company, but how can you capitalise on connections, networks and partners to scale?
It can be tough to maintain an abundant mindset in a scarce market with seemingly fewer opportunities, but those embracing referrals and building reciprocal partnerships are winning higher value clients and attracting the best talent.
On 22nd September, Liberti Club brought together a select group of ambitious founders, fractional leadership specialists and partners in our South East ecosystem for a practical Forum on partnership and referral strategies to scale.
Hosted by Liberti Club Director Alex Evans at the Mandalay Hotel in Guildford, he opened the event with some stats and analysis on UK economic growth.
“Of the 1.4m UK firms employing people and creating economic value, only 44,595 are scale-ups (sustained over 20% growth for at least three years) collectively generating £2.19 trillion and 766,847 are family businesses creating £1.6 trillion and 3m jobs,” he explained. “According to the Scale-Up Institute, only 58% of family firms have boards and 60% of the highest growth scale-ups are actively looking for fractional leaders and board advisors to fill gaps in capability.”
“With the cost and risk of bad executive hires rising, and demand for fractional leadership solutions exploding over the last 2 years, founders are more reliant on their networks to find the best and ecosystems like Liberti Club are providing one stop shops to help them connect with peers, partners and potential clients.”
Peer networks and partner ecosystems are a great source of referrals in a market where everyone is looking for a more direct and endorsed route to their target clients.
Referred customers have a 37% higher retention rate (Deloitte), B2B firms with referral programs report 70% higher conversion rates (Heinz Marketing) and referred customers are 25% more profitable (Harvard Business Review).
You can’t beat the system
The Forum opened with an eagerly anticipated workshop led by Thomas Coles, Founder of Solve Referrals, for insight into why a systematic referral program delivers higher value and more loyal clients.
“Research from Hubspot and The Trust Agency found that opportunities arising from referrals are 70% more likely to be won than any other lead source and they close 69% faster,” he explained. “According to Texas Tech Uni, 82% of B2B buyers never make it as far as doing an internet search, instead relying on their networks for recommendations, so if you rely on traditional marketing methods you are only targeting 18% of available budget unless you adopt a systematic referral strategy.”
Liz Jackson MBE, Co-owner of Initium Corporate Finance, observed that referrals create new opportunities for collaboration between sales and marketing teams. “Profiling target clients, researching partners and maximising all of our ecosystem activity is where sales & marketing are working smarter, not just harder,” she explained.
Asked what most impacts success from referrals, Thomas said: “Three things hold most companies back: not being systematic about the whole team generating referrals, asking too generically, if at all, and self-limiting beliefs amongst the team. Overcoming all these is the key, but success starts with finding the right referrer and being clear about who you want to be referred to.”
Picking up on Thomas’ observation that referrals are just as important for finding talent as they are for clients, recruitment founder & board advisor Bradley Lewington said: “Industry research from SThree, the world’s biggest tech recruiter, found that referred candidates are three times more likely to stay and get promoted more quickly if the referrer has a good understanding of the culture, values and direction of the business.”
Thomas Power, co-founder of the BIP100 entrepreneur community, added that the best peer networks grow through referral. “This helps to maintain quality as members refer like-minded people who have that abundant mindset and a genuine desire to help people and make meaningful connections.”
This point was echoed by Vistage UK Chair Kate Hesk, speaking as part of our expert ecosystem panel on the theme of how to maximise partnerships to scale.
“Almost half (47%) of Vistage members have been referred – a reminder that recommendations are built on trust,” she explained. “A referral is more than an introduction; it is a transfer of confidence. The strongest partnerships earn that confidence over time, through useful, reciprocal conversations and a clear understanding of one another’s strengths. For a leader, that trust can open access not only to expertise, but to the challenge and insight that lead to better decisions.”
Investing in the scale-up ecosystem
BGF, the UK’s largest minority stake investor, with over 650 investments made and £5 billion of growth capital deployed, has built a value creation team and supporting ecosystem to provide value beyond capital.
“Being able to source fractional finance, HR, sales or marketing leaders from networks like Liberti helps us ensure that our investee businesses are accessing leadership capability more affordably and we are front of mind for those fractional leaders when their high potential businesses are ready for investment,” said BGF investor Matthew Connor.
“High growth firms with referral programs built into a team instead of just the founder also reassure us as an investor that it can grow after investment or exit.”
Increasingly, the funding community of banks and PE/VC investors has recognised the role of fractional leaders in enabling scale, not just reducing the cost and risk of permanent executive hires but tapping into networks that provide support across all functions and at all stages of scale.
“Fractional CMOs help founders understand what their Ideal Customer Profile is and how to target them as they scale, particularly when they are looking to access adjacent markets,” said David Fenton, Regional Director of The Marketing Centre.
“As part of Liberti, The Marketing Centre has a long history of cross-referral across all five of our group businesses, with 60 regional directors and over 600 principals regularly referring clients and measuring the impact on business results. Liberti Club is taking this a step further, expanding our collective client community with an ecosystem of partners for the right support at the right time.”
The CFO Centre, which marked its 25th anniversary this year, works with a wide variety of partners to enable its UK network of over 350 fractional CFOs to make the best recommendations to clients, but what does a good partner look like?
“Like our fractional CFOs, who must have the right combination of financial, emotional and collective intelligence, our best partners have demonstrated great technical expertise, real empathy with founders, and strong networks that they can share,” said Zoe Bonnington, Regional Director of The CFO Centre.
With a growing trend toward SMEs building their own ecosystems to punch above their weight and access new clients, the role of HR leaders is evolving to help founders manage more strategic partnerships.
“Just as the workforce is now more blended, and founders need help to balance perm, flexible and agentic solutions, our fractional People Directors need to be able to recommend the right partners to help them achieve their growth ambitions, whether it’s recruitment, technology, or other fractional leaders,” said People Puzzles RD, Dan Broome. “Trust is paramount for founders and partners, which is built by showing a clear understanding of what they’re trying to achieve.”
Whether it’s individuals and teams embedding a referral system, or building a referral program with partners, suppliers and clients, there is one thing that determines success. “If you want referrals, you have to ask for them,” concluded Thomas Coles. “Knowing who you want to be referred to will help you find who is best to refer.”,